david naylor, president of the university of toronto: final exam: the urgent need for a bold...

8/4/2019 David Naylor, President of the University of Toronto: Final Exam: The Urgent Need for a Bold Discussion About Can

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NOTES FOR SPEECH TO CANADA 2020 GROUP

Final Exam: The Urgent Need for a Bold Discussion

About Canadas Universities

By David NaylorPresident

University of Toronto

Ottawa, October 14, 2009

Check against delivery.


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Final Exam: The Urgent Need for a Bold Discussion About Canadas Universities 2

Its an honour to be speaking to this distinguished and dynamic gathering. I had wondered if the reference toa nal exam in the title might have brought back bad memories and scared more of you away. Happily not, Isee. And of course its just a gure of speech designed to emphasize that this is not some professorial lecture

I have as many questions as answers here, and Im looking forward to the discussion after we complete ourdinner.

Im especially delighted to see Dr Alex Himelfarb looking so happy and healthy. Mr Ambassador, welcomeback. I suspect that in Italy, you havent missed Canada very much. But I shall say only that Canada hasmissed you.

The structure of this talk is simple, as outlined on the slide. Ill move quickly and try to avoid repeating aloudthe data that you can read on the slides. Ive also set aside my related pre-occupation with the innovationeconomy, and focused quite narrowly on universities for this presentation.

Overview

Troubling signposts on the higher education landscape

Where do our research-intensive universities stand?

The business model of research-intensive universities

A national strategy for post-secondary education?

Broken telephone and the differentiation debate

Where do we go from here?


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The data on advanced degrees are also striking. About 1% of the population in the relevant age cohort graduatefrom university with a PhD or similar advanced degree, again below the OECD average, with many countriesrunning far ahead of us. Analyses by the Institute for Competitiveness and Prosperity strongly suggest that we

will lose ground economically unless these gaps are closed.

Last month the OECD released their 2009 version of an annual report entitled Education at a Glance. Thenumber of Canadians who earn bachelors degrees is clearly below the OECD average and well behind manyother nations.


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Various provinces are expanding graduate enrolments, with Ontario leading the way. Where, however, is thenational strategy to widen and deepen the talent pool across the country? Should we try to align federal andprovincial spending in support of graduate enrolment growth, or is that constitutional tiger country?

This chart compares the percentage growth in faculty and enrolment in Canadian and American publicuniversities since 1987. The impact of this trend has become obvious: A rising ratio of students to full-time facultyBigger classesAnd less personal interaction between university teachers and students. Notsurprisingly, when the National Survey of Student Engagement is administered across North America, studentsat Canadian universities give their institutions signi cantly lower scores in a variety of dimensions than dostudents at US peer institutions.

Yes, academic salaries have risen faster in Canada than some OECD nations. But differential salary growthaccounts for only a small part of this dramatic shift in student-faculty ratios. Fundamentally, its about funding.

Once upon a time, Canadas governments funded their publicly-assisted universities meaningfully better thanAmerican governments. Thats no longer the case. Overall funding per student has fallen behind in Canada from $2,000 more per student in 1980-81 to $8,000 less per student in 2006-07. That differential is biggest inCanadas largest province, and also, as youll see later, for research-intensive universities.

Losing Ground


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There are other troubling sign-posts. Post-secondary enrolments are falling in Atlantic Canada. Last year, forexample, President Wade MacLauchlan at UPEI advised his community that Nova Scotia universities had seena combined rst-year enrolment drop of 12.1% in a single year, while in New Brunswick rst-year enrolmentsfell 8.3%. Ontario meanwhile faces a demographic wave that could boost demand for seats in universities andcolleges by as much as 75,000 over the next decade.

What are we doing to foster inter-provincial mobility of students? And what exactly is the appropriate numberof in-province undergraduate seats on a population-weighted basis?

