Alex Usher of Higher Education Strategy Associates has spent the last week on his blog going through an analysis of the financing of Canadian universities His final post on the subject today provides a convenient summary showing that while total dollars per student has grown substantially over time, the academic operating side of the university as a share of total budgets has declined even as academic salaries have risen.Essentially, other parts of the university were receiving money at a faster rate than the operating budget.The big culprits were scholarships, utilities and to a lesser extent central administrations.As a result, while per student income has grown, faculty-student ratios have fallen.

His conclusion: “Billions of dollars went into the academy in the last twenty years, coming from students, government, and other sources. But a disproportionate amount of that money went into non-operating areas (such as research). And a disproportionate amount of operating money went into areas other than academic salaries. And average faculty wages rose substantially in real terms.”

However, Alex Usher then goes one step further and assigns the blame for all this when he notes: “And it's worth underlining here: virtually all of this has to do with changing priorities within the academy, not changes in government policy. It was universities who urged the new focus on research. It was universities which made the decision to favour other spending categories over academic salaries. It was the academic community as a whole which decided to pay more money to fewer professors, rather than keep salaries stable and hire more staff. No one made the academy do this. It's a self-inflicted wound.”

I’m not sure I agree with this. Borrowing from Oscar Wilde, the truth is rarely pure and never simple. Yes, universities and their academics definitely like the higher status research affords and would be complicit and accepting of government initiatives that promote research spending and capital projects designed to expand “research infrastructure.” They would even lobby for and promote them. However, go back a few decades to how this all began.

The fiscal crunch of the early 1990s in Canada meant cuts and freezes to government operating grants for universities spawning the search for more revenues such as higher tuition fees. As government budgets began to recover, universities began to clamor for grant funding increases but it was not business as usual. Governments wanted to see value for money and innovation in university practices. Universities responded by making the case for research and innovation as economic drivers for the economy and for expensive technology in the classrooms as ways to enhance student learning. Universities sold government a bill of goods but governments were keen to buy. Politicians love a photo-op and ribbon cuttings at a cyclotron are more impressive than one for smaller class sizes. Governments began to invest in buildings for research, research chairs and funding for new initiatives but they also wanted universities to often match the funding which meant more money had to come from budgets elsewhere in the university. Academics were co-opted by granting them higher salaries in return for cuts in department staffing and re-allocating hires to exciting new departments and programs.

That is what brings us to the present. Government has been helping set university spending priorities by structuring funding incentives for universities to respond to. It takes two to tango. Given the large proportion of university budgets still accounted for by government funding as well as the increasing quantity of government curriculum regulation it is only logical that if governments want to improve the quality of the undergraduate student experience they will have to help lead the way. Tell the universities they will only get new funding for initiatives that lower the student to faculty ratio and they will respond accordingly. In the end, we all respond to incentives.