Government of Ontario’s Blue Ribbon Panel Report on Post-Secondary Institutions

Outlining the establishment of a panel tasked with providing advice and recommendations to ensure the long-term financial sustainability of Ontario's publicly assisted colleges and universities, prompted by the financial difficulties of Laurentian University and broader concerns highlighted by audits.

Executive Summary

The panel emphasizes the need for a comprehensive set of recommendations, including increased direct provincial support for institutions, higher tuition for students, and collaboration among government, institutions, and students. Accountability, financial literacy of board members, and the financial risk associated with international student dependence are highlighted. Special challenges faced by different parts of the postsecondary sector are acknowledged, with recommendations tailored to address specific needs. The panel is confident that its recommendations, when implemented collectively, will contribute to the long-term financial sustainability of the sector. The summary also notes the inclusion of Indigenous Institutes in the sector, although recommendations for them are excluded from the panel’s scope, with plans for bilateral discussions between the institutes and the Ministry of Colleges and Universities in the near future.

Background and Context

The panel was established to provide advice to the Minister of Colleges and Universities in Ontario, aiming to ensure the long-term financial sustainability of publicly assisted colleges and universities in the province. The postsecondary sector includes 24 colleges, 23 universities, and nine Indigenous Institutes (IIs) with distinct funding and governance structures. The panel’s terms of reference specifically tasked them with understanding and identifying issues related to IIs.

The establishment of the panel was prompted by financial challenges faced by Ontario’s colleges and universities. In 2017, direct provincial funding for domestic enrollment was effectively frozen during the Strategic Mandate Agreement (SMA) process, limiting the number of funded students and the funding per student. Two years later, the province further strained the finances of these institutions by reducing tuition rates by 10%, followed by a tuition freeze that remains in effect. The ongoing freeze, coupled with higher rates of price inflation, poses a growing threat to the financial sustainability of the postsecondary sector in Ontario.

Financial Stability

The panel focuses on ensuring the long-term financial sustainability of Ontario’s publicly assisted postsecondary sector, emphasizing the distinct financial assessment approaches for colleges and universities. Colleges’ finances are consolidated, allowing for regular monitoring by the Ministry of Colleges and Universities (MCU). In contrast, universities self-assess based on various indicators. MCU, in collaboration with the Council of Ontario Universities (COU), is developing a financial accountability framework for universities. Smaller universities generally have lower financial health scores. The report underscores the benefits of assessing financial sustainability, providing transparency and opportunities for MCU to monitor and address concerns. The recommendations aim for fiscal responsibility and accountability to ensure sector excellence and financial sustainability.

Recommendations

Implement an Integrated Funding Framework

  1. Corridor Funding Model:
  • Originally designed to adjust over time, corridor midpoint changes were precluded in 2017, leading to financial challenges.
  • Without adjustments, inflation eroded the real value of funding for universities and colleges.
  • Current funding models necessitate institutions to seek additional revenues, impacting the learning experience.

 

  1. Addressing the Freeze:
  • The report suggests using the corridor model more effectively by aligning it with current demographic projections.
  • The report recommends grant funding for these additional students, estimating potential additional revenue of $175 million for universities and $3 million for colleges.
  • Demographic projections indicate the need to admit more students in the future, with an estimated demand for spaces by 2047 for an additional 119,000 domestic students and 168,000 international students.

Financial Adjustment

  • One-time Adjustment:
    • Proposes a one-time significant adjustment in per-student funding for colleges and universities, acknowledging high inflationary cost increases over the past several years.
    • Recommends a 10% one-time increase, partially recognizing inflation since 2017, followed by more modest annual adjustments over the next three to five years.
  • Annual Adjustments:
    • Suggests annual adjustments aligned with increases in the consumer price index or a minimum of 2% per annum thereafter.
    • These measures aim to enhance institutions’ financial sustainability.
  • Implementation:
    • The panel suggests increasing the value of weighted grant units (WGUs) and weighted funding units (WFUs) to reflect program delivery costs.
    • Recognizing that different programs have varying resource requirements, and applying the increase to WGUs and WFUs would acknowledge current enrollment distribution and increased program delivery costs since 2009.
  • Northern Institutions:
    • Recommends offering northern institutions the possibility to reduce the lower boundaries of their corridors during Strategic Mandate Agreement (SMA) negotiations.
    • Recognizes the unique challenges faced by northern institutions, including differences in costs, competition for students, and market access.
    • Proposes downward adjustments to the lower boundaries of northern institutions’ corridors (from -7% to -10% for colleges and -3% to -6% for universities) to explicitly acknowledge and address these challenges.
  • In-Year Reductions:
    • Acknowledges that some colleges and universities may fall below their corridor floors in 2023‒-2024 based on corridor assessments.
    • Recommends that funds normally clawed back for in-year “assessed enrollment” be retained by institutions facing reductions, serving as transition support.
    • This support aims to provide time for restructuring, with the goal of achieving sustainability in 2024-2025 at a lower enrollment level
  • Funding Envelopes:
    • Supports the three-envelope system but recommends a slower shift to performance-based funding.
    • Proposes a gradual increase in performance-based funding, starting at 10% and reaching 25%.
    • Emphasizes the need for performance indicators within institutions’ influence, aligned with student needs and future labour markets.
  • Fungibility and Program Caps:
    • Encourages institutions to use the corridor funding model’s fungibility for differentiation.
    • Recommends removing the 15% cap on “high-demand programs” for colleges.
  • Part-Time Student Funding:
    • Notes disparities in part-time student funding between colleges and universities.
    • Recommends aligning part-time student funding in colleges with the program of study.
  • Tuition and Student Assistance
    • Addressing Tuition Challenges:
      • Recommends a nuanced approach to tackle challenges from the 10% reduction and subsequent freeze in college and university tuition rates for domestic students.
    • Multi-Year Tuition Framework:
      • Proposes a multi-year tuition framework with a one-time 5% upward adjustment in September 2024 and subsequent increases tied to the consumer price index.
  • Differentiated Tuition:
    • Recommends treating college and university tuition differently to address competitive disparities, allowing flexibility for targeted increases.
  • Financial Assistance and OSAP:
    • Stresses increased investment in needs-based student assistance by institutions and the government.
    • Advocates for a comprehensive communications program for high-school students regarding available financial assistance.
  • Predictability and Support for OSAP:
    • Suggests changes impacting students should apply only to new recipients, maintaining predictability.

