In an effort to address the reality that Ontario tuition costs are higher than other Canadian provinces, the Ontario government has committed to transform the way that universities are funded. The new funding formula will focus on improving access to universities for individuals from low-income households, and preparing these students for the workforce. Although part of the funding that universities receive will be tied to indicators such as post-graduation employment rate and student satisfaction, the majority of funding will continue to be based on overall student enrollment. However, this ‘transformation’ of the funding formula focuses only on one function of universities; it emphasizes knowledge transfer but ignores research.
Ian Clark, Professor at the University of Toronto’s School of Public Policy and Governance, argues that research is a public good. A streetlight is an example of a public good. As a consumer of streetlights, my use of the light does not exclude other people from using it, which means it is non-rivalrous. Moreover, I cannot stop other people from using the light, which means it is also non-excludable. Considering that I benefit from the streetlight as long as someone pays for it, I am going to try very hard to pay as little as possible myself.
Similar to the shared benefit of streetlights, research benefits all Ontarians through improved development. For example, when NASA invested its resources into the development of scratch-resistant lenses for its astronauts, it also revolutionized eye-wear for the average citizen; today, the majority of sunglasses, corrective, and safety lenses are made of plastic, rather than glass. Everyone who wears glasses benefits from the research performed, though only one institution invested.
What does the current funding structure look like for research and enrollment?
Enrollment-based funding made up 90 per cent of total funding awarded, according to The Ministry of Training, Colleges and Universities (MTCU) in its 2015 Final Consultation Report.
Universities also receive funding for the research they conduct from the Ministry of Research and Innovation (MRI). In 2015, MRI granted Ontario Universities a total of $204 million.
To put those numbers into perspective, let us look at how research funds compare to enrollment-based grants as a percentage of total revenue.
Since York University has almost double the enrollment rate of Queen’s University’s, York receives an extra 7 per cent of its revenue from enrollment-based funding, as the graph shows.
At the same time, Queen’s University received more than double the research income compared to York University. However, Queen’s University received only two per cent of total revenue for research from the Ministry of Research and Innovation, while York University received one per cent.
There has clearly been greater support for enrollment-based targets at universities than for research-based targets. Is this because research is inexpensive and, hence, requires little support?
In Academic Reform: Policy Options for Improving the Quality and Cost-Effectiveness of Undergraduate Education in Ontario, Clark outlines the expenses of conducting research. While universities receive support for the one-off costs of research from the province, they receive little support for the associated ongoing costs. As a result, universities pay out-of-pocket to fund a public good. That is very nice of them.
What can Ontario do to improve its funding of research?
We could start by looking at the funding formula used in Australia, which focuses on ‘research income’ and ‘higher degree through research’ (HDR). ‘Research income’ is the amount of funding universities attract from the non-profit, private, and public sectors for research. Since none of this support is mandated, these sectors are directing funding to where they perceive a gap. The Ontario government already collects data about the income received by universities from the three sectors. Secondly, HDR measures how many students are completing their degrees by doing research. In Ontario, data about the number of people with advanced degrees at the graduate level is collected. While ‘advanced degrees’ include degrees awarded by doing research, the measure also includes degrees awarded in other non-research fields, such as professional degrees like the Master of Business Administration. Therefore, this data will need to be finer-grained to match HDR completion rates.
In the end, we will have universities that are better at research doing more research, and universities that are better at teaching doing more teaching.
Incorporating such a funding-formula would benefit from comparative advantage, according to Clark in Academic Reform. By allowing certain universities to focus on research to gain funding, they could let go of funding awarded for enrollment. The freed-up funds for enrollment could then be directed to universities that focus on enrollment and not on research, and vice-versa. In the end, we will have universities that are better at research doing more research, and universities that are better at teaching doing more teaching.
The proposed funding formula by the Ontario government will support an increase in enrollment at universities, but will ignore the social and economic importance of research. Adopting a funding formula that allows universities to differentiate—focus on research or focus on enrollment—may lead to an outcome that is beneficial to Ontario.
Aniket is a 2018 candidate of the Master in Public Policy at the University of Toronto’s School Of Public Policy and Governance. He studied Philosophy and English Literature at UBC. His policy interests include education, urban, economic, and technology policy.
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