Pre-Budget Consultations 2009:

Canadian Alliance of Student Associations

Submission to the House of Commons
Standing Committee on Finance
The Canadian Alliance of Student Associations (CASA) is an alliance of 24 student associations from
coast-to-coast. CASA represents nearly 400,000 post-secondary students at the national level. CASA’s
members believe that Canada’s post-secondary education system should be affordable, accessible, and
of the highest quality. We believe that the federal government has an important role to play in higher
learning and research. CASA is committed to working with decision makers at the federal and inter-
provincial levels to promote the innovative policy solutions developed by our members.

CASA Member Associations:

Acadia Students’ Union

Bishop’s University Students’ Representative Council
Brock University Students’ Union
Dalhousie Student Union
Fédération des étudiants et des étudiantes du Centre universitaire de Moncton
Graduate Student Association - University of Waterloo
McMaster Students’ Union
Red River College Students’ Association
Saint Mary’s University Students’ Association
St. Francis Xavier Students’ Union
St. Thomas University Students’ Union
Students’ Association of Mount Royal College
Southern Alberta Institute of Technology Student’s Association
University of Alberta Students’ Union
University of British Columbia Alma Mater Society
University of Calgary Students’ Union
University of Fraser Valley Student Union Society
University of Lethbridge Students’ Union
University of New Brunswick Students’ Union (Fredericton)
University of New Brunswick Students’ Union (Saint John)
University of Prince Edward Island Student Union
University Students’ Council of Western Ontario
University of Waterloo Federation of Students
Wilfrid Laurier University Students’ Union

Home Office Staff

National Director: Arati Sharma
Government Relations Officer: Rick Theis
Policy and Research Officer: Spencer Keys
Public Relations and Communications Officer: Jillian Flake
Digital Technology Officer: Sharif Virani
Administrative Assistant: Ellen Wightman

Canadian Alliance of Student Associations

PO Box 3408, Station D
Ottawa ON K1P 6H8
Phone: (613) 236-3457
Fax: (613) 236-2386
www.casa.ca
Introduction

The Canadian economy is increasingly defined by global interconnectivity and competition, and is
shifting away from jobs based on manual labour and repetitive tasks, to ones that require analytical
skills and resourcefulness. As a result, there is now widespread agreement across all sectors and
governments that access to a high-quality post-secondary education (PSE) system is a pre-requisite for
all Canadians to help them gain the skills they will need to fully participate in this new economy, as well
as to facilitate sustained economic growth in our country.

In addition, over the next decade the number of people retiring in our country will surpass the number
of newcomers entering into the workforce. In twenty years, retirees will outnumber new workers by a
factor of four to three, creating a serious labour shortfall, and an acute drag on our economic growth.

As a consequence of this, the federal government has two challenges it must come to terms with:
providing the necessary resources to help strengthen our post-secondary institutions, and ensuring that
Canadians are able to access higher learning institutions in order to build a stable pool of talented,
proficient, and innovative citizens that we need in the face of forthcoming demographic changes and
new economic realities.

The recession that began in 2008 has brought the former point into sharp relief. Faced with growing
costs and shrinking resources, universities have been charged with the duty of providing a high-quality
education to a growing body of students with far fewer resources.

To the latter, it is time to reinvest resources into our First Nations and Inuit peoples. Building the
knowledge and skill levels of these groups will be vital to avoiding labour shortages as well as bolstering
better social cohesion and inclusion in our country.

With these issues in mind, the Canadian Alliance of Student Associations makes the following
recommendations to the House of Commons Standing Committee on Finance:

CASA recommends that the federal government increase the funding “envelope” within the Canada
Social Transfer for post-secondary education by an increment of $800 million each year, for each of the
next 5 years. Additionally, CASA recommends that the federal government should negotiate agreements
with the provinces to not reduce their post-secondary education spending when additional federal
funding is provided.

CASA recommends that the federal government increase financial support for the indirect costs of
research by providing an additional $335 million to the Indirect Costs Program over the next 5 years.
Further, the federal government should set a goal of providing 40% of the value of direct research costs
of as a longer term funding target for the Indirect Costs Program.

