The State of Post Secondary Education: Crisis or Opportunity?

 

It is another academic year, and recent reports have helped kick off its start with analysis and introspection regarding the state of university and college education in Canada.  There is the OECD international compendium of indicators titled Education at a Glance 2025 which covers all aspects of education including post-secondary or tertiary education.  Then there is Alex Usher’s Higher Education Strategy Associates compilation The State of Postsecondary Education in Canada 2025. And last but certainly not least there is the Royal Bank’s ominously titled Testing Times Fending off a crisis in Canadian postsecondary education. There is indeed quite a bit of reading here geared towards understanding the current situation with respect to postsecondary education in Canada and other parts of the world.

Canada boasts a highly skilled and well-educated population with 63 percent of population aged 15 to 64 holding some type of post-secondary or tertiary degree attainment. However, in terms of the distribution of those degrees, Canada ranks 26^th out of 41 OECD countries, in the share of 25–34-year-olds with master’s degrees.  Meanwhile, Canada is unique in that it boasts the largest proportion in the OECD – one quarter – of degrees being what they term short-cycle degrees.  These are programmes usually offered by community colleges and similar educational institutions, of at least two years duration, and are vocationally oriented.  While there is often a lament that Canada needs more skills and career-based training, it appears that a large proportion of the system is indeed geared that way.

On the surface, the demand for post-secondary education in Canada should grow in coming years based on demographic projections showing the total number of individuals aged 15 to 19 and 20 to 24 growing until at least the mid 2030s, then levelling off or declining for a few years before resuming substantial growth.  Recall that the 15-19 population pool was shrinking during the 2010 to 2020 period though increases in participation rates combined with the flow of international students helped grow university enrolment.

However, when it comes to public sector spending on tertiary education, Canada is below the OECD average n USD per capita.  Government expenditure on post-secondary in Canada amounts to USD 13,684 per tertiary student compared to the OECD average of USD 15,102.  And, as noted by Alex Usher, spending on higher education as a share of the economy in Canada has been dropping pretty steadily since 2011.  

So, there are challenges facing Canadian postsecondary education spanning financial, technological and social levels.  The financial challenge to post-secondary institutions in Canada is quite serious and has been aggravated by provincial and federal policies.  In Ontario, for example, university tuition for domestic students was cut by 10 percent in 2018 by the Ford government and has been frozen at that nominal level ever since.  Indeed, the RBC Testing Times report notes that most undergraduates in Canada are paying approximately what they would have paid a decade ago.  Universities made up a lot of the revenue by admitting more international students, but that tap has been cut off too by changes in federal immigration policies.  Going forward universities will face tighter revenue circumstances accompanied by rising costs.  After all, inflation has not just hit individuals, but institutions also.

The RBC report notes that post-secondary education and skills they impart are vital to the dealing with the economic changes facing Canada but add that: “Without a new financial arrangement, institutions are forced to make decisions with their viability in mind, rather than the country’s prosperity. These decisions will have important implications for education quality and access, especially in rural communities where workforce shortages are already acute, as well as the country’s ability to retain top talent”. They suggest boosting government funding to the post-secondary sector tied to specific criteria or outcomes.  As well, they think student fees – that is – tuition could play a greater role.  

However, the financial challenge is only the tip of the iceberg given that there are more serious existential challenges: technological and social which are both intertwined with AI.    The rise of AI in the short term is posing challenges to how classes are taught and students graded and assessed but in the longer run will affect the demand for university and college education as well as its role in shaping society.  As an article by Ryan Craig in Forbes argued, AI will likely shrink the university given its potential for personalized learning and independent tutoring. 

More optimistic but not any less transformative, Nick Ladny (also in Forbes) makes the case for the end of college as we know it with AI facilitating customized corporate education, transforming the role of faculty into mentors facilitating human interaction rather than purveyors of knowledge, more decentralized neighborhood campuses, and smartphone provision of education.  Those institutions that adapt quickly to the new reality will survive while others will simply close.  Nimbleness is key to dealing with change and universities in general tend to move slowly.

However, universities and colleges have faced the onslaught of change before and yet here they still are.  I think the next decade will see a major sorting of universities into those that successfully adopt and transition to the world of AI education and those that do not.  There will likely be changes in the types of courses and programs taught given that AI can do much more so much more quickly and effectively.  There will need to be new skill sets that involve the application of technology and AI tools to analyzing, interpreting and solving human problems.  Some jobs that right now are performed by skilled professionals such as accountants, lawyers and even physicians, can be automated by AI.  On the other hand, asking the right questions and interpreting the answers will be a skill that AI with its tendency to essentially compile and regurgitate what exists or apply set algorithms to data will not be able to perform as effectively as a creative and intelligent human.  This suggests that the teaching roles and administrative functioning of the university are likely to see the biggest changes from AI while the research function can be transformed in more positive ways.

