Why universities have had record revenues in the midst of a pandemic — University Affairs

The CAUT chief fears that financial fundamentals will remain weak despite the windfall.

Despite COVID-19-spurred closures, travel restrictions and reduced ancillary services, Canadian universities recorded record surplus revenues of $7.3 billion in 2020-21. According to a recent Statistics Canada report, this is the biggest boon since the agency began collecting such data two decades ago.

Provincial funding and tuition fees remained the two main sources of revenue. But the strong financial performance was attributed primarily to $5.4 billion in investment income, the report said. “This is something we’ve never seen in history,” said André Lebel, program chief/manager for the agency’s Canadian Center for Education Statistics, noting that the surplus has coincided with a hot stock market. By comparison, universities earned just $44.3 million in investment income in 2019-20 and generated a total of $1.4 billion in annual revenue, on average, over the previous five years. As the stock market begins to cool in early 2022, the report notes that similar investment returns are unlikely for the current fiscal year.

Nor do the report’s findings point to a simple financial windfall, Lebel said. Investment income is often limited to predefined goals. And apart from the record investment income, Mr. Lebel said “there were no big surprises”. The report showed that provincial funding continued to decline overall, with five provinces seeing a decrease and five an increase. Universities also continued to rely heavily on revenue from tuition fees – especially from international students – to make up for shortfalls in provincial funding.

bust and boom

This year’s record revenues contrast sharply with forecasts from just a year ago. In the fall of 2021, Statistics Canada predicted that universities across the country could have lost between $438 million and $2.5 billion in projected revenue for 2020-21. Mr. Lebel specified that this analysis aimed to assess the potential financial impact of a reduction in the workforce. It was based in part on study permit data from Immigration, Refugees and Citizenship Canada (IRCC) which has historically been correlated with the number of international students. “What happened, which had never happened before, was that you had international students first who were studying abroad, and they didn’t have a student permit because [IRCC agents] haven’t been able to produce them fast enough,” Lebel said.

Although Statistics Canada’s student enrollment data for 2020-21 is only released in November, the agency’s report on university finances showed that tuition revenue rose by 2. 7% in 2020-21 over the previous year (although at a slower pace than in the past five years).

Riaz Nandan, national treasurer of the Canadian Federation of Students (CFS), said tuition fee increases are being felt by students more than ever. “Students have been complaining for years, but especially this year, the cost of everything is only going up,” Nandan said. As a result, the federation would like to see the revenue windfall “directed towards the things students have long been asking for – essential services like food banks, mental health support, academic and advocacy centers, student housing, health care – great things that go to their basic needs. This is a chance for universities to catch up.

David Robinson, executive director of the Canadian Association of University Teachers, said the fact that student enrollment numbers seemed to be holding up was a positive. But there were also signs of vulnerability. “Despite the overall report of a very large collective surplus, there is a rather fragile underlying base that universities are going to have to deal with,” he said. “We saw a small anomaly in interest income which contributed significantly to the overall surplus. But when you look at the underlying fundamentals – government funding, tuition revenue, all those things,” he said, “I’m afraid the fundamentals going forward aren’t great.”

Lower the costs

Universities didn’t just break a record in 2020-21. The report revealed that they had cut spending by 3.8% from the previous year, the biggest drop in 20 years. Salaries and benefits, the largest expense category, fell 0.8%. However, this decrease was not shared equally. Salaries of non-teaching staff fell by 1.6%, salaries of academic staff by 0.2%.

Lebel, who is also responsible for Statistics Canada’s University and College Academic Staff System (UCASS) survey, said the agency’s data shows that the number of full-time academics and their salaries both increased in 2020-21. This suggests universities were employing fewer part-time academic staff, he said.

CAUT data also points to reductions in contract academic staff, Robinson said, though those numbers aren’t conclusive. “The problem is that UCASS does not collect data on part-time or contract academic staff, so we have no idea of ​​their exact numbers or their long-term progression,” he said. “Hopefully one of the things we would want to look at from a policy-making perspective is to get better data on the number of contract teachers and trends over time.”

Eighty-five collective agreements involving CAUT member associations are due to expire by the end of next summer. Record surplus income will “absolutely” be a factor in those negotiations, Robinson said. “People are going to consider the fact that universities and colleges have weathered the COVID storm relatively well,” he said. High inflation will also be factored in, he added. “Wages haven’t really matched that increase over the years, so people are looking at real declines in terms of wages and compensation. I think there’s going to be a lot of pressure at the table, and it could be a very long, cold winter.