CASA recommends that the federal government implement the 2007 recommendation of the Standing
Committee on Aboriginal Affairs and Northern Development that the 2% cap on spending increases for
INAC’s Post-Secondary Education Program be eliminated immediately and that spending increases for
PSE programming be based on actual costs associated with program components and not be subject to
discretionary caps. As well, CASA recommends that the program receive an additional 10-15% ($33-49
million) increase to support administrative costs.
Increase Funding Within the Canada Social Transfer for Post-Secondary Education

In Budget 2007, the federal government announced an $800 million dollar “envelope” within the
Canada Social Transfer for post-secondary education, which would grow by 3% annually. This
represented a much-needed infusion of resources to the provinces and territories, but still did not
return funding for post-secondary education (PSE) to the level provided in 1992, when deep cuts to
federal PSE funding were first made.

Using the Consumer Price Index as a method of calculating inflation, the 2007 transfer should have
included $3.79 billion for PSE1. Instead we continue to have a $3 billion funding gap in real terms, not
accounting for increased numbers of students. CASA estimates the actual gap to be closer to $3.46
billion.

Since 2007 circumstances surrounding PSE funding have deteriorated further. The recession that began
in 2008 has had a devastating effect on particular industries, especially those driven by US demand and
credit availability. The financial hit these industries have suffered has had a correspondingly crippling
effect on provincial spending capacities as tax bases have been downsized, and many provinces have
been forced to engage in deficit spending to help stimulate their own economies and sustain crucial
social services.

The corollary for universities is that provincial funding grants for higher education have been frozen or
clawed back in spite of growing institutional operating costs; the Province of Alberta for example
announced in April that its universities could expect to receive no increases to operating grants
beginning in 2010.2 Added to this, institutional endowments (which help fund student financial aid and
research chairs) and pension funds have also dropped significantly in value, creating new, unexpected
financial obligations for schools across the country.

Consequently, universities have scrambled to find ways to decrease spending and increase their revenue
streams. This has taken the form of reduced course offerings, increasing class sizes, staff layoffs, and
delaying the hiring of instructors and support personnel. Institutions have also looked to students as a
means of increasing income through higher tuition levies, and larger residence and ancillary fees.
Students can ill-afford to have these costs offloaded on them. Putting aside the ever-increasing level of
student debt, students were unemployed in record numbers over the summer, and thus have far less
financial resources to put towards their education as a result.

The federal government has traditionally been a bulwark against these challenges and should expand
that responsibility. Therefore,

CASA recommends that:

The federal government increase the funding “envelope” within the Canada Social Transfer for post-
secondary education by an increment of $800 million each year, for each of the next 5 years.
Additionally, CASA recommends that the federal government should negotiate agreements with the
provinces to not reduce their post-secondary education spending when additional federal funding is
provided.

1
Statistics Canada, Consumer Price Indexes for Canada, Monthly, 1914-2006
2
“U of C faces budget crisis”
http://www.calgaryherald.com/news/faces+budget+crisis/1533704/story.html
Increase Funding for the Indirect Costs of Research

Indirect research costs are expenses that cannot be directly attributed to a specific research project but
are required for the conduct of research in general. These “hidden” or indirect costs include those
incurred for administering and managing research activities from upgrading library computer
networking to the expense of renovating laboratories, and basic operations, and maintenance.

In 2006-2007 the indirect costs of research for Canadian universities in support of federally funded
research was estimated to be approximately $400 million3. This represents at least 40% above and
beyond the direct costs of research as well as the cost of salaries for the principal researchers borne by
universities.

Without government resources, universities pay for these costs themselves, either through their
operating budgets, by not funding initiatives, and/or by passing along the costs to students directly
through tuition increases. None of these is a sustainable mechanism for dealing with these costs.

Prior to 2002, the federal government only funded the direct costs of federally sponsored research, with
the exception of contractual research. Since then however, the federal government has assumed partial
responsibility for providing funding of these expenses through the Indirect Costs Program (ICP). That
said, the ICP’s funding has not kept pace with increases to granting council funding and continues to
stretch already taxed university operating budgets, undercutting Canada’s innovative competitiveness.4

By increasing the funding provided under the ICP, the federal government would help free up much
needed financial resources for universities to conduct additional research, and would help to mitigate
the downloading of these costs to students in the form of tuition hikes.

