A Challenge for Higher Education in Ontario

A Challenge for Higher Education in Ontario
Charles M. Beach (ed.), 2005 (Paper ISBN: 1-55339-074-1 $24.95) (Cloth ISBN: 1-55339-073-3 $32.95)

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Acknowledgements . . . v
Charles M. Beach

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The Rae Review and the Structure of Postsecondary Education in Ontario
Michael L. Skolnik

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Assessing the Revenue Framework and Multi-year Planning in the Rae Report
Ken Snowdon

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The Rae Report and the Public Finance of Postsecondary Education
Robin Boadway

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Accessibility in the Rae Report
Lorne Carmichael

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In February 2005, Bob Rae presented Ontario: A Leader in Learning Report and Recommendations to the premier and the minister of training, colleges and universities of Ontario following from the Rae Review of higher education in Ontario. Within short months, in May 2005, the Government of Ontario brought down a budget containing substantial increases in postsecondary funding in the province and indicated their intention to adopt many of the major recommendations of the report. Since the demographic and funding environments in Ontario are shared by many other provinces, it can be expected that the Rae Report will have a major influence on the future of higher education, not just in Ontario, but in Canada as a whole. The report addresses concerns of accessibility to postsecondary education in the province, quality of the higher education and training that is provided, current underfunding of universities and colleges, availability of funds for eligible students, and accountability in the postsecondary sector.

In light of the importance of the Rae Report, the John Deutsch Institute at Queen's University approached several leading experts in the areas of postsecondary education and its funding environment in Canada to write informative reviews of the report. This volume presents their commentaries. The objectives of the reviews are, first of all, to provide a critical evaluation of the report's stance and recommendations for reform of the postsecondary sector in Ontario. But the authors also seek to provide a broader context in which to undertake such an evaluation and to suggest alternative perspectives and recommendations to address the report's concerns. Earlier this year, the John Deutsch Institute published a major volume of studies on issues of postsecondary education in Canada Higher Education in Canada (2005), edited by C.M. Beach, R.W. Boadway, and R.M. McInnis that effectively set the scene for the Rae Report. The present volume of reviews complements the above collection and should be viewed in the context of the major issues examined there of underfunding, student access, and faculty shortage.

This volume presents four reviews of the Rae Report from quite different perspectives. The first, by Michael Skolnik, focuses on what the report has to say about the general structure of postsecondary education in Ontario. Skolnik points out that the mandate of the Rae Review was to provide recommendations on the design of the public postsecondary education (PSE) system and on funding models for PSE, but the report concentrates much more on the latter and says rather little about the former. The report's funding recommendations for universities, for example, are based on comparisons with peer (public) institutions in the United States that are the most expensive institutions in the American PSE system which also includes a wide range of other PSE providers. While the report indeed advocates greater institutional differentiation, it does not convey a vision of what a differentiated system should look like or what kind of structural reforms are appropriate. Yet alternative funding mechanisms, controlled deregulation of tuition fees, proposed doubling of the number of graduate students, and mode of delivery of distance education in the province have potentially strong effects on the long-run structure of the PSE sector in Ontario. The new Council on Higher Education proposed in the report offers the potential to provide advice to the government on design of the higher education system. But the announced intention of the government in its May 2005 budget was to have the council focus on issues of accountability and quality improvement in PSE rather than on design or policy in the higher education system. The government may be losing an opportunity to undertake a major rethinking of what PSE structure would most benefit Ontario looking towards its future needs.

The second paper in the volume, by Ken Snowdon, assesses the revenue framework and funding proposals of the Rae Report. Snowdon notes that, over the past 40 years or so, the higher education system in Ontario has become "mass education" as participation rates in universities and colleges have increased dramatically. The government is thus faced with the challenge of how to fund a mass education system while ensuring accessibility, affordability (to both government and students), and an acceptable level of quality. The Rae Report proposes a new revenue framework for PSE institutions that offers them greater long-run funding security and predictability. Snowdon provides a useful review of past university funding arrangements in Ontario since 1967 as context for the Rae Review proposals. He notes that, while the title of the Rae Report is A Leader in Learning, the proposed funding levels are not in reference to benchmark leaders but to benchmark averages that Ontario should try to catch up with. He views the report's endorsement of the "corridor system" of funding as a positive move towards improved funding predictability.

