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For More Information: Alex Usher (416) 848-0215 or ausher@educationalpolicy.org.

EPI Releases Report on the Recession's Impact on Post-Secondary Education

TORONTO, ON, February 25, 2009 — Warning that post-secondary education (PSE) in Canada is about to head back towards conditions last seen in the mid-1990s, the newest publication from the Educational Policy Institute (EPI), On the Brink: How the Recession of 2009 Will Affect Post-Secondary Education, takes an in-depth look at the profound affects the recession will have on both revenues and expenditures in the PSE sector. The report’s authors suggest how governments and institutions might respond in order to not only survive this crisis, but perhaps even be in a position to thrive once the recovery arrives.

 

“It is clear that post-secondary education is facing difficult times as a result of this recession,” said report co-author and EPI Vice-President Alex Usher. “There is, however, still time to save the system from decline if university and college presidents and premiers react quickly and make wise choices on policy and budgeting.”

 

The report briefly outlines the key effects of the recession on Canada’s system of post-secondary education:


  • The collapse in equities affects institutions’ endowments and pension liabilities thus reducing income and increasing expenditure in the short-term;

  • The real-economy recession will create new patterns of post-secondary attendance (rising college and graduate school enrolment; falling apprenticeship registrations) which will both raise institutional costs;

  • Worsening labour market conditions will affect student income and cause student aid budgets to balloon;

  • Two or three years out, significant cuts in government operating grants to institutions can be expected as governments try to bring budgets out of deficit which, in turn, will result in a number of challenging financial years ahead for universities and colleges.

 

“It may be too late to respond with upcoming provincial budgets, but governments have an opportunity in the 2010 budget cycle to make the right choices. It will still be a hard few years for institutions, but if governments do not respond appropriately, it could be even worse,” cautioned Usher.

Institutions faced with rising costs and shrinking budgets will need help in the short-term to reduce their cost-base and diversify their revenues. On the Brink lists a number of ways government can help institutions achieve this, including:

 


  • Pay for salary-restructuring: Governments should assist institutions in making one-time buy-out offers to staff to reduce the salary base. Spending a little bit of money extra money in this way in the 2009 and 2010 budget cycles could save a tremendous amount of money later.

  • Don’t let enrolment formulas constrain institutions from meeting the shifting demand: Sudden enrolment increases in college and graduate programs could be unfunded if traditionally slow-to-respond government funding formulae do not keep pace with rapidly changing enrolment patterns.

  • Allow tuition to increase while protecting and improving student aid programs that matter, and chop the ones that don’t: Institutions are likely to look at increased tuition fees as the most obvious place to start to offset declining revenues. If governments permit tuition increases, the temptation to cut back on soon-to-explode student aid budgets has to be resisted. Only the programs that most effectively target resources to those who need it the most should be maintained or increased, but governments should not be afraid to cut ineffective, universal programs like tuition tax credits.

  • Fund brains, not buildings: The recent rash of government funding on infrastructure is welcome, but should not come at the expense of base research funding which keeps researchers in the country in the first place.

 

From a longer-term perspective, the economic recession will likely coincide with broader demographic shifts – most notably, the retirement of large numbers of baby boomers – that will squeeze government budgets in ways that prevent governments from re-investing in PSE. As a result, it is possible that we are now entering a state of permanently declining per-student revenues, or “Peak Post-Secondary Education”. While Peak PSE is not inevitable, it is still possible and governments and institutions need to be prepared to respond in a number of ways including increasing internationalization and thinking seriously about the methods through which learning is delivered at the institutional level.

 

“As the saying goes, ‘a crisis is a terrible thing to waste’”, said report co-author, Ryan Dunn. “Though few schools are likely to survive the recession unscathed, provided they react now and receive appropriate support from governments, Canada’s post-secondary institutions may be able to turn these challenges into opportunities.”

The full EPI report will be available here.

 

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The Educational Policy Institute is a 501(c)3 corporation based in Virginia Beach, Virginia, with offices in Winnipeg, Canada, and Melbourne, Australia. The mission of the Educational Policy Institute is to “expand educational opportunity for low-income and other historically-underrepresented students through high-level research and analysis.” For more information on EPI or its evaluation work, visit www.educationalpolicy.org.