It should be noted that virtually all of Canada’s competitor nations provide permanent funding for the
indirect costs of research5. In the United States (US), Britain, and Australia, indirect costs are
reimbursed. The United States has been funding indirect research costs since 1947, and that funding
currently averages 52.3% of direct research costs6.

CASA recommends that:

The federal government increase financial support for the indirect costs of research by providing an
additional $335 million to the Indirect Costs Program over the next 5 years. Further, the federal
government should set a goal of providing 40% of the value of direct research costs of as a longer term
funding target for the Indirect Costs Program.

3
Association of Universities and Colleges of Canada, Indirect Costs Background Document
4
Department of Finance Canada, Budget 2004; Budget Plan 2005; Budget Plan 2006.
5
Fifth Report of the House of Commons Standing Committee on Industry, Science and Technology, A
Canadian Innovation Agenda for the Twenty-First Century, June 21, 2001, chapter 10.
6
Christian Sylvain, Association of Universities and Colleges of Canada, Indirect Costs Reimbursement in the
USA: Facts and Fiction; rate quoted is from 1997 but rates were very consistent throughout the 1990’s.
Increase Funding levels for the Post-Secondary Student Support Program

A final and critical area for action is fixing the inadequate funding for First Nations and Inuit students.
Between 1971 and 2001, the Aboriginal population grew 322% compared to 37% in the non-Aboriginal
population, and 50% of Aboriginals are under age 25, while a third are under age 147. However, only 3%
of the First Nations population has earned a Bachelor’s degree or higher, compared with 13.3% of the
Canadian population8. Meanwhile, the Post-Secondary Student Support Program (PSSSP), the principal
funding mechanism of First Nations and Inuit students, has been capped at a program increase of 2%
since 1996, forcing an already small pot to be spread thinly among an increasing number of students.

First Nations and Inuit PSE attendance rose until 1999 when it began trending down as applicants began
to exceed available funds. In 2004-05, 23,000 First Nations and Inuit students were receiving funding
from PSSSP, down from the 27,000 receiving support when the cap was put in place in 19969. Removing
the cap and increasing funding is a valuable marginal cost to government. As the Association of
Universities and Colleges of Canada has stated, “Considering the amount of money the federal
government currently spends on primary and secondary education for status Indians and Inuit, and the
strong economic and social returns Aboriginal university graduates provide, a sound policy would be to
ensure that every qualified student has sufficient funds to access university.”

Furthermore, the structure of PSSSP inhibits the effectiveness of the program and other student
financial assistance programs. Band councils are responsible for administering the program but are an
administrative budget, forcing them to either go without PSE coordinators and have nobody responsible
for pushing the use of PSSSP and other programs like the Canada Student Loans Program, or use PSSSP
funds for administrative purposes; the latter of which is considered misuse by Indian and Northern
Affairs Canada. Failure to fund administration prevents post-secondary education coordinators on
reserves from having the time or resources to do community outreach or professional development, if a
band hires a coordinator at all.

CASA recommends that:

The federal government implement the 2007 recommendation of the Standing Committee on Aboriginal
Affairs and Northern Development that the 2% cap on spending increases for INAC’s Post-Secondary
Student Support Program be eliminated immediately and that “spending increases for PSE
programming be based on actual costs associated with program components and not be subject to
discretionary caps”10. As well, CASA recommends the program receive an additional 10-15% increase to
support administration costs. According to the 2005 internal audit conducted by Indian and Northern
Affairs Canada11, PSSSP in 2008-09 is approximately $327 million12. Thus, the cost to government to pay
for the administration of PSSSP in current dollars would be $33-49 million.

7
No Higher Priority, pg. 5
8
Audit of Post-Secondary Student Support Program, pg. 4
9
Ibid, pg. 6-7
10
Ibid, pg. 33
11
Audit of Post-Secondary Student Support Program, pg. 3
12
Dollar amount derived by applying 2% to the $285 million reported in 2001-02.