Let me keep looking east for a minute. I said on CBC radio a few weeks ago that, in many respects, the threeMaritime provinces have an enviable system of universities. Dalhousie as a research-intensive agshipRegional comprehensive institutions with speci c areas of research strength such as UPEI and UNB And,of course, a number of undergraduate-focused small universities that should be magnets for out-of-provincestudents

On that latter point, the US is known for small undergraduate colleges such as Swarthmore, Amherst, Williams,

Middlebury and Wellesley all highly sought-after and highly reputable. These elite undergraduate-focusedcolleges in the US are privately-funded and well-endowed. Compared to Canada, however, they are alsoextremely expensive.

Scanning Canada, these types of institutions are overwhelmingly concentrated in the Maritimes. And sadly,because of regional demographics, these excellent small colleges seem to be losing ground.

Demographic Imbalance


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Not surprisingly, some Maritime institutions are looking to draw more international as well as out-of-provincestudents. Thats a desirable trend nationally, so lets look at international student recruitment.

In April 2009, Australia had 436,895 full-fee international students on student visas, more than three timeshigher than Canada. Small wonder that international education is the third largest source of overseas earningsfor Australia, generating around AUS$12 billion in 2008 and supporting more than 125,000 jobs

What accounts for the difference? Better weather certainly helps! But so does coordination. Australia is afederation like Canada. Unlike Canada, it has a national ministry with a higher-education mandate and a laser-like focus on building a coherent brand for overseas student recruitment.

Education Destinations

123,901International students (2008)

436,895International students (2009)

Missing Persons


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One last signpost A few years ago, the Chretien government introduced some reimbursement for theinstitutional costs of research. Sometimes misleadingly called overhead costs, or worse yet, indirect costs, theseare real costs that all universities incur when they support research by faculty and students.

In Europe these costs are reimbursed at about 48 cents on the dollar. The same is true in the UK. In theUS, both NIH and NSF grants are covered with actual audited costs, which can run to 80 cents on the dollarfor advanced bioscience and natural science grants, but average about 57 cents currently across all sites anddisciplines.

As the slide shows, the formula in Canada is perverse. The more successful the institution, the larger its losswill be in absolute terms. There is no other jurisdiction in the world that systematically penalizes success thisway.

Please understand that there are no meaningful economies of scale at work here. In fact, the inverse is true.

Those institutions that have the biggest research budgets are most likely to be doing the types of research thathave higher institutional costs. This unfunded mandate takes a serious bite out of about 20 universities coast tocoast, many shown on the next slide.

ICR Formula in Canada

Based on the average funding received by university/college

researchers from the 3 granting councils over the 3 previousyears

Coverage on: The first $100,000 per year = 80% The next $900,000 per year = 50% The next seven million per year = 40% The balance = up to an average rate of 20%, based onavailable funding


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Were all committed to research and proud to receive competitive federal grants, but lets not fool ourselves.The institutional costs of research have to be covered from somewhere. And that somewhere is theundergraduate classroom.

Just how big is the bite at the countrys largest research institution?

Perverse Incentives

Missing ICR: A Heavy Cost University of Torontos rate of ICR coverage from the Federal

Government = 19.7%

2009: U of T awarded $38.8m to cover institutional costs associated withfederally sponsored research

How would this compare to other common rates of coverage? European rate (48%) = $95m US average rate (57%) = $112m

If U of T were in the USA, it would receive an additional $73.2m per annum to cover the institutional costs of federal research

Big enough to make life a lot better for a lot of undergraduate students. Bigger, in fact, than the pay-out fromour endowment at peak in 2007.


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At this point, were starting to get into the mechanics of research university operations, so its a good time toshift gears. Youll probably have inferred that I believe we need to think harder about the overall plan of ourpost-secondary systems and raise all boats coast to coast. But unsurprisingly, I also believe we need to payclose attention to the institutions that presumably will carry a rather large load in dealing with the future needsof the innovation economy, not least graduate education.

Let me start with a disclaimer. I dont believe that superior research performance means that a particular

university is better than others. And I dont particularly like the word elite in relation to universities, becausea big part of our role in a decent democratic society is to be springboards to equality of opportunity based onmerit and motivation. Stronger research performance, however, does mean that a given university is bettersuited than others for educating larger numbers of research-stream graduate students and may well haveadvantages in some professional programs.