Snowdon goes on to assess the funding mechanism the Rae Report proposes against the stated goals of access for all qualified students, quality of teaching and research, institutional autonomy within a public system, and the mutual responsibility of the players involved (government, institutions, and students). With respect to access, Snowdon notes that the Rae Report steps beyond the traditional Robarts policy of ensuring that Ontarians are provided the opportunity to pursue PSE. Higher education is now critical for prosperity of the province, and government must be proactive in encouraging participation in PSE. He also remarks that the report recognizes that access has several dimensions, including affordability, outreach, and capacity of the system. With respect to quality of teaching and research, the report recognizes that, in an environment of increased resources, across-the-board salary increases can leave little funding available for improvements in student-faculty ratios, enhancements of the teaching and research facilities, and basic infrastructure hence the linkage of funding increases and accountability and multi-year revenue requirement plans by institutions. In return for greater public investment in the PSE system, institutions will have to demonstrate efforts to achieve government objectives of access, affordability, and improved quality of education.

The third paper in the volume, by Robin Boadway, examines the proposals of the Rae Report from the point of view of public finance principles. Boadway criticizes the report for its general lack of discussion of the underlying rationales for its various recommendations and for its relative lack of detail on how alternative policies might be designed to achieve the stated objectives of the report. It takes the existing PSE system as given and asks how it can be improved. Sweeping changes to institutions or methods of finance are not proposed; the approach to changes in funding is basically incremental. Perhaps this is to be expected given the time frame and resources of the review.

Boadway examines the rationales for government intervention in the provision of postsecondary education and their implications for government policy. With respect to policies applied to students, he identifies several difficult questions which need to be addressed such as what should be the share of PSE costs borne by students, how should the financing and risk costs to students be structured based on equity and efficiency criteria (say through an income-contingent loan program or graduate tax program), and more generally, how should PSE investments be treated by the income tax system? With respect to policies applied to PSE institutions, he raises further questions: How much decentralization of decision-making should exist in the PSE sector and to what extent should PSE institutions be free to decide tuition levels and programs to offer? How many students ought to receive higher education, what should the level of government funding be, and what factors should a funding formula take into account? Finally, Boadway calls for some rationalization of the federal and provincial roles and a clearer division of responsibilities in the Canadian PSE sector.

The fourth paper, by Lorne Carmichael, looks at the issue of accessibility as addressed in the Rae Report. Both Rae and Carmichael distinguish between access and affordability. High tuition fees certainly create a barrier for low-income students. However, the remedy is not to increase the tuition subsidy for everyone, but to focus attention on those in greatest need. Carmichael cites the report as clearly acknowledging that higher education overwhelmingly benefits upper-income families whose offspring enjoy a much higher participation rate in university education. He identifies two aspects of accessibility capacity and equal access. Capacity of the system to offer positions to prospective students is addressed by a number of recommendations to increase funding levels to PSE institutions, thus make them more predictable, provide greater support for infrastructure, and subsidize increased graduate training. Equal access seeks to ensure that all qualified students can attend PSE institutions regardless of their ability to pay. This is addressed by savings plans and loans for those who can afford to pay and by targeted bursaries and grants for needy students. The report offers a number of strategies for reaching out to potential students from poor backgrounds. The report recommends an immediate expansion and revision of a PSE loan program and a longer-term development of a loan program with repayments based on income and made through payroll deduction as already adopted in several countries. This brings in the need for federal-provincial cooperation in implementing such a plan. Carmichael indeed recommends a move towards adopting a graduate tax where PSE tuition is free to all qualified students and graduates then pay a tax based on the tuition cost of their program and their actual income after graduating. Carmichael is very supportive of the Rae Report and feels that Rae has done a great service to postsecondary education in Ontario.

Charles M. Beach
John Deutsch Institute for the Study of Economic Policy
Queen's University

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