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Monday 13 June 2016


Guest Post by Karl Sullivan

A full review of our health and education systems, in light of the Province’s fiscal challenges, is an absolute necessity. Those areas of expenditure, aside from reducing the size of the public service, constitute the greatest opportunities to reduce government spending. A review should focus upon the affordability of these services rather than our wants and needs. Otherwise, the growing public debt will require more profound measures to address the problem of excessive public spending.

This commentary will chiefly address spending on Memorial University although there is room for savings in K-12 education. The number of teachers has remained constant at about 5,600 since 1965 even while the enrolment in public schools has dropped from 144,000 to about 66,000 students.

I am hopeful that there will be a thorough analysis of the public school system and the health care system, too, in an effort to find savings without necessarily reducing the high standards essential to the maintenance of a modern society. I expect Uncle Gnarley Blog will find space for such contributions as it has for this one.

At the outset, I suggest Memorial is a good comprehensive university. However, its existing structure is unaffordable. It is a prime place to find savings.

Memorial’s cost per full-time student per year, according to the Maclean’s 2016 rankings, is $19,155. The figure compares with $13,200 and $13,800 for UNB and Dalhousie, respectively.

We can debate the reasons for the cost differences but it cannot be reasonably argued that Memorial’s cost per full-time student equivalent should be higher than every University in Canada.

It is my opinion that there is no justification for costs to have risen to such a level. Other schools have science and medical programs, too, and more than one campus, etc., and offer programs not available at Memorial. 

Memorial’s administration, and the Government of the Province, should be mindful that the primary mandate of the University is to provide a post secondary education for Newfoundlanders and Labradoreans. That focus seems to have changed and not without consequent budgetary implications. I suggest we cannot afford a vision in which growth is based primarily upon low tuition, and which asks NL taxpayers to highly subsidize out-of-province students.

Memorial’s Enrolment Plan 2020, which establishes enrolment targets and objectives for the seven year period 2014-15 to 2020-21, is a growth model based in large part on a substantially increasing undergraduate and graduate enrolment. It assumes an undergraduate population of about 15,400 students by 2020 and a graduate student population of about 4,800 students.

Compare this stated goal to 14,208 undergraduate and 3,565 graduate students enrolled at Memorial in 2013. While the increases may not seem large, the achievement of these targets is substantially dependent upon the attraction of other Canadian and international students at highly subsidized tuition relative to that offered by other Canadian universities. The Plan notes that it “will require a fiscal investment in various forms of direct and indirect graduate student support (from government) during the expansion period”.

The Government has decreased its grant to Memorial in each of the past two years. I believe this is a positive step. But it does not go far enough.

While a university by definition should not be parochial and should have diversity in its student population, Enrolment Plan 2020 is clearly not needed.

Memorial’s strength in recruiting students is founded on the promise of a cheap education when it should be striving simply to be an outstanding university within the limits of our fiscal capability.

The number of Newfoundland and Labrador students at Memorial is likely to drop by 1,000 across all undergraduate years by 2020 (from about 10,500 in 2013). I suggest that the actual number is likely to be not more than 7,500 full-time student equivalents by 2020. The number of first year students averaged just over 1,600 from 2011-13 at all campuses, and the retention of first year students attending Memorial into second year is very low at <75%.

It is possible that almost half of all undergraduate students will come from outside this Province by 2020, most attracted by low tuition. Enrolment Plan 2020 notes that almost 3,500 undergraduate students came from outside the province in 2013. Memorial expects an increase of a further 30%. Its plan for graduate studies suggests 50% of the increase in enrolment will be other Canadian and foreign students.

While they add much to the university and to the community at large, government needs to ask: is this plan compatible with Memorial’s obligation to the people of Newfoundland and Labrador?

I submit that it is not. It is time to right-size Memorial as its enrolment plan can only be achieved by continuing to offer unacceptably high subsidization of students from outside the Province, and low tuition for Newfoundland and Labrador students.

The Auditor General noted in his December, 2014 Report that “in excess of $112 million of the Provincial 2013-14 operating grant to the University effectively subsidizes students from outside the Province”. He also stated that the Province spent $193.4 million since 2005-06 to support a freeze on tuition at the University.

President Kachanoski also confirmed the role of subsidy, upon the inception of the Enrolment Plan, stating that “the university will need the same kind of tuition incentives to draw students to these programs to maintain a sustainable enrolment rate” (The Telegram, Dec. 16, 2014). Under the 2020 Plan, the cost to support students from elsewhere would have increased substantially.