When I think of my own discipline of Economics, I think posing interesting research questions and devising approaches to their solution via theory will remain a human endeavor, but the compilation of facts and rudimentary processing of data will be largely automated by AI. A well-trained economist with a wealth of theoretical and empirical knowledge will be able to harness AI to do creative things whether it is modelling long-term business cycle fluctuations or assessing the full quantitative impact of economic and social variables in economic history. 

On the other hand, AI can do more mundane things like model the economic impact of a construction project or a value of life calculation resulting to a significant drop in the demand for many economic consulting services.  In the long run, this will likely make the economics profession and indeed many others smaller and more elitist in their structure.  Economists will set directions and design the questions and validate the results with much of the menial mental and data grind done by AI.

In the end, universities will not disappear.  They will evolve into on and off ramps on the information highway rather than destinations in and of themselves.  They will also retain valuable social functions in terms of providing a human social environment for the young to learn how to function in this new economy and to develop human relation and networking skills. Faculty will still be required to mentor and guide and set directions but there will be fewer of them.  And, as AI is very good at automating routine things, most university administrations will likely see significant downsizing as human resources, payroll and even basic academic advising and student services can be automated. It will indeed be a new age, but successful universities will seize opportunity, evolve, and persevere rooted as they are in the depths of the past but continuing to the end of the human age.

 

Reflections on the New Year

 

Happy New Year to all!  One must admit that 2023 has been a bit of a ride regionally, nationally, and internationally.  Regionally, Thunder By and northern Ontario have had a reasonably good year economically though many of the trends affecting the country and the world – the higher cost of living, homelessness and a general angst and anxiety about the future – are also part of life here.  Sometimes, even the nature of “high tech”  21^st century crime sometimes makes one wonder if the world has truly been turned upside. 

 

The country’s economy has slowed but there is no recession yet.  If anything, the Bank of Canada is not given enough credit for engineering what to this point has been a soft landing of higher interest rates, slower growth and falling inflation.  As much as people complain about the cost of housing in Canada and the seeming inability to get things done, it also seems to be a feature of other countries such as the USA, the UK and Australia.  Indeed, it is interesting how similar debates around housing issues are occurring in countries around the world.  And of course, there is the international front where a definite challenge is underway from the CRINKs (China, Russia, Iran and North Korea) in three specific theatres  – Middle East, Ukraine and Taiwan – and in the Cyber world to the EU-Anglosphere-Asia/Pacific Western Alliance. 

 

Still, much of the global turmoil seems far removed from Thunder Bay which is still in many respects still somewhat both removed and integrated with life in the rest of province and country.  Air travel is still the quickest and most convenient way to get from here to anywhere but the pre-pandemic age of numerous, cheap, and conveniently scheduled flights connecting Thunder Bay to Toronto and ultimately the world has departed for now.  As much as Thunder Bay is plugged into the modern world, we still seem to wait a long time for things other places seem to get much sooner. After all, we have been waiting for an Ikea and a Costco since at least the mid 1990s.  As my running joke goes, Thunder Bay is probably a great place to wait for the apocalypse.  When the world ends, it will happen at least ten years later in Thunder Bay. 

 

Of course, as much as there seems to be constant change and turmoil, after 33 years of teaching and research and nearly twice that number of years being alive, one achieves a certain serenity from the patterns of constant change.  In many respects, one has seen it all. I reflect that during my career, my teaching has gone from hand-written lecture notes and chalkboards to electronic screens and PowerPoints while my research output was once typed on a manual typewriter after organizing index card cards from research trips to the library where sources were hunted down from a card catalogue. Today, I can surf any number of libraries and digital sources for both data and output on my laptop or iPad from the comfort of my own home. Writing - including blogging - is much faster than it ever was.

 

With all the new technology and social changes, one can sometimes start to feel like a dinosaur but the trick to avoid that fate is of course to maintain a curiosity and enthusiasm for the world around you, to see things in a different light, and to try new things.  After all, despite the gloom, 2024 should be the quintessential Canadian year.  A year of beer as we celebrate the year of 20-2-4s.  What could be more Canadian than that?  To a 2024 of hope and wonder and if things go off the rails, there is always a beer.

 

 

Thunder Bay Municipal Budget 2021: Overview

 

It is budget time at Thunder Bay City Council and this year’s discussion should be quite interesting given the coming together of the pandemic, numerous water issues that have affected residents directly in their pocket-books as well as the long-term effects of rising municipal expenditures combined with a flat population profile and an essentially stagnant property tax base.

