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Tallying the pandemic’s financial toll on universities

‘We are cautiously optimistic that we are entering the recovery phase,’ one comptroller says.

BY SPARROW MCGOWAN | OCT 22 2021

With one of the most difficult academic years behind the Canadian postsecondary sector, universities are starting to see the full financial picture of operating in the midst of a pandemic. Travel restrictions, the pivot to remote learning and the resulting empty campuses have proven challenging for a system that relies increasingly on revenues from tuition and ancillary services.

A recent Statistics Canada report estimates that universities across the country may have lost between $438 million and $2.5 billion of projected revenues for 2020/2021. The report bases its predictions on three projected scenarios, with an anticipated drop in international student enrollment a key factor in each. It also considers variations in domestic student enrollment, and the impact of $450 million in federal funding, announced in May 2020, to help researchers during the pandemic.

At the University of New Brunswick, a reduction in tuition revenues was a big reason that the school incurred a deficit of $9.7 million in its 2020-2021 operating budget, a spokesperson said in a statement. While “the majority of current international students who opted to remain in New Brunswick/Canada since March 2020 returned to UNB to complete their studies,” the statement continued, there was “a 40 per cent decrease in new international student enrolment over 2019, with many students choosing to defer their admission to Fall 2021.”

The University of British Columbia was able to meet the tuition revenue expectations set out in their 2020-2021 budget, said UBC comptroller Karamjeet Heer, but those expectations had already been reduced. “When we did a budget, we projected a decline in the number of students that would attend during the pandemic and we anticipated that some of these students may not take a full course load,” she said.

The situation proved more positive at Bishop’s University in Quebec. “In terms of tuition and government grants, we were more or less where we were planning to be before the pandemic,” said Isabelle Goyette, vice-principal, finance and administration. “We were not anticipating [remote learning] to be as successful as it was.”

The nimble move to remote learning at Bishop’s and other Canadian universities may have prevented a more severe decline in enrollment, particularly among international students. However, several universities said another key source of revenue saw a significant decline because it couldn’t be offered remotely.

Ancillary services hit hard

Simon Fraser University’s vice president, finance and administration, Martin Pochurko said that while the university’s international student enrollment actually increased slightly, ancillary services bore the brunt of the pandemic’s impact on SFU operations. “Dining services went down to zero. Parking went down to zero. In residence and housing, I think they had a few people, but not many,” he said. “It was devastating, for sure.”

The situation was similar at UBC, where Ms. Heer said the operating fund deficit of $62 million “was mainly due to lost revenues for student housing, food services and parking.” She said the university will absorb these losses over the next several years. But with the return to in-person learning, UBC is expecting ancillary revenues to return to normal. “We are cautiously optimistic that we are entering the recovery phase,” Ms. Heer said.

The shift back to in-person learning has also meant that some schools are seeing an uptick in international students and a rebound in the significantly higher tuition fees these students pay. UNB said that early numbers suggest international enrollment will match fall 2019. At SFU, Mr. Pochurko said, there has been a “slight softening” in international enrollment, with a decline of about two per cent. But “the counterbalance that we’re seeing is an even stronger domestic demand.”

Students are also back in university residences, although in some instances at reduced capacity to accommodate COVID-19 protocols. UBC is holding some rooms for possible self isolation requirements, while Ms. Goyette said that Bishop’s decided to avoid room-sharing, which translated to a 20 per cent reduction in occupancy.

The return to campus this fall may also cause financial strain in a new area. “The last year in COVID was an unrealistically low year in terms of expenditures,” said Mr. Pochurko. “People weren’t doing office renovations, they weren’t buying furniture, they weren’t travelling or doing any of those things, which saved more than what COVID was costing us.” With the academic year underway, he said things will likely swing the other way. “Our costs are going to drive up higher than normal coming out of COVID.” He noted that there have also been surprise costs with the return to school. For example, the appetite for online meetings has continued but the campus network can’t keep up and needs to be upgraded. “It’s just crushing the Wi-Fi,” Mr. Pochurko said.

While adapting to the pandemic has been demanding, some argue that the financial vulnerability of universities in this country is nothing new. Earlier this year, the Royal Society of Canada (RSC) released a policy briefing titled Investing in a Better Future: Higher Education and
Post-COVID Canada. It made a number of recommendations to support universities through the pandemic and beyond. Julia Wright, a Dalhousie University professor and chair of the RSC higher education working group, which penned the report, said “all of the places that have been turned into food courts, all the extra fees and building new residences” are an extension of the growing reliance on students as a source of money to run universities. That’s because students are the only revenue source that universities can manage, she said. “When the government says no, there’s nothing they can do. Really, the only way of significantly addressing the revenue shortfall is through students.”

Dr. Wright said that declining public funding for higher education has been a concern since the late 1990s and continues to go unaddressed. “It’s very easy for decision-makers to basically respond to it like: ‘It’s Chicken Little. The sky is falling.’” But Laurentian University’s declaration of financial insolvency this past spring showed “that the sky can actually fall,” she said, “and I hope that is taken very seriously.”

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