Memorial should reshape its vision to create a University more appropriately sized relative to the demographics of the province and to its fiscal circumstance. In so doing it will fulfill its mandate as its pays deference to a seriously challenged tax-paying population. A smaller university would increase the emphasis on local students as it continues to welcome students from elsewhere, albeit possibly in smaller numbers.

The university has enjoyed a high level of autonomy and this should continue. However, the exigencies of our financial position suggests it is time the institution reduced its reliance on the public treasury. It should realign its expenditures to achieve greater consistency with other large Atlantic Canadian universities.

Government grants to Memorial increased by $100 million over the 4-5 years to 2014-15. Student fees have not increased for several years, and are < 15% of all University revenues. Fewer academic staff and fewer administrative personnel will be required with a smaller university. While it is fundamental that Memorial remains viable and competitive, I suggest this can be achieved by right-sizing, cutting costs and increasing student fees. Such measures will enable the Government to reduce its funding.

Indeed, it is difficult to discern on what basis Memorial’s tuition fees should not closely approximate levels existing in the other Atlantic Provinces. Right-sizing the University and implementing more realistic tuition fees for non-residents is likely to be the best guarantee that comparatively low tuition will remain available for Newfoundland and Labrador residents.

A 50% increase in tuition rates over a 3 year time period could contribute upwards of $30 million after three years, while accounting for an enrolment decline. This is still only an additional $1300 per student. Tuition could be doubled and still be less than other Canadian universities outside Quebec. Dalhousie is a university of similar size and it reported tuition revenue of $149 million in 2014/15, compared with Memorial’s $60 million. Dalhousie’s two semester tuition is $5,700-7000, UNB is $6,200 and Memorial is $2,550 for Canadian undergraduates.

In addition, the plan to convert loans to grants, introduced by the previous administration, should be rescinded.

The tuition subsidy and student grants are most beneficial to the middle and upper classes.

There is research (Frontier Centre for Public Policy, Policy Series No. 118, Sept, 2011) to indicate that students from low income families in Quebec and Newfoundland, where tuition is lowest, benefit least of all from tuition subsidies.

A worrisome side effect of low tuition is that many Memorial students appear to be not serious about their studies or are unprepared for university.

The Maclean’s 2016 university rankings report that 25.4% of Memorial students did not return the following year. This retention rate is the fourth lowest of over 50 Canadian universities, and well below the average retention rate of 85% for Canadian universities. Of course, there are other reasons for the low retention rate, including the inadequacy of our high schools to prepare students for a higher education.

Memorial is attracting many students from other Canadian provinces who are performing below average, according to its own research.

Non-resident students studying here obtain an average of <70% during their first semester. There are, of course, exceptions. Is this another outcome of low tuition rates at Memorial?

A good many bright NL students bypass Memorial for other Canadian universities. This can only be viewed positively provided the cost of tuition subsidy to attract new students is not draining funds for scholarship programs to retain the very best students.

Expenditure reduction measures should contribute more in reducing government funding to Memorial than revenue increasing measures.

Fewer students will require fewer salaried employees at all levels. It is clearly not so easy to reduce staff and the physical plant, but it is important to recognize the reality that a growth strategy built upon subsidization rather than academic excellence cannot survive these difficult times, which will be with us for many years. It also does not help that salaries at Memorial are high by Atlantic Canadian university standards.

Hard questions need to be answered too, such as: is Grenfell affordable? Is the plan to maintain Memorial’s enrolment being conducted at the expense of new programs and equipment for the Marine Institute?

As noted, Memorial has the highest operating expenditure per weighted full-time equivalent student. While we spend significantly more per student, achievement relative to other universities is often lacking.

According to Maclean’s 2016 rankings, Memorial is tied 7th of 15 comprehensive schools. But a part of this ranking is achieved on the basis of a high operating budget and a student faculty ratio which is the lowest of any Canadian university. Other standings are not so generous. Memorial ranks lower on criteria related to achievement such as student retention, the percentage of students graduating within 7 years, faculty awards, and research grants.

On balance, Memorial’s Enrolment Plan 2020 has good aspects. They include the adoption of effective retention strategies, increasing degree productivity, and the offering of distance education. None preclude the importance of revisiting the Plan without which the cost to government will rise substantially. The University does not provide a cost benefit analysis of the various initiatives and recommendations proposed in the Plan, so the net benefits are not at all clear.

There are also a good many unanswered questions regarding Plan 2020. Here are just a few:

-   why would we need to educate so many masters and doctorate graduates in education?
 Many will end up in the classroom and not pursue their specialty. The degree leads to
 salary enhancement rather than to making them better teachers.