 

The proposed 2021 municipal tax levy, which represents the total amount of dollars that needs to be raised from property taxpayers to fund City services, local boards and agencies and contribute to capital infrastructure programs, is $203,682,300 - an increase of 2.15% or $4.3 million over the 2020 approved municipal tax levy of $199,398,000. By comparison, in 2020 the municipal levy increase was $5.3 million, representing a 2.73% increase over 2019. Not included in the increase are costs associated with the COVID-19 pandemic, which are proposed to be funded from the Stabilization Reserve Fund in 2021 and one expects the millions of dollars in federal and provincial funds that have been provided for the purpose.

 

As well, there are numerous user fee increases not least of which is for water which comes in at 3.5 percent.  The irony of a 3.5 percent increase for water given the epidemic of residential pinhole leaks affecting thousands of residents is notable. As well, the 2021 proposed capital budget is presented at $51,607,300 gross of which $16,525,700 is funded by the tax levy representing an increase of 8.6% compared to the 2020 budget.  In terms of employment, the number of fulltime equivalent positions (FTEs) rises from 1724 to 1758 which we are assured is temporary because it has to do with cleaning costs associated with COVID.  This increase of 34 FTEs in municipal employment comes on the heels of 9 FTEs in 2020 and 10.5 in 2019.

 

If one wants some comparisons, Figure 1 plots the total municipal tax levy from 1990 to the current forecast for 2021 with the trend readily apparent. As well, while we know that Thunder Bay in 2020 had the second highest property tax rate of 35 Ontario cities, Figure 2 looks at the per capita levy in 2020 for 27 Ontario cities.  It turns out, that at $1783 per capita, Thunder Bay is the fourth highest.  For those purists who say it is unfair to compare us with cities like Toronto, very well, let us just look at the five major northern Ontario ones.  Here, Thunder Bay is ranked first – primus inter pares – above North Bay, Timmins, Sudbury and the Sault.

 

If City Council is to be guided on what to do this year it may want to heed the results of its own budget survey which had nearly 500 respondents though one expects that the expert statisticians resident on City Council will simply discount the results as based on a small and biased sample of negatively minded people not representing the true mind of the City of which only City Councillors have the divine power to ascertain.  Still, the survey results were quite telling as the general tenor of the responses was to focus on core services. 

 

As the report reads: “While there was a wide variety of topics covered, the strongest message and overarching theme centred around not spending money on extras considered ‘wants’ and instead focusing on essential ‘needs’. For example, not spending money on new capital projects such as the Multi-use Indoor Turf Facility, a waterfront sign, roundabout, or art gallery, and instead investing in existing City infrastructure (roads, facilities, fixing water pipes), and social services such as crime prevention and supporting vulnerable populations. It was also conveyed that citizens have experienced financial hardship because of the pandemic and do not want to see their taxes raised at this time – especially not to support new capital projects. Citizens outlined they would like to see the City invest in what we currently have and support the core needs without increases taxes – understanding this means giving up those items which would be nice to have but are not essential services.”

 

Indeed, based on a ranking of what is considered “very important or important,” the top programs and services in the city should be: emergency services, winter maintenance, drinking water, road maintenance and construction, garbage and recycling.  Included at the bottom are transit, child-care, libraries, recreation programs and facilities, animal services, and economic development.  There certainly does not seem to be a groundswell of support in this survey for new capital projects that do not reflect a core services mandate.

 

What should the City of Thunder Bay do this budget season?  Well, that is the $203,682,300 question.  First, it probably is time for Thunder Bay to visit the concept of core services in a more substantial manner.  Given our tax base, running the expansive set of services that we have is increasingly difficult given the size of the tax base. If the province wants us to fund an expansive set of community and social services on a local and regional level perhaps, they should foot more of the bill. Second, the 2.15 percent proposed increase does represent a retreat from the 4 percent or more number that was being bandied about earlier in the year.  While it may seem that City Councillors and administration have seen the light, it is unfortunately an oncoming freight train in a dark tunnel and more needs to be done. 

 

While 2 percent does mirror the rule of keeping increases to the sum of the rate of inflation (approximately 2 percent) plus population growth (pretty much zero), it should represent an upper bound rather than a flexible target.  There is more to be done to get levy growth even lower. Third, given that approximately 70 percent of costs are often associated with employment levels, there really needs to be a program of reduction via attrition and redeployment and retraining of staff.  For the next three years, for every two municipal employees that retire or resign, there should only be one replaced.  That FTE footprint needs to start coming down to where it was a few years back – say 1700 as in 2017.  At 100,000 per employee – which is not an unreasonable estimate of what each municipal FTE costs when salaries and benefits are combined, that would eventually reduce spending by $5 million a year.