Research universities, moreover, are also great places for academically-gifted undergraduates. They give youngpeople exposure to some of the nest minds in the country, scholars who are rede ning entire elds. Andthey offer a wide range of intellectual and extra-curricular opportunities for personal growth. That said, manyundergraduates will do as well or even better in very different environments, including regional comprehensiveand undergraduate-focused universities.

Many US states weigh these realities, and try to clarify roles and responsibilities for universities. The mostdramatic example is Californias three-tiered system. It features excellent community colleges, the Californiastate campuses that offer undergraduate and professional-stream graduate degrees, and the University of California research-intensive campuses. There is carefully assured mobility across the tiers.

The result of this differentiation is interesting. There are 11 publicly-assisted U Cal campuses with a strongresearch mandate serving a jurisdiction of 36 million people. The performance of those U Cal institutionsspeaks for itself. Berkeley alone has 7 Nobel laureates currently on faculty. More generally, faculty andresearchers across the U Cal system have won 57 Nobel prizes, 24 since 1995, including 2 this year.

In contrast, this year Canada has again been left to claim re ected glory because one of the US laureates inMedicine completed a baccalaureate in Canada and one in Physics was educated here at McGill to doctoral levelbefore doing all his Nobel prize-winning work in the US. Its a bit depressing.

The good news, however, is that wedo compete very seriously on theworld stage.

These are this years assessmentsof overall science and social science

publication output and impact from aneutral third party the HigherEducation Evaluation andAccreditation Commission of Taiwan.

Taiwans Take


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The picture gets more interesting when we break the data down by discipline.

Ive added two universities to the usual 13 research-intensive suspects because they highlight a key point in anydebate about the future of our universities. The University of Guelph and the University of Saskatchewan aspictured here are global players in agricultural science. Youll also see specialization at work within the G13 for example, the University of Waterloo competes well in engineering. Those of us who favour a more strategicand differentiated approach to university funding would strongly advocate investing in such foci of excellencewherever they are found.

More recently the Times Higher Education Journal has held its annual beauty contest among global universities.Canada is holding its own.

Peer Review by 9,386 Professors


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McGill has again led Canada in overall score, sitting 18 th worldwide. U of T again leads the academicreputation assessments, sitting 9 th globally. And as the data on the slide indicate, the peer survey results showthat many Canadian institutions are perceived to be doing very well in speci c disciplines.

On the other hand, as countless observers have noted, the real trend of interest is the slow but steady ascent of universities in Asia.

Asia Rising?

While the Chinese institutions dont seem to be moving very fast, let me offer two warnings.

First, I think here of Maos perspective on Americas global success, about which he is reputed to have saidIts too early to draw any conclusions. 1 China is a very patient giant.

Second, I have visited top Chinese institutions such as Beijing, Tsinghua, and Shanghai Jiao Tong. They aremuch smaller than most Canadian research universities, with 50% graduate enrolments. They also pick the verytop undergraduates from among millions of candidates who undergo national standardized examinations at theend of high school. Those entering undergraduates in turn are put through extremely demanding programs. Allstudents live on campus thats a requirement. The campuses are large and extremely well-equipped. Andtheir student-faculty ratios are dramatically lower than our strongest research-intensive universities.

How did this happen? Because the Chinese government has explicitly embraced differentiation of universities,pushing 10 institutions out of thousands to compete globally while supporting another 90 to be nationalinnovators and because the major hub cities in China also use their substantial revenues to supportuniversities.

1 Since preparing these notes, Ive been advised that the paraphrase is apocryphal and almost certainly derivedfrom Chou En-lais comment on the French Revolution. Fortunately, the point stands given the proper source!


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It turns out, in fact, that those leading Chinese public universities are remarkably similar in size and graduatecomposition to some of the best known US private universities. So, lets come back to North America and divedeeper into the business model of research-intensive universities.

