In early August, Statistics Canada released its latest annual survey of university finances. Casual observers might have experienced cognitive dissonance in parsing through the numbers because the data show that total university revenues rose faster than expenses. That left institutions with a relatively healthy collective surplus.
So why does this picture not match the recent headlines that tell the story of a post-secondary sector in financial freefall?
The short answer is that the latest data is from the 2023-2024 fiscal year, before the financial fallout of international student visa caps.
Even so, if you dig just a little below the surface, you can see some of the early warning signs of impending problems.
For instance, when you look at operating revenues — the money that funds the core educational activities of institutions — the long-term trend is revealing. In the 10-year period between 2013-2014 and 2023-2024, provincial operating grants, adjusted for inflation, rose by about 18%. Meanwhile, tuition and other fees shot up by a whopping 45%.
In fact, 2018-2019 was a watershed year. That’s the first year the Statistics Canada data shows that operating revenues received from tuition fees were higher than provincial grants.
In effect, that marks a great dividing line between a time when universities relied primarily on public operating funding to today when their major source of operating revenues comes in the form of private fees paid by students.
A good part of that rapid rise in tuition revenue, of course, can be attributed to international student recruitment that took off over the past decade. There were a lot of indications for years that the increasing reliance on — and frankly exploitation of — international students was an unsustainable and dangerously fickle financing model. However, in the minds of some governments, the boom in international student revenues was a convenient excuse for not properly funding post-secondary education.
As international student tuition revenues have now nosedived, it’s the people who work in Canada’s universities and colleges who are paying the price for years of this neglect as institutions suspend enrolments, cut programs, lay off staff, and implement hiring freezes.
A tempting response to today’s financial mess might be to revisit the caps on international students. It may be that we bent the stick too far in one direction in restricting student visa numbers, but tinkering with the caps will only get us so far. The real problem is that governments, both provincial and federal, have abdicated their role of being the primary funders of post-secondary education. That’s the fundamental gap that needs to be bridged.
The 2023-2024 university financial data paint a deceptive picture of fiscal stability. But when you peel away at it, you see it’s only the calm before the raging financial storm we are now experiencing.
