Alberta to tie funding for postsecondary institutions to performance

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Alberta plans to tie funding for postsecondary institutions to performance, looking at targets such as postgraduation employment rates and wages, as well as increasing enrolment, to decide how much public money colleges and universities receive.

Premier Jason Kenney’s government wants to have 40 per cent of a school’s provincial cash tied to meeting those targets by 2022 as it continues to make significant changes to Alberta’s system of advanced education. In less than a year, the government has scrapped a tuition freeze and announced plans to cut provincial spending on postsecondary institutions by 32 per cent over the next three years.

Advanced education has faced one of the steepest series of cuts in the province’s drive to balance the books by 2023, with the government looking to reduce its direct funding for postsecondary institutions from $2.5-billion last year to $1.7-billion in 2022. Some of the reduced spending will be offset by higher tuition.

Advanced Education Minister Demetrios Nicolaides told reporters on Monday that he hopes to have the new performance-funding system in place by April, with only 15 per cent of operating funding based on meeting targets this year. The government hopes to eventually use 20 indicators to grade performance.

Schools will be judged based on their historic performance and the targets will vary widely for each institution, with research juggernauts such as the University of Alberta graded differently from small schools such as Olds College. The targets will be created in the coming weeks after consultations between the ministry and schools. Each school will also be allowed to create a single target unique to itself.

“Institutions will not compete against each other for taxpayer dollars. Rather, they’ll compete against themselves and seek to improve their own performance,” Mr. Nicolaides said.

Schools that fail to meet their targets will see their funding cut. As an example, reaching only 80 per cent of an enrolment goal means receiving 80 per cent of the money budgeted. The system is similar to one being adopted in Ontario by Premier Doug Ford’s government.

According to Mr. Nicolaides, the move to performance-based goals will keep universities and colleges accountable. “Performance-based funding is not something new and is a developing and growing trend in higher education,” he said.

The Alberta government says performance-based targets are used in 35 U.S. states, as well as in Hong Kong, Britain and a number of European countries.

Performance-based funding is increasingly popular, according to Alex Usher, the president of the consultancy group Higher Education Strategy Associates, however almost no other system is designed like Ontario’s and Alberta’s.

“There are few systems in the world that are sticks only. What they normally do is say that ‘Here’s a pot of money, go compete for it.’ The key thing about Alberta’s system is that it is rigged to make people lose,” he said.

Better performance and improvement is not rewarded by an increased budget under Alberta’s proposal; it only results in a school keeping what it already has.

Mr. Nicolaides said his department has not decided what it will do with money allocated to schools that fail to reach their targets.

“It’ll all come down now to how tough the targets are. If the targets are tough, treasury wins and the institutions lose. If they are easy, the government can save face and schools can go about their business unimpeded,” Mr. Usher said.

Heather Bruce, the president of the Confederation of Alberta Faculty Associations, said academic staff is looking forward to consultations, but admitted the compressed timeline will make things more difficult. “We don’t want any unintended consequence from this move,” she said.

Faculty are concerned that by having up to 40 per cent of a school’s provincial grant tied to performance goals, budgets could be unstable, said Dr. Bruce, who is a professor at the University of Alberta.

“I find it difficult to understand how having 40 per cent of your funding ultimately tied to performance-based metrics won’t lend itself to being unpredictable funding. If you have to wait to find out whether that 40 per cent of your budget is available to you, that’s not predictable at all," she said.

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