A glance at this slide shows that none of our public universities come close to the Chinese model. In fact, mostof our institutions with the exception of Dalhousie and Queens, are big. They are big because they have bigundergraduate enrolments. In fact, you can readily add York University and the Universities of Manitoba andSaskatchewan to this list because they also have large undergraduate enrolments.

Now, lets add the US research-intensive institutions to this picture.


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Its a cluttered slide, I know, but all you need to do is glance at the left-hand side, and youll see instantly howthe US private institutions set themselves apart with their massive per-student funding advantage. The topChinese universities would t very nicely here.

Now, let me confess that U of Ts position on the far right involves some dramatic license on my part.Remember that we have three campuses. There are about 17,000 full-time equivalent students on our newer,

primarily undergraduate campuses in Scarborough and Mississauga. The US public comparators involve themost graduate-intensive campus in multi-campus state systems. Thus, our original St. George campus isactually the appropriate comparator for the US universities shown here. Displaying that campus in isolationwould line Toronto up very closely with several US public institutions in the right-sided cluster. 2

But what matters more is the fact that theres lots of overall size alignment across the board between USpublics and Canadian research-intensive universities. Smallish, biggish, or really big, there are peers inoverall enrolment. Where the peers differ across the border is in the proportion of graduate students. The USschools, ceteris paribus , are more graduate intensive. And thats where we come right back to the issue of funding models.

I said earlier that Canadian universities had all lost nancial ground to US public universities over the last twodecades. The biggest gaps, however, have emerged for our research-intensive institutions.

This slide shows funding for the University of Toronto compared to two of the major public researchuniversities in the USA UCLA and the University of Washingtons agship campus in Seattle.

2 Intriguingly, the graduate-intensity of the St. George campus is partly dependent on the newer campuses,both because of revenue ows and because of the role of professors on those campuses who supervisegraduate students on the St. George campus.

Institutional Revenue per FTE


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Institutional Revenue per FTE

These comparisons suggest that Canada has inadvertently created a funding model that penalizes universitiesin lockstep with their research-intensity and the proportion of graduate and professional education that aninstitution undertakes.

The speci c funding differences are clear. Federal funding is the biggest factor, but state appropriationsin California are also dramatically higher. Encouragingly, tuitions are not a big part of the total funding

differential. These ndings can be generalized for all of the so-called G13 in Canada.

Here weve done a soft-ball match-up not the top research-intensive public universities in the US, but awider set of comprehensive public institutions that have health science faculties, or at minimum, some strengthin science, technology, engineering and mathematics. Again, federal and state funding is a meaningful part of the Canadian-US gap.

Before summarizing, let me pause to put a few major caveats on the table.

First, faculty and staff at all of Canadas universities are well aware that these are tough economic times, andmost of us feel very fortunate to be securely employed and well-compensated.

Second, big or small, Canadas universities have undertaken a variety of innovative steps to compensate forbudget pressures and staf ng shortfalls.

Third, contrary to some popular mythology, faculty members at universities across Canada have a strongcommitment to undergraduate teaching. At the University of Toronto, for example, we expect top scholars todo their fair share of undergraduate teaching. Scores of endowed chair-holders, Canada Research Chairs, andmajor research prize-winners in Toronto can be found teaching undergraduates with verve and enthusiasm.


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Now, to summarize: The prevailing business model in Canadian universities relies unduly on underfundedundergraduates to underwrite underfunded research and underfunded or, in some provinces, unfunded graduatestudents. Its simply not sustainable.

At this point, with dinner waiting, let me start turning the discussion back to you. Ill do so by revisiting brie ythe so-called Big Five controversy of the summer and early fall.

What an all-Canadian tempest in a teapot. And what a dramatic example of broken telephone.

Broken Telephone (Modern Version!)

This spring, the heads of ve institutions that account for a substantial amount of the research and graduateeducation in Canada had a conversation with each other about the ongoing challenges facing our institutions,other research-intensive institutions, and universities coast to coast. For reasons you will now understand,our assessment of the higher education scene was unsettling. One of our number approached Macleans to setup a videoconference. I think Paul Wells and the Macleans team did a very reasonable job distilling out ourconcerns, and they pro led my core views accurately.