 

Of course, all this talk of numbers and reductions is probably a lot for more upbeat members of council and one certainly one would not wish to bore them to death as they are perfectly capable of doing that to themselves during their marathon five and six-hour meetings.  A better way of framing all of this is via a simple analogy from the world of nature.  Simple stories are often the best ones as they can reduce complicated issues to the essentials needed for understanding.

 

Picture if you will, our municipal government as a Physalia physalis – also known as a Portuguese Man O’ War – floating serenely in a large aquarium.  It is essentially a large jelly like inflated bladder that in the end is rather brainless and feeds instinctively on the small fish and creatures in the aquarium via the lethal stingers in its tentacles.  Along with being rather brainless, it also really has no anus so it is probably recycling its own waste matter which can eventually get monotonous and a little stale given the size of its environment. 

 

As it sits in its limited environment and exhausts its food supply, it really is not capable of doing what needs to be done.  The solution is either to expand the size of the aquarium and restock it with new prey or replace the current Physalia Phyalis with a new and much smaller one or perhaps even an entirely new creature.  The current creature of course behaves by instinct and really is not capable of altering its size or its environment.  It is not capable of expanding the size of its environment – economic growth and an expanded tax base – and it does not appear to be capable of shrinking on its own.  I suppose that a solution has to be done by forces external to the situation.  I guess that is where the voters will ultimately come into the picture. 

 

Making Thunder Bay's Next Municipal Election Count

We are about six months away from Thunder Bay’s next municipal election and the race for the mayor’s chair and council spots represents an opportunity to examine directions and priorities.  The last election was obsessed with the event centre and the issue was a distraction from important issues such as the sale of municipal public assets, economic development, the city’s economy, the sustainability of municipal finances as well as the ongoing saga of infrastructure renewal and in particular the James Street Bridge which has now been closed to vehicular traffic since 2013.

Sadly, with the exception of the events centre, which has ridden off into the sunset for the time being, all of these other issues are still ongoing.  And of course, added to all of these issues are those with respect to relations with First Nations as well as court cases involving the city’s politicians and administration. Needless to say, Thunder Bay has garnered an inordinate amount of negative attention on the national stage in areas under the purview of municipal government and such attention is certainly not a magnet for business investment.

When it comes to economic development and the city’s economy, it remains that both population and employment levels in the city have been flat for the last four years.  The low unemployment rate in the city results from a labour force that has shrunk faster than employment and of itself is not a positive harbinger for the future.  Waiting for the Ring of Fire to kick start the economy appears to be a process akin to Waiting for Godot and all the talk of smelter locations in the world will be of no avail given low current chromite prices.  As for the current trappings of prosperity in the city, they are largely the result of a large public sector and associated public spending which after the June provincial election could very well come to a crashing halt.

Of course, even without long term private sector wealth creation, the illusion of prosperity created by public sector spending has helped fuel municipal government spending and tax increases which over the last few years have averaged above the city’s inflation and GDP growth rates.  Moreover, there has been a continued shift of the tax burden onto the residential ratepayer and they now account for about 70 percent of tax revenues.  Added to this are the continued steep increases in user fees and charges which given the talk about “rainfall taxes” show no sign of abating anytime soon.

Indeed, the thirst for residential tax revenues also results in city council giving the go ahead to new urban residential developments outside core areas that while adding to the tax base in the short term also add to urban sprawl and require municipal servicing whose maintenance will add to city expense in years to come.  The sustainability of this type of short term development formula should be a topic for debate and discussion but again it is an issue the politicians are happy to ignore when it comes to an election year. 

So, what is to be done? Well, for starters Thunder Bay residents need to pay closer attention to the fiscal, economic and social issues affecting the city and ask candidates more pointed questions about what solutions might help address the situation.  Perhaps one should ask why anyone might want to buy a new house in Thunder Bay if the property tax bill for a new bungalow is going to be in the range of $5000 to $7000 onto which will be added another $1000 a year in water and sewer charges. 

Given the length of tenure that many current members of council have had, a legitimate question is whether or not Thunder Bay might not be better off with a substantial transfusion of new blood on City Council with new ideas and new energy to look at new ways of doing things.  After all, current members of City Council have generally been the most comfortable with solutions that involve raising taxes and spending more money.  While the claim is often made that millions in efficiencies and savings have been implemented, the fact is the tax levy continues to grow which means total spending is going up and not down.

Making Thunder Bay’s next municipal election count requires making an effort to create real change in the way municipal issues are dealt with and that requires some new blood. It truly is time for change.