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No, it does not cost $26K to educate a student

By: | May 3, 2017

In the fight over post-secondary funding, incorrect math is being used for political purposes.

Hans Rollmann
To Each Their Own examines political issues impacting Newfoundland and Labrador.

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Memorial University President Gary Kachanoski, Vice-President Academic and Provost Noreen Golfman, and Vice-President Administration & Finances Kent Decker react to a MUN student's question at the April 26 town hall on budget cuts to the university. The student, Kerri Neil, asked why the university is spending millions on headhunters, and why Kachanoski "feels he is worth more, and should earn more, than the prime minister of Canada?" Memorial University / YouTube.

A high-profile tiff has broken out between Memorial University’s senior administrators and Advanced Education and Skills Minister Gerry Byrne over Memorial’s financial reporting and analyses.

The dispute was sparked by senior university administrators’ plans to raise fees on students by 16.3 percent—plus add hundreds of dollars in additional service fees—in order to, they claim, cover funding cuts from government.

Byrne criticised the proposal by indignantly proclaiming he’s not convinced the university actually needs the extra money it seeks to get from student fees. He feels Memorial can live within its budget by achieving other savings and measures that don’t involve fee increases, and has threatened to withdraw more funding from the university if they move to increase fees on students.

In one of the most recent exchanges, Byrne also suggested the university was improperly reporting financial data and miscalculating the ‘costs of educating a student’. In St. John’s, at an April 26 university town hall on the fee hike proposals, the administration sanctimoniously objected to this criticism.

The university’s Board of Regents also weighed in on the matter, issuing a statement affirming full confidence in the university administration (as opposed to the government, one presumes). They also stated that financial and enrolment data should not be used to make the sorts of claims that were being made (by both sides) about how much it supposedly ‘costs’ to educate a student.

Two wrong answers to the wrong question

Central to this argument has been the question: What is the cost of educating a student?

The two sides have pitched different figures. Byrne accused MUN of misreporting data and inflating the cost to something like $31,000 per student. At last week’s town hall, Memorial administrators pegged the figure at $26,000 per student.

Both numbers are out to lunch.

The truly damaging aspect of this fight is not the university’s reputation, but rather the fact that the argument perpetuates a completely fantastical fiction about an imaginary ‘cost’ of educating a student. It’s important to break this down.

Both sides’ claims about the ‘cost of educating a student’ are bogus because they’re produced through a ridiculously simplistic mathematical calculation: dividing the university’s budget by the number of its students.

The university performs two primary functions (and several other lesser functions, but we’ll set those aside for the moment): teaching students, and doing research. Neither of the ‘cost’ calculations distinguish between university dollars going into research and university dollars going into teaching. If the university divided those functions by half, then automatically the ‘cost of educating a student’ drops by half. It’s almost impossible to determine the breakdown between teaching and research, however, as many faculty see their duties as being part research and part teaching, while some professors do only research and others do only teaching. The ratio tends to vary immensely from year to year and person to person.

Photo by Justin Brake.

Estimates around the ‘cost of educating a student’ don’t take into consideration the net benefits having more students in N.L. bring to the provincial economy, says Hans Rollmann. Independent file photo.

But there’s also plenty of other money that goes into research: research staff, research facilities, research publications and equipment and marketing and grant applications. How much of the university budget goes into these things, and not into teaching students?

Also, as students (and faculty, and staff, and others) have vociferously complained, there’s plenty of other spending at the university that doesn’t go into teaching students either. Why are public relations agents’ budgets being calculated into the ‘cost of educating a student’? What about the expenses of the Battery takeover and renovations? The president’s and provost’s extensive travel around the world ‘networking’ with people? The millions of dollars spent under the chief risk officer’s portfolio?

Consider the growing fiscal empire of the university’s chief risk officer—$3.7 million in that unit in salaries alone and counting, according to the presentation at the university town hall. Risk management personnel include the people who spend a great deal of time telling students that they can no longer do fun (if remotely risky) things, like have climbing parties at Wallnuts, or sell grilled cheese sandwiches on campus. Students would much rather those millions be spent elsewhere — for instance, in lowering the costs of their education (so they wouldn’t need to host parties at Wallnuts or sell grilled cheese sandwiches as fundraisers).

Students have long argued that many of these costs are unnecessary and waste money that should more properly be going into their education. Why then do government and administrators alike calculate those things as ‘necessary costs of educating a student’? Students have repeatedly emphasized they are unnecessary, frivolous, and undesirable.

What about ‘hosting’ expenses? All those public tax dollars that senior administrators spend going out to dinner at Portobellos and Bacalao and Magnum & Steins (to list a few of the MUN admin faves, according to recent ATIPP requests)? Why are those being calculated into the ‘cost of educating a student’? The ‘travel and hosting’ line item was $17.4 million in the university’s 2016 financial statements.

Or how about Kachanoski’s nearly half million dollar salary, which students and the general public have loudly objected to? Or his monthly car allowance? Or his financial and tax advisor fees, also paid for by public dollars?

The fact is, much university spending does not go into the ‘cost of educating a student.’ It is disingenuous and inaccurate for anyone to claim these items under the cost of educating a student.

