Ontario to introduce performance-related funding of HE

In a bid to increase both ‘accountability’ and ‘transparency’ in the funding of Canada’s largest system of colleges and universities, Ontario’s Conservative government plans to tie tertiary education funding to a series of 10 metrics.

Beginning next year, 25% of provincial funding will be linked to these metrics with that share rising to 60% by the 2024-25 academic year.

“We have created a performance-based funding mechanism that takes into account and supports the strengths and differences among our colleges and universities,” the Ontario Ministry of Training, Colleges and Universities said. “The government selected metrics that best represent its priorities, while balancing accountability and reporting.”

The province’s opposition, led by the New Democratic Party (NDP), has blasted the plan as a thinly disguised means to cut funding to the province’s 24 colleges and 21 universities.

“This government has already cut CA$400 million [US$299 million] from the Ontario Student Assistance Program [which provides grants and loans to students] and according to its own budgetary documents, plans on cutting a total of CA$700 million from post-secondary funding,” says Chris Glover, NDP Colleges and Universities Critic.

Glover fears that the metrics, which are supposed to be negotiated with each of the 45 post-secondary institutions by next March, will in fact be imposed as a fait accompli and, when the institutions don’t measure up, the government will wield “a giant budgetary axe”.

For its part, the government of Doug Ford – brother of Toronto’s notorious mayor, the late Rob Ford – says that the plan is “a bold step” forward.

Though modelled on funding formulas used by some American states, such as Tennessee, it will provide a “Made in Ontario” approach that will result in great emphasis being placed on identified outcomes that “will encourage colleges and universities to be more efficient and specialised, and to focus on what they do best”, said the Ministry of Training, Colleges and Universities in Ontario.

The metrics will allow ministry officials to determine “differentiated improvement, where each individual’s strengths are recognised and enhanced”, said the ministry.

Both the government and the Higher Education Quality Council of Ontario (HEQCO), a provincial agency charged with monitoring the quality of Ontario’s post-secondary system, have dismissed claims that what is officially known as SMA3 (Strategic Mandate Agreement 3) is a ‘fig leaf’ for budget cuts.

According to HEQCO’s president, Harvey Weingarten, jurisdictions such as Tennessee adopted performance-based funding because of the desire to increase post-secondary participation rates.

“Ontario already has high participation and graduation rates. We are looking at second-generation data. ‘Did you get a good job from your education’, for example. I can imagine that colleges and universities that do well on their metrics will see an increase in funding because the government will want to support measurable success.”

Nine of the metrics will be system-wide and one specific to each institution, with the weighting of each metric to be negotiated with each institution.

The 10 metrics

There are six ‘skills and job outcomes’ metrics: graduate earnings, experiential learning, skills and competencies, graduate employment, institutional strength or focus, and graduation rates.

There are four ‘economic and community impact’ metrics: research funding capacity (universities only) and apprenticeship-related (colleges only), research funding from industry sources or funding from industry sources, community or local impact, and institution specific (economic impact).

The last metric will be defined by the university or college itself but could create odd outcomes. For instance, an institution that makes up a large proportion of a small local community might make a lot more economic impact locally than an institution in a big city.

Measured against themselves

Concerns that the system will pit universities against each other, voiced by the Ontario Confederation of University Faculty Associations, are unfounded because “institutions will be measured against themselves, through targets, using an institution’s historical data and ministry established criteria”, says Tanya Blazina, a ministry spokesperson.

The University of Toronto, the province’s largest university, appears to be taking the government at its word. “We have advocated for several years for differentiation among universities and funding linked to accountability measures, rather than enrolment alone. We are confident we can meet our performance goals,” said Elizabeth Church, the university’s spokesperson.

Others are less sure about how the system will work and the government’s motives.

“What we’ve seen so far is a very bare bones roll out. As always, the devil is in the details,” says Alex Usher, president of Higher Education Strategy Associates, an education consulting firm based in Toronto.

“Performance indicators and performance-based funding are a good idea in general. But some of the ones the government has suggested are, quite frankly, bizarre.”

One metric focuses on grants for research. For large institutions such as the University of Toronto, they are pretty stable year over year. But for small institutions the grants can differ greatly year over year. “There is no evidence that the government has thought this through – how the metric would account for this change in small institutions,” says Usher.

Legality questioned

However, he warned that the entire plan may not even be legal. “If the legislature puts CA$5 billion for post-secondary [education], the auditor general expects to see that it is spent.”

In jurisdictions that use envelope funding – funding allotted to different institutions in blocks – the entire system moves in tandem with the economic ups and downs; in other words, no institution is directly penalised.

According to Usher: “If you work with a set of individual performance contracts, and they are not met, then what you have is a disguised cut. Every institution could conceivably lose 60% of its grant in one year. This would be a ridiculous outcome.”