  -  is it necessary to increase the total student population while the number of in-province students has declined from  about 12,500 in 2000 to 10,800 in 2013 and, given our demographic, likely to decline even further by 2020? This increase can likely only be achieved by the continuance of highly subsidizing tuition costs 

 - the Enrolment Plan states that the number of  undergraduate NL students attending Memorial will decline 1,000 by 2020. Less than half all students could be from NL. If 2013 is a good indication of future enrolment, only 7,500 undergraduates out of 15,367 anticipated by 2020 will be native to this province.

  -the Enrolment  Plan notes the success of the recruitment plan but it does not offer any observation, let alone hard data, to indicate the degree to which this plan’s success is tied  to low tuition.

Memorial’s Academic Performance Profile documents of 2012 and 2013 indicate chronic academic underperformance, too many students enrolled in areas of study with poor job prospects, and too many students not carrying a full academic load. This probably suggests that there should be seating quotas for various majors as there are for professional Schools such as Pharmacy and Medicine. Education is valuable on its own, but do we need to educate so many students in fields for which job prospects are just not great, but rather in areas where job prospects are better?  Should subsidized tuition be tied to both academic achievement and employment prospects?

The Academic Performance Profiles indicate that many students graduating from high school are ill-prepared for university. Grade inflation in high school means that students accepted with, for example, an average of 70% would have achieved only about 60% under a more tightly controlled evaluation regime, like that provided by the province’s public examinations. Indeed, the grades awarded by high schools are often 10% less than the grades achieved on public examinations. It should then be no surprise that many do not make it. Over 20% of first year students take 3 or fewer courses, and students achieving <80% average in high school do not perform very well at Memorial.

The purpose of this article is to be constructive. I, acknowledge the fine work being done by Memorial in the education of our students. One must also acknowledge the benefits to the greater community provided by this institution. It might even be that the benefits outweigh the cost, but one must return to the basic question of relative affordability measured against the wants and needs of the entire population, especially those of the elderly and disadvantaged. With that said, the following questions may also be worthy of consideration:

           1.          Should government establish fiscal targets for the University, emanating from a consideration of all its obligations and desires?

           2.          Should a review of the future development of the University be undertaken by a task force embracing a combination of internal and external members joined with a strong contingent of critical thinkers from outside the University community?

           3.          Should any such new plan, following public input, be developed for a smaller university requiring a smaller footprint and a reduced requirement for infrastructure? This will require a reconsideration of the current growth strategy built around oil revenues and an expanding population.

           4.          Can we afford to build a comprehensive university which includes a plethora of professional schools, such as a law school?

           5.          Should Memorial divest itself of Grenfell, existing land, infrastructure, programs and international assets such as Harlow?

          6.          Should the university be challenged to focus its teaching and research on issues germane to the social, cultural and economic development of the province?

          7.          Should the university be asked to reform its administrative structure and consider compensation of executives based on small stipends for academics to assume administrative duties? This would be a departure from the existing system which rewards managers according to the size of the empire over which they preside.  

          8.           Should professional schools and other programs be sized on the basis of job opportunities, adjusting enrolment as required? 

The fiscal condition of the province requires that our government establish stringent spending priorities, however unpopular they may be. Education is obviously one of those priorities but Memorial needs a sharper focus on its primary mandate; that is to educate deserving NL students at a cost fair to all. University education is not a right. Quality is certainly more important than quantity.

It is less expensive for high schools to prepare students for university than for university to prepare them after they have arrived. Any review of Memorial’s mandate and the academic programs it offers must extend to an examination of whether the school system is as productive as it should be in the role of preparing Newfoundland and Labrador’s youth for the challenges of a post-secondary academic environment.

Public investment in education will always be paramount concern of enlightened public policy. But that is not the same as saying we must entertain the status quo and that only the university should determine how much funding it should receive. This is a seriously challenged province. Successive $2 billion deficits and a growing debt burden are compounded by declining economic growth and an ageing population. Public policy choices, some painful, will be necessary in the highest cost areas, including education, to maintain our solvency.

Memorial University is well equipped to begin a process of change; one that reduces its demand on the public purse. If it fails recognize this is a necessary task, and our fiscal circumstance continues to deteriorate, Memorial should worry such change will be forced upon it.  
Editor's Note:

Karl Sullivan is Senior Vice-President of the Barry Group. Sullivan's public policy background includes twelve years with the NL provincial government in the Executive Council Office and in the Department of Fisheries. He also spent five years with the Organization for  Economic Co-operation and Development (OECD). Though we share the same surname, Karl is not related to the Editor.