International education tuition in public post-secondary in Canada and budgetary houses of cards?
Is there a house of cards afoot in the construction and implementation of many post-secondary budgets in Canada?
The privilege of stepping into independent research, as opposed to being immersed within particular institutions, is that it opens the space to ask some critical questions, in a little more open format. In my recent employment, it was suggested by a senior leader in an organization that my perspective on matters such as this post were “too disruptive”. I have been finding this a curious statement. Did this individual mean the definition of disruptive as:
“causing trouble and therefore stopping something from continuing as usual”, or,
“changing the traditional way that an industry operates, especially in a new and effective way.”?
Or, maybe both?
Let me be clear, this post is not a value judgement for or against the importance of International education. This is more a set of observations about a precarious scenario in institutions that have critical regional value. After the first Canadian public post-secondary institution entered credit protection this past year (Laurentian University in Ont.) there are many questions circulating in the sector; as well as many concerns.
This is about appropriate checks-and-balances.
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I was reading, with some curiosity, information from the Ontario Auditor General and their “Value-for-money Audit” specifically on Public Colleges for 2021. I am speculating that after the debacle at Laurentian over many years, that many more provincial governments will be turning the attention of Auditor General offices to this area of significant public funding - e.g. post-secondary. If they haven’t already, such as Manitoba, Alberta, and now Newfoundland & Labrador.
Some highlights from the Ontario AG analysis, that stood out as I was reading:
Between 2012/13 and 2020/21, domestic enrolments declined 15%, while international enrolments grew 342%.
About 30% (104,937) of all (348,350) students enrolled in public colleges in Ontario in the fall of 2020 were international students.
62% of international students in 2020/21 came from one country : India.
Public colleges increasingly rely on tuition fees from international students to remain financially sustainable. In 2021, revenues for Ontario colleges were almost $2 billion.
In 2020/21, 68% of total tuition fee revenue came from International students. However, International student enrolment represented 30% of total enrolment.
There is limited college oversight of international student recruitment agencies. Of the four colleges reviewed in Ont., none have established a formal policy to guide the selection and removal of recruitment agencies.
The Ministry does not have a strategic plan for the college sector to mitigate the risk of high reliance on international students for financial sustainability.
I was struck by some similarities with a College here in BC, that I was recently working for. This rough ratio of 70 to 30. What I mean by this, is the ratio that 70% of an institution’s tuition revenue comes from 30% of its student body.
For any revenue generating enterprise, this can be precarious - and, also, most likely dictates where the enterprise focusses much of its attention - maybe at least 70% of its time, if that’s where 70% of revenue is generated from? (at least outside of the government grants).
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In BC, like much of Canada, provincial governments provide block funding grants on an annual basis to public post-secondary institutions. However, those grants do not fully fund the institution. To make up the shortfall, and the opposite of many European nations, post secondary institutions charge tuition. They also look to generate revenues in other ways too; however, tuition is the central source of revenue beyond government grants.
Publicly funded post-secondary institutions must also post their budgets and financial statements publicly. There isn’t necessarily continuity or consistency in these budgets and financial statements from institution to institution, or even year to year in the same institution; however, looking with a bit of depth can paint pictures of scenarios.
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In north-central BC, the College of New Caledonia (CNC) is the main community college and is intended to serve a large geographic area that includes at least 22 First Nation communities and 9 municipalities. It serves an area of almost 120,000 sq. km. and over 10% of the province’s territory. The largest campus is located in Prince George (BC’s ‘northern capital’).
Looking at the publicly posted budgets and financial statements, paints a picture quite similar to the Ontario AG reports (2021), when comparing International student numbers and revenues.
In the most recent CNC Institutional Accountability Report, posted at the Ministry website and the institution’s website, it outlines that in 2020-21 there were 1,625 International students at the Institution - 27% of the total student body of 5,979 total.
In the CNC Budget statements for a similar period, it is suggested that total revenues for the fiscal year 2020-21 were expected to be just over $77 million.
Expenses were forecast at almost $81 million - meaning a forecasted deficit of over $3.5 million. (This was permitted during pandemic, as one time only. Generally post-sec in BC are not permitted to run deficits).
Government funding was forecast at almost $42 million, plus another almost $6 million in special programs.
