Alberta pulls back on performance-based funding, briefly

Alberta’s universities are enjoying a reprieve from the threat of heavy performance-based funding limits on top of deep provincial budget cuts, although they aren’t expecting much more than a short-term postponement.

After persistent lobbying by the universities, provincial policymakers have agreed during the Covid emergency to tie just a single institutional performance measure to only 5 per cent of each campus’ government-supplied money.

Universities “spent a lot of time” with government “helping them understand” that the pandemic is a bad time to begin a major new funding innovation, said Michael Mahon, president of the University of Lethbridge.

But performance-based funding, understood from experience elsewhere to be more about politics than proven effectiveness, seemed destined for revival, said Professor Mahon, who chairs the Council of Post-secondary Presidents of Alberta.

“I think they’re pretty set on performance-based funding,” Professor Mahon said, “and we haven’t been able to take them off that.”

Most US states have tried some form of performance-based funding, in which they connect a share of their funding for institutions to various types of performance benchmarks, and the idea is gaining attention in Canada.

The nation’s other major adopter is Ontario, which plans by 2024 to use performance metrics to allocate 60 per cent of the money it gives its 45 public colleges and universities. It agreed almost a year ago to delay implementation during the pandemic.

In Alberta, the government plans to set out 10 performance metrics – in areas that include student employment and research revenue – that will determine 40 per cent of each institution’s provincial funding.

For the province’s 26 public institutions, the stakes are especially high because Alberta is at a half-century low in its critical oil revenues, and has already cut funding for higher education by 22 per cent over the past four years.

“The province is in a very tough spot,” conceded William Flanagan, president of the University of Alberta.

He described himself as ready to meet the challenge, even as his institution absorbs half of the higher education cuts across Alberta – C$230 million (£133 million) from 2019 to 2023 – while having only about a quarter of the students.

The university expects to cope, Professor Flanagan said, by consolidating many administrative and academic functions, raising tuition fees by 7 per cent a year, and growing enrolment.

On top of such cuts, the government of Jason Kenney, head of the United Conservative Party, has pursued the performance-based funding model and argued that it must be large enough to truly drive institutional behaviour.

Alberta’s university leaders do generally agree that their operations have been comparatively well financed, and that some amount of funding reduction is warranted given Alberta’s budgetary challenges.

But the speed of those cuts has overwhelmed many institutions, he said. “You can’t change that overnight,” Professor Mahon said.

Meanwhile, experience in US states that have tried performance-based funding models has shown they can produce negative incentives, such as avoiding the enrolment of disadvantaged students, while generating little meaningful improvement in the targeted areas.

Even reversing the approach – by offering additional funding for meeting goals rather than withdrawing money for failures – seemed preferable, Professor Mahon said. While that kind of shift could still deliver the same amount of total government dollars, an additive format would at least offer the benefit of giving institutions more predictability in long-term planning, he said.

At the University of Alberta, Professor Flanagan said he shared the concern over performance-based funding. “I do think it’s really important that the government be thoughtful in how it proceeds,” he said, “so that we don’t have these unintended consequences.”

paul.basken@timeshighereducation.com