Dissecting university funding models in Quebec

(Katarina Martins / The McGill Policy Association)

(Katarina Martins / The McGill Policy Association)

Whether it’s aging infrastructure, overstretched services, antiquated teaching equipment, or steadily rising tuition fees, students face a number of challenges while pursuing a higher education. Linking university funding models to educational outcomes, therefore, is an important exercise in ensuring that higher education remains equitable and accessible.

Provincial funding models

Each province applies a different formula to assess funding for its universities. For instance, the province of Quebec now uses a weighted funding formula which, prior to the 2018-2019 school year, had 538 differently weighted factors, including enrolment, basic teaching costs, research output, and maintenance of capital assets such as land and buildings. Since 2018, the formula has been simplified considerably, and it now only has 107 weighted factors that determine provincial funding.

The funding model differs greatly across provinces, from New Brunswick providing 75 per cent of a university’s unrestricted operational funding to Ontario that uses a combination of weighted factors, performance-based supports, and envelope funding to encourage schools to specialize instead of significantly increasing enrolment.

This patchwork system of funding is not only complex but also it tends to overlook student wellness by prioritizing the graduation rate while neglecting the quality of education. For example, universities rely on a mix of federal and provincial grants to supplement tuition and other income. In the case of McGill, government grants fund less than half of the university’s operating costs which increases reliance on other revenue streams.

McGill University 2017 Operating Revenues.  McGill University Budget Book 2017, p. 7

McGill University 2017 Operating Revenues. McGill University Budget Book 2017, p. 7

The role of international students in Quebec

The majority of Canadian universities have tiered tuition schemes that offer a rate for international students, one for out-of-province students, and the lowest fees to residents of the province.

This stepped hierarchy is based on the logic that since the government receives less money in taxes from students who are not residents of the province (post-transfer payments) and none from international students, that their tuition should be set proportionately higher.

This is particularly true in Quebec, which in 2018, deregulated the tuition rates for international students, meaning that not only could universities charge them more but also that universities would be free to keep any excess revenue earned from the raised tuition fees of international students instead of having to remit them to the government.

In exchange for letting universities keep their share of higher international tuition fees, the added caveat is that the province intends to reduce the base funding for international students and adjust the funding formula to reduce government expenditure on them, saving the Quebec government $12.8-million each year.

Outcomes on educational equity

While proponents of tuition deregulation argue that provincial and federal governments have no obligation to subsidize the tuition fees of international students, failing to do so may lead to universities favouring international students who have the means to pay for their studies instead of encouraging accessibility and equity in tertiary education.

Indeed, the outcomes of tuition deregulation can perhaps most clearly be seen in Texas following a 2003 proposal to deregulate all tuition fees, not just those for international students. In their article “Pricing Out the Disadvantaged? The Effect of Tuition Deregulation in Texas Public Four-Year Institutions,” professors Stella M. Flores and Justin C. Shepherd note that “Hispanic students have been most negatively affected by tuition deregulation” and subsequent “pricing out” of the educational market. In empirical terms, the enrolment of Hispanic students fell by 9.1 per cent after tuition deregulation as these students were unable to “cover the increase in costs.”

While Quebec and Canada have not yet reached the point of deregulating tuition fees for domestic students, the effects of this policy on international students could very well limit accessibility of Canadian universities and the equity of education as a whole. As Quebec’s funding model was just recently revised in March of 2018, it is unlikely that another significant change is on the horizon. Nevertheless, the newly elected Coalition Avenir Québec government has committed to have current funding levels keep pace with inflation but this may not be enough to make education more equitable and accessible.