Fund Success, Not Seats in Lecture Halls

Current methods of funding universities encourage high to enrolments, but contain weak incentives for ensuring the students will earn degrees.
Published on September 30, 2003

The annual swarm of students is buzzing back to our universities and the numbers and the tuition costs are at record levels. Many are driven back to the alma maters by the prospect of higher salaries down the line. But even students seriously dedicated to expanding their minds have questions about the quality of the education they are fed.

From coast to coast, tuition increases continue to outpace inflation. Dalhousie University considered bumping them by 50% this year, the University of Victoria by 30%. Between 1987 and 2001, Canadian tuition fees doubled. Last winter Federal Finance Minister John Manley decried the trend. He said that Ireland had unleashed its vaunted “Celtic Tiger” with free tuition and threatened the provinces with reductions in transfer payments if they kept increasing tuition fees.

Yet, as the University of Manitoba’s Rod Clifton points out in a recent study published by the Frontier Centre (What can be Done About the Underfunding of Universities?) Canadian universities are packing students in at record numbers. As a percentage of GDP, our colleges have more resources than any other developed country and they are producing more graduates than ever before.

Clifton, a Professor in the Sociology of Education, correctly identifies the problem as one of university performance, not the traditional complaints of under-funding. Over the last 40 years, he points out, the number of graduates with one degree increased by 630 percent, with Master’s degrees by 996 percent, and with Ph.D.’s by a whopping 1,300 percent. The ranks of professors quadrupled. As a famous economist once remarked, these numbers don’t lie.

Professor Clifton instead zeroes in on very high rates of attrition of the students who register in first year, with too many enrollees failing to graduate. Fully 40 percent of full-time Canadian university students fail to win a degree within five years. At U of M, 17 percent fail to re-register after first year, and another 28 percent fail to re-register after second year. Where they go and what they do, no one knows and no one seems to care.

“Obviously,” he writes, “it is time to rethink some fundamental policies for Canadian universities. University administrators and professors have been accustomed to receiving more and more money for simply enrolling students. No wonder they cry ‘under-funding’ when they receive less.”

Clifton suggests three fundamental reforms that would give universities enough money for good programs and strengthen accountability to both students and taxpayers. First, he would tie admission to standardized literacy and numeracy tests. Allowing students with inadequate skills to pay for courses they can’t complete is wasteful and unfair: “[U]niversities should become more concerned about selecting students who can successfully complete university studies and they should become more serious about teaching, particularly teaching first year courses, so that fewer students drop out.” Strict admission tests are regularly used in professional faculties like Law and Medicine.

Second, Clifton would slash the fees for first-year students, especially those who need remedial work. This reform would keep the doors open to people when elementary and secondary schools fail to prepare them adequately. The difference should be expressed in higher tuition for courses in second year and beyond, for those who have real prospects for graduation and consequently for the higher incomes that will enable them to pay the bill.

With the guarantee of equity in place, Clifton suggests that government funders pay per-student grants on a sliding scale. Universities would receive only 80% of each student’s entitlement – say $10,000 a year – for those in first year, 100% for those in second and third years, and the missing 20%, augmented by a 10% bonus, on the students’ graduation day. “The incentives built into this funding formula would encourage, if not force, universities to improve their retention and graduation rates. As a consequence, graduation days would become an honouring of students and a reimbursing and rewarding of universities for their respective successes.”

Economics is about nothing more than incentives, and Clifton’s intriguing plan would obviously entice universities to do a better job. He concedes that these reforms would need to be fine-tuned to accommodate the needs of part-time students, or those registered in longer programs. But he anticipates another favourable consequence. Instead of throwing their least talented lecturers into gigantic first-year classrooms, administrators would assign the best, to ensure that few students dropped out before graduating – definitely a change for the better.

Clifton is critical of his colleagues who mindlessly chant demands for more unconditional money. Probably universities have enough resources, but how wisely the money is spent, and how fair its distribution, are open questions.

Although they accomplish much, Manitoba’s universities continue to fare weakly on lists that measure overall merit. Students should receive greater value for the fees they pay and citizens should receive greater value for the tax dollars they send to universities. Rod Clifton’s modest proposals have the potential to ensure that.

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