But then the fun began


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The media had a eld day, as other university leaders came rushing forward eagerly, apparently seeing anopportunity to harpoon the big whales and get some positive publicity. Editorialists red lightning bolts,defending their local institutions. Of course, once the dust settled, a few members of the G13 realized that,as Indira Samarasekera had said in the Globe and Mail , our concerns were very salient to at least 20 to 25institutions coast to coast and belatedly started to speak out on the other side of the issue.

Indeed, reading a transcript of the Macleans videoconference highlights the scope of the misinterpretation.First, there was no concrete proposal, rather an airing of concerns and discussion of some of the strategies thatmight mitigate them. (Yes, group therapy is obviously perilous with journalists in attendance!)

There was strong support voiced for primarily undergraduate institutions, and an urging that we needed more of them. Some reports to the contrary notwithstanding, there was never a suggestion that other comprehensive orresearch-intensive universities should abandon their graduate programs and their research portfolios to becomeundergraduate-only institutions. I understand that university presidents are not perceived to be the sharpesttools in the academic shed, but I do not understand how colleagues or reporters could assume that ve seasonedacademic leaders would propose such an idiotic concept.

That, however, wasnt the end of the game of broken telephone. We had aired some concerns about thepoliticization of research funding. We expressed sincere appreciation that growth in core research funding atthe federal and provincial levels had allowed meaningful diversi cation of the system, and we urged that thisemphasis on excellence through peer review should continue and be intensi ed, along with some clari cationof mandates again based on adjudicated excellence. This position, amazingly, was also turned upside down inthe secondary media coverage. Now we were ganging up to steal research money from smaller universities, andclaiming an entitlement to funding based on size or prestige rather than competitive merit.

Exam Question

Indicate which of the following best completes the sentence:

All is fair in

1. Love2. War 3. Journalism4. Academic politics5. All of the above


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Mums the Word

A slowly-growing list of things Canadians cant talk about

1. Universal Healthcare

2. Fiscal Federalism / Equalization

3.

A Systematic Approach to Modernizing Universities

It was somehow tting that one of my favorite columnists accused us of proposing a bad idea, badly presented.Badly presented it surely was, but at least I can af rm that there was no one bad idea because we simply werentthat organized!

For a while, it seemed that we were about to add debate about our universities to the growing list of topics thatCanadians cannot raise without outbreaks of mass hysteria. There is, however, a reasonably happy ending, ormore accurately, a happy beginning to this story, because Paul Wells and the team at Macleans have indeedstarted a debate that is overdue.

I am struck that many colleagues in leadership roles at universities across Canada, having vented their concerns,are willing to acknowledge that it would be useful to clarify who is supposed to do what, as long as all boatsrise and ongoing institutional and faculty creativity isnt sti ed.

I think there is belated recognition that we need major research universities with a broad graduate educationmandate, exciting regional innovators with foci of global excellence like the Universities of Saskatchewan andWaterloo, and undergraduate-focused institutions like Acadia or St. Francis Xavier that can become our answersto Swarthmore or Amherst.

Above all, I think the debate has again highlighted some major challenges in the core nancing of our nationsuniversities.


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In closing, and here I am being mischievous, please remember that, after all the distortions and heateddenunciations of the musings of the so-called Big Five this summer, something very interesting happened.The Globe and Mail ran an on-line poll that drew over 11,000 responses. The question posed in that poll isshown on the slide.

Globe & Mail Poll August, 2009

Now, as I said earlier, the word elite in the question leaves me cold, but the results of the poll are not exactlyequivocal. 63% of respondents voted in favor, a result that has about a one-in-a-million chance of being a uke.Every majority-hungry politician in this town would love those numbers. And that, among other reasons, iswhy I am con dent that the debate about universities in Canada is far from over.

Thank you for your kind attention, and I look forward to the discussion after dinner.

david naylor, president of the university of toronto: final exam: the urgent need for a bold...

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