The Ontario Budget 2000-01
The Mike Harris Conservative government of Ontario brought down its Budget for 2001-02 on May 9, 2001. This Budget projects total expenditure of $63.3 billion for the year 2001-02. Of this, spending on schools and post-secondary education is expected to reach $11.7 billion (Budget Paper B, p. 49). Thus, 18.5 % of total expenditures is expected to be directed towards education.
In this overview of the Ontario budget we shall be looking at post-secondary education. The education news of this budget, however, is the decision to offer family tax credits to help cover the costs of private school tuition in primary and secondary schools. This decision justifies the further under-funding of public education in this province. It is, moreover, a turning point in the privatization of education in Ontario and so we shall begin there.
Tax Credit for Private Education
The “Equity in Education Tax Credit” will be phased in over five years, beginning in 2002. It will cover 50 percent of the eligible tuition, to a maximum of $700 in the first year, rising to a maximum of $3,500 annually in 2006 for each child.
Although the government allocated $360 million to primary and secondary education, this handout to wealthy elites is likely to cost $300 million in lost tax revenue.1 The government could have doubled the amount of money for education but chose to give it to the wealthy instead.
Critics also point out that this figure of $300 million is based on current enrolment numbers. The tax credit is likely to become an incentive that will increase the number of students in the private system and, consequently, the costs of lost tax revenues.2
To add salt to the wound, this credit is “refundable” in comparison with the current post-secondary education tuition credit, which is “non-refundable”. “Refundable” means that the credit will be paid to the claimant, if it exceeds taxes owing. Moreover, the PSE credit is approximately 24% of a $5,000 maximum, or $1,200. In comparison, the “Equity” tax credit is for $3,500.3
In fact, the so-called “equity” tax credit will have the effect of increasing inequality in Ontario.
Post-Secondary Operating Grants
The Budget indicates there will be an increase in post-secondary operating grants by an estimated $293 million by 2003-04 (Budget Paper B, p. 53). What does this mean? First of all, we should realise that governments fund post-secondary institutions according to the day to day expense of running the colleges and universities (operating costs) as well as on the basis of the longer term infrastructure costs of the buildings and physical plant (capital costs).
Enrolment and Funding:
To understand operating grant numbers, we need to look at enrolment projections in comparison with funding increases.
Government figures indicate there are 380,000 students in Ontario post secondary institutions. To really understand how funding works, however, we have to look at students differently. We need to count the “Full Time Equivalents” (FTEs). There are 263,400 current FTEs in Ontario’s colleges and Universities (2000-01).
The Ontario government projects increases of (approximately) 12% in enrolment by 2003-04. According to the Ontario Confederation of University Faculty Associations (OCUFA), this means 295,000 FTEs in Ontario’s Colleges and Universities.
Let’s look at enrolment increases more closely. It is assumed there will have been a 16.3% increase in enrolment in Ontario’s Universities between 1995-96 when this government came to power and 2003-04. During the same time, funding will have gone up by only 7.4%. If we were to count the effect of inflation on the value of the dollar, the increase would even be less. This is why OCUFA says the government is only funding the increase in enrolment at about 50 cents on the dollar.
|In 1995-96, operating grants to Universities were $1.814 billion. The government is projecting $1.948 billion for 2003-04.4|
Futhermore, the government only wants to count the increase in students from next year (2001-02) until 2005-06. So, their figures show an increase in 78,000 students.
The real figures show the increase is 88,000 students because the big increases in enrolment began in 1999-00. As a result, Ontario’s Universities and Colleges must absorb 10,000 students who are not covered by the new funding formula. The government says the extra $16 million they gave out last year was supposed to cover these students, but it is simply not enough.5
The Ontario Confederation of University Faculty Associations reports we can expect a decline of 22.9% in real dollars per full-time equivalent student funding between the academic year 1995-96 when the Harris government took power, and 2003-04 when the spending estimates for post-secondary education end.6
Access To Opportunities Program: A Public - Private Partnership
|78 m||87 m||86 m|
(Add this money to operating budgets. Budget Paper B, p.53)
In 1998, the Ontario government began to promote private sector investments to create spaces for students in Colleges and Universities. The government gave $150 million for a three year program to create 17, 000 new spaces for students in computer science and engineering. In July 1999, the program was expanded to a target of 23, 000 students. The government committed $228 million while the private sector invested $136 million. This program is known as the Access to Opportunities Program (ATOP). The funds are considered part of operating grants.7 The ATOP program encourages private companies to pay costs associated with running a public system. This is a clear example of privatization.