Enhance Cost Efficiency and Effectiveness

  • Efficiency Opportunities:
    • Acknowledges discussions with the Nous Group, suggesting potential 10% reduction in administrative costs.
  • Areas for Improvement:
    • Identifies cost reduction areas: administration, space, IT services, and non-labor costs through automation and digital advancements.
  • Benchmarking and Collaboration:
    • Encourages benchmarking against efficient institutions.
    • Advocates collaboration, consortia models, and shared services for cost-effectiveness.

International Students

This section emphasizes the crucial role of international students in providing talent and contributing to GDP while acknowledging associated risks. It notes varying revenue proportions from international students across institutions, emphasizing the need for a balanced approach.

  • Risk Mitigation and Commitments:
    • Institutional Commitments:
    • Universities and colleges commit to improving the international student experience through published standards.
    • Colleges implement quality assurance processes for public-private partnerships.
  • Challenges and Opportunities:
    • Risks arise from campuses heavily reliant on international students, prompting quality assurance measures.
    • Universities adopt various strategies, including satellite campuses, to balance domestic and international student enrollment.

French-Language Education System for FSL and Francophone Students

  • The report addresses financial challenges for French-language institutions, particularly Université de Hearst and Université de l’Ontario français (UOF). Proposed solutions include federating UOF and Hearst with the University of Ottawa or forming a partnership with established French colleges. The objective is to ensure financial sustainability, collaboration, and innovative models to meet the needs of French learners and employers.

Indigenous Learners and Indigenous Institutes:

  • The report acknowledges the importance of Indigenous Institutes (IIs) in fostering language revitalization, cultural learning, and supporting Indigenous learners in their local communities. It emphasizes the unique role IIs play in providing trauma-informed wrap-around student support and includes elders in pedagogical development. The report recognizes the direct labor market focus of IIs and their contribution to the aspirations of many Indigenous learners for rewarding skilled-trades careers. The panel suggests continuing support for partnerships between IIs and mainstream postsecondary institutions, highlighting the importance of distinct roles played by IIs in contrast to institutional partnerships. The report acknowledges the need for a differentiated funding model that considers the variations among IIs in terms of regions, communities served, and student populations. The report concludes by recognizing the importance of IIs in addressing the educational goals outlined in the Truth and Reconciliation Commission’s recommendations related to education.

 

Five specific issues that could be the focus of bilateral discussions between the ministry and the IIs beginning later in 2023:

  1. Funding Mechanism:
  • Proposes a shift to multi-year funding for Indigenous Institutes, aiming for predictability and reducing administrative burdens.
  1. Best Practices Sharing:
  • Suggests discussing best practices from successful entities, citing Algoma University’s special mission grant as an example.
  1. Transition Funding and Support:
  • Urges discussions on transition funding and support services for Indigenous learners, considering childcare, housing, and travel stipends.
  1. Tuition as Revenue:
  • Emphasizes the importance of discussing tuition as a revenue source for Indigenous Institutes.
  1. Capacity Building:
  • Recommends discussing ways to support capacity building, including technician support and qualified personnel for planning.

Conclusion

The panel emphasizes the fiscal responsibility and affordability of their recommendations, highlighting that other provinces have successfully implemented similar measures. They stress the potential high costs to the province of failing postsecondary institutions and underscore the negative impact on the province’s reputation, international student recruitment, regional economies, workforce readiness, and foreign investment attraction if action is not taken.

Demographic and economic factors are cited as additional reasons for a different approach to public funding. Failure to act now, according to the panel, would lead to increased difficulty for students to find program spaces, limiting access for a growing population. The institutions would struggle to keep their programs relevant to evolving labour market needs.

While acknowledging that some recommendations may stretch the terms of reference, the panel expresses confidence that their collective application will lead the sector toward long-term financial sustainability. They stress the importance of a shared and balanced approach to associated investments. Additionally, the panel recognizes the diverse nature of the sector and proposes specific recommendations to address historical factors that have left certain parts of the sector uncompetitive nationally or internationally. Overall, the recommendations aim to align with the government’s guiding principles for a comprehensive and adaptable postsecondary education system.

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