The University of Toronto is in negotiations with the Ontario government that would see Canada's top globally ranked university reduce the number of undergraduate students it admits and receive increased funding for research and graduate training, The Globe and Mail has learned.

Under the plan, which has not been finalized and is the subject of debate at the university's downtown Toronto campus, the university would see less of its provincial grant depend on undergraduate student enrolment and more on reaching performance goals, particularly in research intensity.

The talks are occurring as part of the province's long-term strategy to implement a "differentiation" framework for postsecondary institutions in Ontario. Agreements that will set out specific performance goals for each school are expected to be signed by summer.

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Many options are being considered, said Andrew Thomson, the chief of government relations at U of T.

"The province is asking all institutions to look at how to deal with the demographic position, which is showing a decline in the number of students available for undergraduate direct admission," he said.

Some universities in northern parts of the province are already struggling with a drop in the number of university-aged students, a decrease that will continue for several years and affect all of the province's universities and colleges. But the reduction in admissions being considered at the University of Toronto is sharper and longer than would occur through demographic changes alone, sources said.

Cuts of 2,000 to 8,000 over five to seven years are being considered, with reductions foreseen primarily at the school's landmark St. George location, multiple people involved in the discussions said. Approximately 24,000 full-time undergraduates attend St. George, with another 30,000 undergrads enrolled at the Scarborough and Mississauga campuses or in other departments.

The proposals are leading to anxiety and concern that the university will become even more selective than is now the case. Over the past five years, entrance marks at St. George have increased by 1 per cent to 88.5 in arts and science and by 3 per cent to 92.5 in engineering, according to University of Toronto reports.

"Why should we limit access to Canada's best university?" one departmental chair said, echoing the opinion of many departmental heads polled by The Globe. None among the roughly half-dozen faculty administrators wanted to be identified because consultation is continuing.

Many chairs said they support the broad goal of linking public grants to educational and research outcomes. But they question the fairness of a plan that could deprive students in the Greater Toronto Area, some from less advantaged backgrounds, of a U of T education.

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"What happens to first-generation kids if we reduce our intake of undergraduates?" one chair asked.

We "support the notion of more graduate students," another said. "But what does it mean to cut the number of undergraduates? I have raised the issue of diversity, I don't have an answer."

Maintaining accessibility is one of the university's most important considerations, Mr. Thomson said.

"That is our No.1 priority, making sure that access does remain," he said. "We are a destination of choice for GTA students and … we are fighting very hard to make sure that is reflected in the agreement." The steepest drop being floated is unlikely to be adopted, he added. "The number has not been determined, whether there is in fact a reduction has not been negotiated," Mr. Thomson said.

The negotiations mark the end of an era of expansion in postsecondary education, fuelled by an explosion in the number of university-aged students and the government encouraging institutions to expand access by basing grants on growth in enrolment.

In December, Ontario announced that it would implement a new funding framework in which the government and postsecondary institutions decide on an enrolment target. Growth far beyond the target will not be funded. Instead, colleges and universities will have to set and meet performance goals to gain access to another pot of money, estimated at about 15 per cent of a university's total public funding.

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The process "gives each institution the flexibility, in consultation with the ministry, to adjust their enrolment based on their goals and priorities, or to respond to student demand," said Tanya Blazina, a spokesperson for the Ministry of Advanced Education and Skills Development.

At the same time, the new framework envisions some compensatory funding for institutions that fall short of the target in a bid to tide them through the demographic trough.

Departmental chairs and faculty who have been involved in the U of T discussions say reducing admissions has been presented as a way to help those institutions grappling with weak demand. Students turned away from U of T would trickle through the system, filling empty seats elsewhere.

But choosing to cut enrolment is up to each institution, the government said.

If "institutions elect to reduce their enrolment … the ministry will ensure that any proposed decrease is consistent with our commitment to ensuring that every willing and qualified Ontario student has a place at one of our colleges or universities," Ms. Blazina said.

The talks show that universities need more flexibility in raising revenue, many chairs at U of T said. A deregulation of tuition fees would be one option, some suggested.

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The university maintains that the plan is part of its long-term strategy to emphasize its international research strength.

"What we want to do is think about what would be the best way to be able to ensure that we provide the best undergraduate experience and that students who come here really benefit from the .. opportunities of being in a research-intensive university," Cheryl Regehr, vice-president and provost, said. "There are many different options on the table."