Tuition revenues were forecast at a little over $19 million. Of that, International Education tuition is listed at just under $10.5 million. There is another tuition revenue source listed as Post Credential, which are essentially International programs, at a little over $2.3 million. Total International tuition was forecast at approximately $13 million.
Conservatively, International tuition is 65-70% of total tuition revenues ($13 million of $19 million total).
Yet, International students are less than 30% of the student body (1,625 of 5,979 total).
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My math is generally sub-par; and my economic analysis even worse. However, here are my rough calculations for illustrative purposes.
If colleges in Ontario, or a college in BC, or wherever has, for example, a budget of $80 million, meaning revenues and expenses of that amount. If tuition is $20 million of that revenue - that’s approx. 25% of the overall institutional budget.
If 70% of the student body represents 30% of that revenue (e.g. Domestic student tuition): $20 million total x 30% = $6 million in Domestic tuition revenue.
30% of the student body represents 70% of that revenue (e.g. International student tuition): $20 million total x 70% = $14 million in International tuition revenue.
Then what are the impacts on revenue and overall budget if either of these student numbers decline? Let’s say 10% decline in enrolment, in either category of students.
For Int. students at $14 million total revenue, a 10% decline in enrolment potentially translates to $1.4 million decline in revenue.
For Domestic students: $6 million in revenue divided by 10% reduction in enrolment = $600,000 loss in revenue.
There are magnitudes of impacts here, depending on where enrolment declines occur.
A 10% reduction in Domestic students would represent a 3% loss in tuition revenue ($600,000 lost revenue off of $20 million total).
A 10% reduction in International students would represent an overall tuition revenue loss of about 7% ($1.4 million lost revenue off of $20 million total).
Students-wise, the 10% reduction of Domestic students would mean over 400 students. For International students, it would mean a reduction of only about 160 students. Because of the magnitudes of difference - International student declines of small proportions, have large revenue implications.
This has not occurred overnight; nor, have the risks related to this been missed.
In comparison, and at least at CNC in north-central BC, the Institutional Accountability Report for 2015/16 lists that the institution had just over 450 International students.
Trying to compare student numbers in post-secondary is generally a dicey exercise at best. There are headcounts, full-time equivalent (FTEs) calculations, and so on. However, for rough comparison sake. The number of International students at CNC compare approximately like this:
2015 = 456
2021 = 1,625
This suggests a quadrupling of numbers in six years. Impacts? One doesn’t have to look much further than the balance sheet and revenue mix.
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To add further context: In 2018, there was a diplomatic breakdown between Saudi Arabia and Canada on human rights issues. As a result, Saudi Arabia made the call to pull out all of their students studying in Canada, and re-distributed them to countries like the UK and US - or, at least they threatened to.
The Ontario AG reports suggest that about 60% of International students in the province are from one country: India. At some institutions in Ontario it is well over 90% of International students are from India. At CNC in north-central BC it is probably over 90% of International students are from one country: India; however, these numbers can ebb and flow each semester.
Some folks may have seen the news related to the Russian invasion of Ukraine, and India’s abstention from any UN votes condemning Russia. Media and diplomacy circles suggest it has much to do with India’s reliance on arms deals with Russia. It’s a dicey scenario.
The thing with dicey global scenarios is that they can have far reaching impacts - like the global pandemic.
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To put this dicey scenario into further focus. Let’s say that at an institution such as the College of New Caledonia, lost 50% of its International students due to a global diplomatic rift, or some other far-reaching event. In the current context, this could mean a loss of about 800 International students.
Tuition revenue wise, this would be devastating for the institution. It could mean a potential revenue loss of $7 million. This would be approximately 35% of the total tuition revenue, and almost 9% of its overall $80 million budget.
To make this up with just Domestic students would require an increase of almost 2,500 domestic students. This represents around 50% of current total student population.
Think about this from a business (revenue vs. expense) perspective. International and domestic students are generally taking the same course, same programs, same credentials. The difference in costs to deliver to 800 students as compared to 2,500 students is more than significant; it’s massive - especially in an institution that that touts a maximum class size of 37.
Theoretically, at maximum class sizes of 37, the 800 students would be a little over 20 full classes. The 2,500 students would be over 60 classes. How many more instructors/faculty would this require? How many support staff? How much more physical space and infrastructure supports?
