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DOCUMENT RESUME HE 027 581 ED 372 696 Jefferson, Anne L. AUTHOR The Price To Pay. TITLE 94 PUB DATE 16p.; Faint print throughout. NOTE Viewpoints (Opinion/Position Papers, Essays, etc.) PUB TYPE (120) MF01/PC01 Plus Postage. EDRS PRICE *Educational Finance; *Financial Support; Foreign DESCRIPTORS Countries; *Government Role; Government School Relationship; Higher Education; State Federal Aid; State Universities Canada; *Canadian Government; Ontario University IDENTIFIERS System ABSTRACT This paper discusses the funding status of Canadian universities which are referred to as "creatures of the provinces" as their principal funding comes from the provincisl governments. Their other main source of funds is tuition and academic fees which are themselves subject to government regulations. Together, 78 to 89 percent of university funds are controlled directly or indirectly by provincial governments. Thus they are expense driven institutions. Direct competition for funds with other public goal; results in income uncertainty for universities as illustrated by the recent implementation of Ontario's "social contract" which targeted its universities for a $216 million cutback. When government respensibility to act in the public good conflicts with another public good, it courts economic and social damage. Given these problems, universities should start to exercise more of an entrepreneurial spirit to reshape their dependency on government funding. Universities must convince the private sector to become long-term financial contributors to the general operation of universities as a politically driven funding source can no longer Successful serve as the primary source of university revenue. tempering of the expense driven institution with these changes would create a more balanced support base. (Includes two tables on university revenues in 1992.) (JB) Reproductions supplied by EDRS are the best that can be made * from the original document. *********************************************************************** 11, mhe Pv.ice to Pay by Anne L. Jefferson, Ph.D. Educational Studies Faculty of Education University of Ottawa K1N 6N5 Ottawa Canada 1994 Fax: 613-564-9098 Ph: 613-564-7725 E-mail: [email protected] BEST COPY AVAILABLE S DEPART MENI OF EDUCATION THIS "PERMISSION TO REPRODUCE GRANTED BY CPUCATIONAl I4LSOUFICCS INF ORMAI ION MATERIAL HAS BEEN CENTER iE RIC 04.5.(10,wwmIlw,hor.orfluMta.vdas Jefferson Anne L. ,,Tetwdfloallllopoimmolomirwdlim mmotalinqd OfAoltuiharuirslidwbormmdd041 DwW, of,ew en ,vffm4v. ffw ,4dk.d or RESOURCES TO THE EDUCATIONAL ill M, e,,V ldr1,00roy.fr04,y (ERIC) INFORMATION CENTER The Price to Pay and Sheffield what Canada are Universities in the of "creatures to as refer associates (1982) This reference evolved out of the fact that provinces". funded by the are principally Canadian universities intact public purse. A decade later the scenario remains Canadian universities have five distinct (see Table 1) . investment fees, sources of funds: government grants, and gifts and donations. sales and services, income, funds Government grants include grants for operating (monies used for day to day academic administration and capital funds (monies maintenance of the university) , '":o- the a-a--qi-lon furniture, property, land, and library books), research Revenue from dovernment ornts rzn:-,Pd and contracts. C:S) to a n"ah from a low of 67...1 provinces was for revenue averace a 1 3 AVAILABLE BEST COPY Revenues from fees includes tuition and academic fees. from a low of 9.9% (Que) to across the provinces ranged The average revenue from fees was a high of 17.0% (NS) . Investment income includes income from interest, 13.1%. Revenue from dividends, and realized gains and losses. low investment income across the provinces ranged from a The average to a high of 4.1% of 1.6% (BC) . (PEI) Sales and revenue from investment income was 3.0%. also referred to as ancillary enterprises, . services, includes income from sales and services provided on a from generated Income is basis. recovery cost residences, bookstores, parking services, conferences and services, printing services, food general rentals, vending services, rentals, tenant beverage, graphic services, computer store, telecommunications, services. child cares and services, health student provinces Revenue from sales and services across the ranged from a low of 3.4% (Que) to a high of 11.4% (NS). and Gifts was 8.0%. revenue averace national The -'-nat'r-n, also ro,:e-rd to as trust and endowment fu..ds, and bequests, dcnations, mcniPs includes Revenue from aifts and donations across benefactions. (P':) to a hich the pr:,vinces ranged from a low of 2.2 ;,F fr-m gifts and average revenue 9.6 cf (Que) . Th..= 2 4 donations was 7.2%. Clearly Canadian universities continue to depend on' existence. the public tax dollar for their financial Furthermore, their second most dependant source of funds, subject to government tuition and academic fees, is 78% to 89% of the funds that Together, regulations. directly or controlled, receive are universities And as such, indirectly, by the.provincial governments. they are expense driven institutions. income This status assures Canadian universities an change as subject to base the is however, base; dictate. societial, financial, and political variables existence and continuation In other words, universities' dependent upon societal belief as viable institutions is of the that no matter what the financial circumstances ara opportunities levels leariling of higher state This essential for the continue growth of the state. direct competition for funds with other public goals results in income uncertainty for universities. The Province cf :_',ntaric recent implementation of Its « "social contrac-" illustrtas th.