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College faculty

Brain Drain or Financial Drain: The Challenges Facing Canadian Universities

Strategic Insights

— 2 min read

Canadian universities are facing a perfect storm of financial challenges, including a 10-per-cent cut in tuition fees for domestic students in Ontario, tuition freezes, and low academic salaries compared to their US counterparts. This, combined with healthcare challenges and a lack of support from the federal and provincial governments, is making it difficult for Canadian universities to attract top academics from elite US universities.

Key Takeaways:

  • The Ford government's 10-per-cent cut in tuition fees for domestic students in Ontario in 2019/20 was followed by five years of domestic tuition freezes, representing a cut of approximately 24 per cent in real terms.
  • Universities in Ontario are rapidly running down reserves while cutting anywhere they can, and will need to make significant layoffs over the next two years if the policy environment does not change.
  • Academic salaries are typically much higher in the US than in Canada, with top professors at the Harvard Business School earning over US$1,000,000 per year, compared to under US$500,000 for the top academic at University of Toronto.
  • Health care differences between the US and Canada make moving to Canada less attractive for top US academics, who would struggle to access family doctors and private health insurance in many parts of the country.
  • The QS ranking places Harvard University 5th in the world, while nearby MIT ranks 1st, and Canadian universities are ranked significantly lower, with McGill at 27th and University of Toronto at 29th.
  • A 2021 Conference Board of Canada report found that universities' annual activities and human capital development is equal in value to 11.7 per cent of Ontario's GDP.
  • The Canada Research Chair program needs to be revamped, with the annual transfer from the federal government to the university for a given category of chair having not changed since 2000, resulting in a real-terms decline of approximately 40 per cent.

Statistics:

  • A 24 per cent cut in real terms in domestic tuition fees for Ontario students.
  • Universities in Ontario are projected to need to make significant layoffs over the next two years if the policy environment does not change.
  • US$1,000,000+ per year for the top professors at the Harvard Business School.
  • US$500,000 or less for the top academic at University of Toronto.
  • 11.7 per cent of Ontario's GDP in value generated by universities' annual activities and human capital development.
  • 40 per cent decline in real terms in the value of Canada Research Chair grants since 2000.

Sources:

  • [The Globe and Mail: Jason Klavel, "Why Trump's attacks on universities could help Canadian schools"]
  • [The Conference Board of Canada: "The Economic Impact of Universities in Ontario"]
  • [QS World University Rankings]
  • [Government of Ontario: "Budget 2019"]
  • [Government of Quebec: "Funding for English-language universities in Quebec"]
  • [Harvard University: "Faculty and Staff Salaries"]

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