Educated Spending

Posted September 7, 2012

Spending on schools, universities, and the Nova Scotia Community College is the second largest provincial expense, after health. Government has made some good choices, but major challenges remain.

Spending on post-secondary education is potentially the most valuable economic development investment the province can make. The institutions provide more than 11,000 direct jobs, most of them high-paying. And we are net importers of more than 5,000 students, each of whom spend more than $15,000 on local goods and services.

But the most valuable contribution is the creation of skills that can compete in the global economy. Unskilled labourers will not be able to compete with counterparts in emerging markets, even at minimum wage rates.

The starting point for dealing with universities has been the excellent report by Tim O’Neill published in September 2010. In accordance with that report, government has allowed tuitions to rise by 3% annually for most students. Rather than constraining growth in grants as O’Neill recommended, it has implemented a series of cuts which universities have had to absorb, in addition to inflation.

This has increased pressure on financially troubled institutions, most notably NSCAD, to come to grips with their challenges. The province has wisely not forced NSCAD into merger discussions but is requiring it to come up with a viable plan, of which merging or affiliating is one option.

Funding for all institutions will become increasingly tied to university enrollments. Although superficially attractive, this approach encourages universities to keep programs that are not needed.

For example, we are still graduating some 400 teachers per year, in addition to hundreds more who are certified after studying elsewhere, usually with the benefit of student loans. Yet government’s only recent decision in this area has been to increase the number of institutions providing teacher training. We are thus spending taxpayer dollars to force many of our best and brightest young people to leave the province in search of employment.

On the other hand, organizations like Acadian Seaplants and Ocean Nutrition benefit from the diverse group of ocean scientists in the province. NSCC works in close collaboration with aerospace firms such as IMP, Lockheed Martin, and Pratt and Whitney to provide the skills they need. Acadia has recently established new research facilities in support of tidal energy and the growing wine industry.

At the primary and secondary level provincial school boards are dealing with declines in student numbers, the pace of which will accelerate in the next few years, particularly in rural areas. Both teaching and non-teaching positions have been reduced. The prospect of school closings is devastating for many communities, and tends to accelerate the shrinking and aging of their populations.

Less visible is the biggest problem with the cost of education, and consequent threat to funding for schools and universities. The Teacher’s Pension Plan funding deficit as of the end of 2011 was $1.655 billion, more than an entire year’s budget for schools and universities. Paying for this is a huge burden on taxpayers, and on active teachers, who are paying for a pension indexation benefit that they will likely never receive unless the plan is changed. Although previous Finance Minister Steele acknowledged the need for action on the problem in January 2011, nothing has been done about it, and the passage of time only makes it worse.

Both school boards and universities are under intense funding pressure. At the same time, the annual cost of financing that pension deficit is large and growing. It is irresponsible for the government to let this problem fester.

Scholar Dollars