Some very big holes in the math

But the other, very considerable, problem with this figure is that when you calculate the cost of something, normally you subtract the revenue or value that it brings you.

“Yes, that ticket will cost me $40, but I get a $20 tax receipt and a $10 cab voucher as part of it, so it really only costs me $10.”

Or, “Yes, this car will cost me $5,000, but with it I’ll be able to accept this new job that requires travel and pays $2,000 more a month than I currently earn. So really, the car will have paid for itself after two and a half months.”

The figures both sides are throwing around don’t calculate those types of revenues and benefits either. Students inject a tremendous amount of money and economic activity into the city and the province. This comes in the form of expenses while they’re a student, like rental housing, taxicabs, grocery and clothes spending, other forms of shopping, all the taxes they pay (both income and retail) as a student, travel, and for come-from-away students the inevitable family visits to the province, and much, much more.

And then there’s the money they continue pouring into the economy after they graduate. Over 70 percent of international students stay in the province after they graduate, and more than 40 percent of students from other Canadian provinces, according to government research. They continue to pour economy activity into the province, creating jobs and economic output and applying their skills to local labour markets.

Newfoundland and Labrador would have none of these things—these jobs, these employees, these families and people revitalizing communities—were it not for Memorial’s low fees attracting immigrants from around the world.

In 2015, Memorial economics professors calculated the economic impact of the university on the provincial economy and concluded it generates over a billion dollars in economic activity annually. If we are to use the same logic everyone else is using, and add MUN’s economic impact to the calculation, it turns out that each Memorial student actually generates over $67,000 of economic benefit a year. This is more than twice what it supposedly ‘costs’ to educate them. In other words, the economy gets back more than two and a half dollars for every dollar invested into students at Memorial. Students easily pay for themselves, so to speak. And then some. And then a lot, actually.

So, if both sides are wrong from the get-go, who’s to blame for this fight? It’s hard to say, since they point the finger at each other for starting the ‘let’s-tag-a-cost-on-students’ game.

Memorial administrators blame the Liberal government for starting the whole discussion by saying Memorial’s cost to educate a student was higher than the national average. But as we’ve seen, there really is no national average, because the method of calculation is entirely ridiculous and nonsensical. It’s like blaming air traffic controllers at St. John’s Airport for being incompetent because of the number of cancelled flights each year, when in reality they are highly competent and it’s the weather that’s to blame. Or purchasing a fruit salad for $10, then picking out all the cherries and proclaiming “Look! Six cherry halves cost $10 these days!”

Not only are the figures inaccurate, but a more accurate accounting would actually be an argument against higher fees, or any fees at all for that matter.

Every university does many different things with its dollars, and faces many different costs. To simply divide dollars by students says nothing remotely accurate about the ‘cost’ of educating a student. Nor does it address the considerable cost to be paid if we do not educate and attract youth to this province. In this sense, the provincial government deserves criticism for its efforts to attach a cost to something for which one cannot accurately assign a cost.

But the university deserves blame as well. For the past several years, Memorial’s highly paid administrators have greedily pushed and poked against the tuition freeze by producing precisely these sorts of cost comparisons. Weeks before the provincial budget ever came out, VP-Academic and Provost Noreen Golfman’s committees were distributing documents comparing ‘costs’ of educating students at Memorial and Dalhousie (completely different figures, mind you, from the ones we’ve seen more recently).

You reap what you sow: Memorial should never have started bouncing such comparisons around. Instead of acting like the responsible and principled intellectuals many of us expect them to be, Memorial’s administrators played far too eagerly into the game of instrumentalizing education and pinning its so-called costs on students.

It’s only logical for Minister Byrne to question the accuracy of those calculations, but he didn’t help matters by producing comparisons of his own. He is right, broadly speaking, to challenge Memorial’s spending practices, but this isn’t the way. He ought to do so by directly recognizing the value of affordable tuition for all students, not by entering a mathematical labyrinth that no one can escape unscathed.

In their response to Byrne, MUN’s Board of Regents cited a letter from the Canadian Association of University Business Officers (to which Memorial reports its data, the accuracy of which Byrne questioned), which “goes on to say that the use of the data to compare the cost of students at different institutions would not be appropriate.”

This is the key point, and it should be interpreted as a slap in the face to both sides: No matter how you tweak it, the inflated ‘cost of educating a student’ figures are bogus and inaccurate. The sad thing is, they’ve now been seized on by journalists, media pundits and other public forums and used to reinforce the argument for higher fees. Yet as we’ve seen, not only are the figures inaccurate, but a more accurate accounting would actually be an argument against higher fees, or any fees at all for that matter.

Minister Byrne’s more recent critique of the university is an excellent one. He notes that not only is wining and dining university administrators and new hires a waste of public dollars, but it entrenches and normalizes a culture of entitlement. This is entirely true, and precisely where the discussion needs to go.

Educating a student produces a net benefit to the province, not a cost. Sunshine-list administrators dining on the public tab, on the other hand, is a double expense to society, and benefits no one besides the elite administrators themselves.

Hans Rollmann is an editor, writer, researcher and organizer with a penchant for chocolate and a knack for limericks.

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