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Again, I’m not mathematician, nor economist, however, this does not seem like a very complicated scenario. From my observations and pondering, this is a serious gamble.
The challenge with this gamble is that, these same institutions, CNC included have made many commitments to ‘truth & reconciliation’ with Indigenous peoples and promises to Indigenization. However, how is that possible when, for example, an institution that recently celebrated its 50th Anniversary within north-central BC, is now fully implicated in a potential game of global roulette?
The situation has become immensely precarious. At the College of New Caledonia in BC, for example, every International student at the institution is in Prince George - the main ‘urban’ centre and campus. Yet, there are five other more rural-based campuses. Some of these have seen significant declines in programming and numbers of students, just ask any of the communities. In many cases, the majority of students at smaller regional campuses are self-identifying Indigenous students - this is laid out in Accountability reports.
The Ontario Auditor General report made this observation:
“Despite the benefits [of International students], a high reliance on international student enrolment by public colleges poses risks outside of the Ministry’s and the public college sector’s control, such as the potential loss of a large number of students if individuals from one country were to suddenly not be able to obtain study visas or otherwise be restricted from entering Canada.
We found that domestic students continue to have access to public college programs along with international student growth; however, the Ministry has not assessed how the high reliance on international students may impact the entire public college sector over the long term.”
Similarly, the Ontario AG report also indicated that: “Colleges in northern areas and smaller communities saw the largest growth in international student tuition revenue compared to colleges in larger urban areas during this period.”
At CNC in north-central BC - this situation has not arisen overnight. What appears to unfettered growth of International students has been going on for over half a decade. In Ontario the Auditor General made recommendation #1 of their report focussed on the Ministry immediately acting on the risks presented by public colleges reliance on International student tuition revenues (e.g. this 70-30 split in tuition revenues).
Included in Recommendation #1 was that public colleges establish risk mitigation plans, with clear action plans, timelines and measurable outcomes (remember those SMART goals); AND, annual reports from the colleges on the status of achieving these SMART goals.
Public colleges, especially those located in the more northern rural areas of the country, have got to remain critical institutions for the individuals that will generally be in the area to see the 75th anniversary, or more. Generally, as every public college in the country is on Indigenous territories, the individuals that will have relationships with public colleges the longest - are the Indigenous communities and families that live in the regions in which public colleges serve.
International education and international students are very important for public colleges and regions; however, at what cost?
I have thoroughly enjoyed my time spent with International students in classrooms and hallways. However, it appears that unfettered, and largely un-monitored growth of International student percentages of overall tuition revenues, must stop. Maybe, institutions themselves, within the bicameral governance structures, have not been able to institute checks-and-balances to get this gamble under control?
I’ve heard responses along the lines of well… ‘this isn’t going to change overnight’. And, I have responded with: “ah, yes it will if there is a global event that all of a sudden shuts off the tap from certain countries.”
Because of exactly this, through the pandemic, rules had to change, and change quickly. All of a sudden International students were able to do their studies online, and keep their student visas. And, thus, many International students were still in their home countries, often paying 3x what a domestic student pays, to do the same course. I’m left pondering ethics in matters such as this…
In my mind, for what its worth, beyond the Las Vegas gambling table being run here, are the ethical questions. But, nope, that would be #toodisruptive.
Something has got to change, and change quickly to avert exactly what the Ontario AG is seeing. That change is most likely not going to come from volunteer led Boards of Directors that are intended to be the main governing body implementing these sorts of decisions. With respect, bless those folks for the work they do; however, it seems many are rubber stamping suggestions coming from Executive members at institutions that have a biassed perspective when it comes to revenues. And, who wants to be part of the Board that makes a really challenging call to say #enough?
All too often in my work, and due to churn at post-secondary institutions, I have heard things to the effect of ‘well, I/we didn’t create this mess, that was so-and-so who was here before…’
Or, ‘Oh, that’s not our ‘Plan’ that’s so-and-so’s plan and we’re creating a new one.’
To be fair, there are lots of well-intended folks trying to work through this gamble-scenario; however, it has become a deep gamble, with ethical and regional implications. Who inherits the gamble gone wrong? - Well, the people and communities that remain in the regions that are supposed to be served by these particular institutions.
Time for more serious #checks-and-balances? The Ontario Auditor General certainly thought so.