Universities warn of financial crisis

Without new funding, schools face ‘growing risk of insolvencies,’ province told

Ontario universities are working together to save money — by offering joint courses, sharing purchasing and making the best use of space on campus — but, without a boost in government funding or tuition increases, many are getting close to insolvency, warns a new report.

The report was released by the Council of Ontario Universities in response to the province’s demand that institutions find efficiencies before they will be allowed to raise fees or receive more money from the province.

While universities are “finding new and innovative ways to drive greater efficiencies, the situation is becoming increasingly untenable,” Steve Orsini, the council’s president and CEO, told the Star in an interview.

“Universities can no longer continue to absorb cuts and freezes amidst rising inflation and costs, and many are facing deficits, with the growing risk of insolvencies.”

While no university is believed to be in such dire straits as Laurentian was — the Sudbury university axed hundreds of jobs and programs as it worked to get its finances in order after turning to the courts for creditor protection in 2021 — many are currently running huge deficits.

York University is among those struggling: It had projected a deficit of almost $46 million in 2022-23, and more than $31 million this school year.

Its budget overruns are believed to be in large part due to costs for construction on its new Markham campus as well as post-pandemic spending, amid a decline in enrolment.

Colleges and Universities Minister Jill Dunlop, in her response to the blue-ribbon panel report she commissioned that recently recommended a 10 per cent funding increase and five per cent tuition hike for the 2024-25 school year, said she first wanted to ensure schools were operating as efficiently as possible.

In a statement to the Star, a spokesperson for Dunlop said “We look forward to continuing the work with colleges and universities to ensure the post-secondary education sector remains financially stable and focused on providing the best student experience possible … we are confident we will build on the solid foundation of the postsecondary system and protect it for current and future students, so they continue to receive the worldclass education that Ontario’s institutions provide.”

Orsini said, while Ontario’s universities have a “steadfast commitment to streamlined processes and enhanced productivity … we will continue to work with government to showcase how universities have and will continue to find new and innovative ways to be efficient.”

But he also urged the government to “move swiftly” to boost funding grants and allow tuition increases after a 10 per cent tuition cut in 2019 and frozen fees since.

“The blue-ribbon panel acknowledged that the cut and freeze to tuition, and the decline in real operating grants, has put tremendous pressures on universities,” he said in an interview. “And it’s our commitment to continue work with all our partners to ensure that the resources we have are applied in the most efficient way possible” as schools have done in the past.

Orsini told the Star that some schools are already offering joint courses or programs, and all share a common application system as well as some purchasing and library materials and services.

The Ontario Visiting Graduate Student program, for example, allows graduate students to complete courses not offered on their campuses at other universities, while staying enrolled at their home schools.

While salaries represent a majority of university spending, the panel found they were among the lowest in the country on a per-student basis. “We’re very cost-efficient,” Orsini said. “We believe that we have done a lot to manage our costs, and we’ll continue to look at ways to find the best way to deliver programs and services to best meet students needs.”

The panel did find there was “considerable room for improvement” in administrative costs, including space and other non-labour areas.

Funding and tuition in Ontario are lower when compared to other provinces, it found.

Provincial grants for schools have dropped more than 30 per cent since 2006-07, and universities have taken in 20,000 more Ontario students than they are funded for.

A number of reports have also warned about the increasing reliance on international students to bring in revenue, given they pay much higher tuition fees.

Universities are also having to pay salary increases after wage-capping legislation by the Ford government was ruled unconstitutional — some $335 million in 2023-24 alone.

An email sent to Queen’s University students and staff this week noted “Costs have exceeded revenue to an unsustainable level, with an operating budget deficit for the current fiscal year 2023-24 initially projected to be over $62 million. This is 10 per cent of our total operating budget of slightly more than $600 million.” It blames the tuition freeze and rising costs on inflation.

“The university has so far relied on our financial reserves to cover our operating deficits, but that path is not sustainable,” the school said. “Our reserves are rapidly depleting and will not be enough to cover another full year of deficits at the level we are currently operating.”

Nigmendra Narain, a Western University professor who is president of the Ontario Confederation of University Faculty Associations, said even the blue-ribbon panel recommendations “still aren’t going to bring us to even adequate funding … it would take 10 years of annual 10 per cent increases just to reach the Canadian funding average.”

Tuition is also among the highest, he said, adding “We are at the bottom of the wrong lists, and we’re also at the top of the wrong list.”

He said universities “are already operating on somewhat skeleton budgets in some cases. We need to know what sort of plants the government has.”

In a statement, York University said “Like many post-secondary institutions across Ontario, York continues to actively manage financial pressures resulting from post-pandemic enrolment trends, government funding frameworks, inflation, and other factors” and said its multi-year plan “demonstrates financial stability as a result of a sound planning approach, and sets out an in-year balanced budget expected in 2025-26.”

The statement noted that students will start classes on the Markham campus next fall and that it “is a key part of that strategy. Located in a region with one of the fastestgrowing (populations of ) 18- to 21year-olds, the programs focus on high demand areas in technology and entrepreneurship, contributing to the university’s enrolment and serving the needs of the growing tech industry.”

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We believe that we have done a lot to manage our costs. STEVE ORSINI COUNCIL OF ONTARIO UNIVERSITIES PRESIDENT AND CEO