= raali-v c S2 Under this contract -,:niversities were targeted fcr a 2cmb'ned with cthar 4.iscn1 million cutback. m.eas..:ras war.= taken ty the provincial :7cvernment, '''-'4'.71='rq4*-',='C 3 5 overall facing cuts in the range of 10 per cent of their provincial the addition, In funding. provincial public government attempted to recover $2 billion through 1993).. The aim of sector employees contracts (Pallascio, cash- the contract was to provide financial relief to a $10 billion in the red with no strapped government redline even signs that the fiscal situation wouldn't further. The financial crisis of the provincial government Universities became a financial crisis for universities. Were forced to share the pain. fully more situation this is of impact The The reliance on appreciated by examining Table 2. is significant. government grants by Ontario universities from McMaster University receives 57% of its revenue of all Ontario government grants, the lowest percentage This rating is offset by the relatively universities. and gifts received in percentage substantial (19%) depend on universities remaining The donations. to arants rna'no from 74 (Western) 60% (Zttawa. and quality mPant that the Sharina u-'-ersities became and remains access't--y of Whether investment ..n universitir,s i7 a 7.a-'or concerns. 6 REST COPY AVAILA3LE a healthy economy is necessary investment to achieve Actions of the provincial government would under seiae. indicate that the linkage, at best, is a weak one. recognized that must be time, it same the At "governments are trustees for the taxes paid by their thus the is It p.71) . 1992, (Williams, electors" university's heavy dependence on public funding that is the real focus of concern. Government exercise of this legal right potentially For instance, constrains the operation of universities. the action taken name of the in governmental when invested public trust is dbne without consideration of universities, public trust, another effect on its Higher levels of learning disaster is around the corner. responsible institutions, are nurtured only when the their pursue own enabled to are universities, intellectual growth and in so doing also encouraae the An analytic and critical development of the student. appreciation of this situation is imperative. Unexpected resource constraints restricts the degree to which -h.= is this cons~raint tht must be above can occur. :t Called for is the "recognition on the part o guarded. zovernment that the continual attrition of univers university: t relources only weakens the ability :of the 5 further was This point p.32) 1989, cope" (Sims, . in commenting on higher reinforced by Pritchard (1992) In this context, in the United Kingdom. education stress degree moderate of that Pritchard notes merely excessive facilitates performance but stLress dispirits. being done The damage and potential damage that is exemplifies what happens to universities across Ontario when the preceding points are given little, any, if What has happened in Ontario highlights the attention. problems that are assumed by any institution that is 2nswerable to a diversified audience but whose ability to As respond is restricted by a single external agency. which ways in "the Williams noted (1992) , .by [universities] receive their funds affect institutional organizational their influence hence and incentives behaviour and the composition of the academic services they provide" (p.88) . The position of expense driven institutions has been to funds is auaranteed. z7..ositive civen that --e alo auaranta-- does not when However, 's a -iaht -hat results in Oostina sufficient 'unds 't Universities -us- -he-ec--e *-hP institutions areatly. a.xercis.Q nor.= of an enterpreneurial spirit and srart- t 0 This funding. reshape their dependency on government view has been expressed by Porter (1991): government funding As currently sturctured, mechanisms for universities may not adequazIely underwrite the cost differehtials that exist technology-related and science between -- study. fields of other and courses existing re-evaluate should Governments funding mechanisms and take steps to ensure . for available are resources adequate that competitiveness. programs directly linked to Provincial governments should also re-examine the appropriate role of tuition in the overall university funding mix and the potential for The school autonomy in setting tuition fees. even programs or some of privatisation institutions should be seriously considered. (p.91) The signs clearly indicate a need to reconceptualize and the relationship between university and government Universities between university and the private sector. become long-term must convince the private sector to operation of general the contributors to financial universities, not just for designated ad hoc research be to are accessibility quality and ventures. If milieu and if university within the retained university is an essentail component for the continue growth of the state, then a politically driven fundina of revenue of source can no longer be the primary source status driven of expense The university. the dr1vPn tempered with Income an ',1niversities must e 7 ) In this way, "the university can behave market- status, like, because the possible injustice is corrected by the .subsidy of the government" (Savenije, 1992, p.6). This balance is essential unless economic Darwinism is to With balanced more rule. this support base, the elasticity of the universities' ability to respond to societial needs and at the same time provide leadership returns to a healthy and productive state. 8