HEQCO – University funding: Can a new model improve steering?

Money talks.  Ontario universities are dependent on revenue sources to deliver on their teaching and research missions.  Government is a major revenue source, and has an obligation to drive public policy outcomes and exercise appropriate stewardship through its investment.  And so the funding formula matters, for it is the mechanism through which an alignment of government and institutional objectives could be achieved.

HEQCO has been focussed on the funding formula for a while.  Our Expert Panel reviewing the first round of provincial Strategic Mandate Agreements concluded, “Once policies have been spelled out and agreed to, the instruments of choice for implementation are the funding formulas.”  In 2012, we went down to Nashville and saw the possible:  In the blink of an eye, Tennessee reformed from an enrolment- based to an outcomes- based funding model.

And now Ontario has launched a review of our university funding formula.  It’s not for us to predict where it will end up.  We can only imagine the outer range of possibilities, from stick to tradition and tweak things a bit, to bigger portions please, to a new outcomes based approach.   Lots to think about.

We do think it important to begin at the beginning and talk a bit about context.  How much of the university revenue pie does the funding model represent? (A quarter.)  How does it situate alongside the other primary sources of university revenue: tuition and research funding? (Tuition trumps.)  What outcomes has it helped Ontario and universities achieve? (Enrolment superstardom.)  How do universities spend their government funding? (Hint: not just on teaching.)  What would it take to drive change through this mechanism? (It’s a relatively small lever in context, so better pull it hard.)  Our backgrounder The Ontario University Funding Model in Context provides the details.

Some say the funding model is too small a slice of the pie to really matter.  Others say it is too large a slice to mess with.  We say it is just the right size to serve as a focussed steering mechanism to drive resolutely to … whatever outcomes Ontario wants.

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