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In my opinion

Ontario’s PSE blue ribbon report is a refreshing corrective opportunity

One clear message from the panel is that the provincial government’s plans regarding performance-based funding were misguided.


Ontario’s newly released panel report on postsecondary financial sustainability presents a golden opportunity for the government to rethink how it approaches the sector’s financing.

As far as government-commissioned reports go, this one was refreshing in that it allowed for calls to increase funding, and however subtly, the panel dared also to offer a corrective approach to the government’s current funding plans, quite unlike Alberta’s blue ribbon panel from a few years back, which proved mainly to parrot government talking points.

Sensibly, the Ontario report highlights the risks of relying on international students to make up funding shortfalls, noting the considerable proportion of total revenues this group represents for Ontario colleges stands at 31 per cent and just under 20 per cent for universities.

Acknowledging the challenges of operating under a tuition freeze, while taking into account current inflationary pressures, the report correspondingly calls for a one-time 10 per cent increase to per student nominal operating grants to be followed up by a modest two per cent increase for the next three to five years.

However, the really interesting part, beyond these somewhat obvious, yet vital recommendations, was that the report contained a polite, but clear message to the provincial government that its plans for the performance-based funding envelope were misguided.

How so? The panel examined the three funding envelopes currently in use: the enrolment envelope, based on an enrolment and a weighted grants formula, the differentiation envelope, which is allocated according to 10 performance metrics, and the special purpose envelope, which is a mechanism for funding targeted enrolment responses.

Using 2020-2021 as the baseline, the report notes that the enrolment envelope was almost three times the size of the differentiation envelope and cautioned the government against proceeding with its stated intention of moving the majority of the funding from the enrolment envelope to the performance-based differentiation envelope. The report reads:

“The panel supports the continued distinction and stated purposes of the three  envelopes. We do not though view the envisaged shift of funding from enrolment  based to performance-based as being in the best interests of either postsecondary  institutions or their students.”

The report stressed the importance and benefits of the enrolment envelope as a more predictable and stable mechanism for determining allocations. Moreover, the panel subtly offered a re-directive approach to the current metrics by pointing out that “…The associated indicators in performance-based funding should be within the power of postsecondary institutions to influence…” This is not currently the case for a number of indicators.

What are those indicators? For universities, several of the indicators are closely linked to labour-market and economic outcomes beyond the university’s control, including “Graduate employment rate in a related field” and “Graduate employment earnings”, and to a lesser extent “Research funding from industry sources.” For the curious, the remaining indicators include:  “Economic impact (institution-specific), “Experiential learning”, “Skills and competencies”, “Institutional strength/focus”, “Graduation rate”, “Research funding and capacity”, and “Community/local impact of student population.”

Rather than maintaining the government’s originally planned trajectory, the blue ribbon panel opens an important window of possibility for it to seek a corrective course by simply retaining the 2023-2024 10 per cent cap on the performance-based funding envelope (to be raised by five per cent per annum for three years and top out at 25 per cent where it would remain), while also reconsidering the indicators over which the postsecondary sector has little to no control.

Another possibility would be to scrap the performance-based differentiation envelope altogether and retain the enrolment and special purpose envelopes– the two funding mechanisms that appear to be best serving the postsecondary sector and its students.

Indeed, there is compelling evidence to permanently shelve the performance-based funding implementation.  A comprehensive review of 52 of the most rigorous peer-reviewed studies published between 1998-2019 that examined the outcomes of performance-based funding in 41 U.S. states concluded performance-based funding “is generally associated with null or modest positive effects on the intended outcomes of retention and graduation, but there is also compelling evidence that performance-based funding policies lead to unintended outcomes related to restricting access, gaming of the performance-based funding system and disadvantages for underserved student groups and under-resourced institution types.”

Universities must continue to be envisioned as more than entrepreneurial training centres to be rewarded for performing short-sighted corporate-styled research and worker development if we are to thrive in a future fueled by citizens not only capable of meeting today’s needs, but also capable of imagining and implementing a better tomorrow. Standing between students and such aspirational dreams are the likely ever-creeping tuition fees also advocated by the panel and a government reluctant to fully restore the recommended funding top-ups.

Ontarians must realize what’s at stake.

Marc Spooner is a professor in the faculty of education at the University of Regina.

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