Operating grant increases will be allocated to Universities and Colleges based on their willingness and ability to accommodate enrolment increases. As well, a portion of operating grants will be allocated on the basis of arbitrary, and highly criticized performance requirements.
The Council of Ontario Universities argues that this system, which ties a portion of operating grants to graduate employment records, is “punitive and unfair”, and is turning universities into job-training centres. Last year, one third of universities got the largest amount of performance funding, the next third received less, and the bottom third received none at all, even though the difference between the “best” performer and the “worst” was only 10 percent.8 The differences in community colleges was even smaller and the effect highly arbitrary.
Inflation and Real Dollar Increases
The problem worsens, however, when we consider inflation. Current figures show an increase in the consumer price index of 4.3% in Ontario from April of last year. Nationally, the increase was 3.6%.9 The budget documents show a rate of inflation of 2.8% in 2001 and 2.0% in 2002. No inflation projections are given for 2003-04 or beyond.
Summary – Operating Grants
In summary, given the rate of inflation, together with increase in enrolment, privatization, performance requirements and long-term underfunding of Ontario’s PSE institutions, this government’s announced operating grants are insufficient to meet the needs of post-secondary education in Ontario. Furthermore, the manner in which these funds will be distributed reflects a highly interventionist government strategy that does not respect the autonomy of the University and, in fact, reinforces our concern that this government is committed to bring Ontario’s post-secondary education system wholly under the direction of corporate interests.
Capital Investment in Post-Secondary Education
|1,028 m||202 m||48 m|
SuperBuild public-private partnership has been already committed to establish 73,000 new student spaces with a $1 billion investment by the government, and $0.8 billion investment by private sector (Paper E, p. 177). Going by the more accurate figure of 88,000 new students, this means 15,000 anticipated new students are not covered. Post-secondary educational institutions are expected to find space by seeking out increased efficiencies. The government allocated an unexpected $140 million in 2000-01 for the renovation of existing post-secondary facilities (Paper E, p. 177), far less than what is needed to renovate and accommodate student demand.
SuperBuild and Public-Private Partnerships
This Budget indicates that the push towards privatization is continuing. Infrastructure continues to be a central target. The Ontario Financial Review Commission will report to the Minister of Finance on the government’s capital assets in order to track historic costs, replacement value, asset condition and deferred maintenance needs (Paper E, p. 155, 157).
Colleges and Universities are required to submit capital plan and investment reports. This is part of the government’s strategy to see whether “it has the right mix of assets and whether its capital investment strategy will lead to the desired policy outcomes.” (Budget Paper E, p. 158)
The Budget reports an expenditure of $100 million in funding for deferred maintenance at Ontario’s post-secondary institutions during the year 2000-01 (Budget Paper B, p. 43). This was a one-time expenditure not foreseen in last year’s Budget. The Canadian Association of University Business Officers reports it would cost $1.06 billion to pay for deferred maintenance at Ontario universities alone. That’s over $4,200 per student and more than 10 times what the government delivered in 2000-01.10 There is no new money in the 2001-02 Budget for deferred maintenance.
Also unforeseen in the 2000-01 budget was a capital expenditure of $60 million to establish a new post-secondary institution to be known as the Ontario Institute for Technology in Durham region (Budget Paper B, p. 54). The Budget does not mention operating grants for this institution.11
“Value for Money” Review
In order to absolve itself from years of underfunding, the Harris government has decided to blame Universities for wasting taxpayers’ money. We are about see a so-called “administrative reform” of the broader public sector that will incorporate “zero-based budgeting” and “best practices from other jurisdictions”. It is likely that “administrative efficiencies” will be sought directly from workers’ collective agreements. The private sector panel conducting the review will also evaluate the potential for privatization in the broader public sector.
