The Council of Ontario Universities is grateful that the government has clarified its multi-year tuition policy framework. The Council appreciates the fact that tuition flexibility will help universities keep up with unavoidable costs increases on campus, and thereby help ensure the quality of higher education. At the same time, Council members believe that modest tuition increases can be implemented in a way that will maintain access to universities for a growing number of Ontario students.
The new regulations allow universities to increase tuition for first-year students by up to 4.5% in most programs and up to 8% in the first year of professional and graduate programs. Once students are in their programs, however, subsequent annual increases are limited to 4%. These increased revenues will help universities to meet average annual cost increases, estimated in recent years to be approximately 4.6%, as outlined in the attached Backgrounder.
Universities were particularly pleased by the enhanced student financial assistance measures announced today, because these measures will help ensure that no student is denied access to university for financial reasons. Universities embrace the new “student access guarantee” as entirely consistent with the long-standing commitment to access that all institutions have made. We look forward to working with the government on this undertaking.
The new tuition policy, combined with the increased investment in postsecondary education announced in the 2005 Ontario Budget, will help to address the erosion of quality in Ontario universities, brought on by decades of underfunding relative to other jurisdictions. “The government shares our objectives of excellence in university education and narrowing the gap in per-student resources between Ontario and our economic competitors,” says Dr. Ross Paul, Chair of the Council of Ontario Universities and President of the University of Windsor.
In Budget 2005, the provincial government made the largest postsecondary investment in 40 years, noting that a skilled workforce is the competitive edge of the 21st century. “Governments, educators, students and taxpayers need to come together to make significant investments in those who will shape our future economy,” says Dr. Paul Davenport, Vice-Chair of Council and President of the University of Western Ontario.
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For further information, contact:
Jamie Mackay Vice-President, Policy and Analysis, COU
(416) 979-2165 ext. 209
Dr. Ross Paul
Council Chair and President, University of Windsor
(519) 253-4232, ext. 2000
BACKGROUNDER
RECENT COST INFLATION AT ONTARIO UNIVERSITIES
Approach
This note estimates the price-related cost increases incurred by Ontario universities in the last few years. The basic approach was to estimate the current weighting of the four broad categories of costs that make up the annual operating budget and to estimate the price inflation factors for each.
Faculty Salaries
In 2003-04, faculty salaries represented 29% of the total operating expenditures of Ontario universities. According to Statistics Canada, the data for the five-year period 2000-01 to 2004-05 indicate that faculty salary settlements in Ontario have averaged 3.7% per year. It is worth noting that average faculty salaries have likely been rising faster than this because the differential between retirees and new hires is not as great as it was in previous decades given higher starting salaries driven by increased competition for the best new faculty.
Non-Academic Salaries
Non-academic salary costs accounted for 32% of the sector’s total operating expenditures in 2003-04. Public sector settlements in Ontario, as reported by the Ministry of Labour, have seen an increase of 3.1% per year from 2003 to 2005 to date.
Benefits
Benefits (such as pension contributions, dental plans and life insurance) in 2003-04 represented 11% of total operating expenditures. In all sectors of the economy, benefit costs have been increasing faster than salaries. Between 2001-02 and 2003-04 (the most recent three years for which data is available), these costs have increased at a rate of 14.2% per year in Ontario universities.
Non-Payroll Costs
Non-payroll items (such as library acquisitions, paper supplies, computer hardware and software, machinery and equipment and energy) constituted 28% of the operating budget in 2003-04. This basket of goods and services purchased by universities is significantly different from that consumed by the general public (the basket commonly measured by the CPI). Non-payroll costs have risen on average by 3.6% per year compared to the 1.9% per year increase in the CPI over the past decade.
Composite Results
Based on the above trends in these four areas – faculty and non-academic salaries, benefits, and non-payroll – it is estimated that the price inflation in universities has been 4.6% per year, as set out in the following table. Given international labour market trends for knowledge workers and the cost pressures on benefits and non-payroll costs, it is likely that inflation in the university sector will continue in this range, more than twice the general CPI, for some time.
Weights and Price Inflation in the Components of Operating Expenditures at Ontario Universities
| Weight | Annual Increase | |
|---|---|---|
| Academic Salaries | 29% | 3.7% |
| Non-Academic Salaries | 32% | 3.1% |
| Benefits | 11% | 14.2% |
| Non-Payroll Costs | 28% | 3.6% |
| Total | 100% | 4.6% |
Notes and Sources:
The weights are for 2003-04. The academic salary increases are based on 5 years in the period 2000-01 to 2004-05. The non-academic salary increases are based on 3 years in the period 2003 to 2005. The benefit increases are based on 3 years in the period 2001-02 to 2003-04. The non-payroll cost increases are based on 10 years in the period 1994-95 to 2003-04. [Statistics Canada, Ontario Ministry of Labour, COFO-UO and various indices compiled in COU’s non-salary price index, OUNSPI].