The “Value for Money” Review begins with the question, “Is the government’s original policy intent for the activity still valid?” (Paper F, p. 181), but we expect that the Review will likely end with the question ‘How can we privatize this activity?’
“Accountability” and the Broader Public Sector
This government’s “accountability” agenda was introduced into Ontario’s post-secondary system last year when it first made a portion of operating grants contingent on meeting certain performance standards. It was refined through the work of the “Investing in Students” taskforce. Now, we are seeing the legislative aspect of this agenda which will bring us the “Public Sector Accountability Act” and the insertion of the so-called “Accountability Office” within the Ministry of Finance.
The objectionable aspect of this agenda is the presumption that the public sector ought to be disciplined while the private sector can go about providing educational services in an unregulated manner. What kind of accountability is there in a privatized system? What are the implications for our equity goals? What kind of quality are we to expect as our post-secondary educational system is undermined in favour of a completely commercialized institution like the University of Phoenix which is, at present, advertising a “Summer Promo” in which you can save up to $250 if you register for your on-line degree by May 31st”?
Ontario Student Loan program
Ontario student loans will be harmonized with the Canadian Student Loan Program. New legislation will establish a new entity to finance the program. Are we to assume this will be a private entity?
Ontario Student Opportunities Trust Fund
The government states that it has “raised” $600 million to assist students over 10 years.
Why is the government “raising” money for student assistance when it is giving away billions of dollars in tax cuts? The Budget documents reports that “Ontario’s general rate of corporate income tax is being reduced from the highest among industrialized countries to a level below all U.S. states” (Paper C, p. 82). Furthermore, corporations will be permitted tax-based incentives for research and development that undermine Federal Government taxation policies (Paper C, p. 97).
Ontario Graduate Scholarships / Aiming for the Top Scholarships
- Small increases; no significant changes.
Premier’s Platinum Awards
These awards will present $10 million over 6 years to reward best senior researchers in the province. This is an inadequate response to the needs of the research community and will reward the most secure, well-paid, established researchers. It is the new researchers and teachers who, especially if they are women and people of colour, face the stress, low-pay, and lack of benefits of the contingent workforce. Sessional workers are the University’s “flexibilised” workforce who, unless they are unionized, can look forward to an insecure working life within the University.
Money for training is expected to double the number of entrants to apprenticeship programs in the skilled trades from 11,000 in 1998-99 to 22,000. Funding will be $33 million per year. $50 million in capital funding over five years for an Apprenticeship Enhancement Fund for upgrades in Colleges (Paper B, p.54).
Proposed Changes to the Education Act
The Budget papers indicate the Government will propose changes to the Education Act. What changes are they proposing? (Paper C, p. 104).
A Final Note on Changing Discourse
In the Budget Papers, public sector organizations have been redefined as “Transfer Partners” (Budget Paper F, p. 187). This new term allows the government to present public sector and private sector organisations as equally entitled to public funding.1.C. Szklarski, “Tories Seek Support on Education”, London Free Press, May 14, 2001
2.April Lindgren, “Ecker defends private school tax break”, Ottawa Citizen, May 11, 2001
3.Arthur Drache, “Credit support private tuition”, National Post, May 11, 2001
4.Ontario Confederation of University Faculty Associations, Internal Analysis, May 2001
5.OCUFA, “Ontario 2001 Budget - Postsecondary Education Provisions
6.OCUFA, “Ontario 2001 Budget
7.Ministry of Training, Colleges and Universities, Government of Ontario, “Expectations Surpassed”, July 14, 1999 and “Preparing for the Double COhort: Backgrounder”, May 15, 2001
8.Tom Blackwell, The Sault Star, Wednesday May 16, 2001
9.Statistics Canada, “The Daily”, THursday May 17, 2001
10.Canadian Association of Unviersity Business Officers, “A Point of No Return: The Urgent Need for Infrastructure Renewal at Canadian Unvieresities”, Ottawa: 2000, p. 23
11.OCUFA, “Ontario 2001 Budget”opeiu 491