Industry Insights

An Update on the Impact of Performance Based Funding

02/17/21   |  
Graeme Owens, EVP & Country Manager at Keypath Education Canada

A few months back, I wrote about the financial threat facing postsecondary institutions in Canada and the major shift in government financial support about to take place in Ontario and Alberta.

Since then, Ontario has released its plan for performance-based funding. Under the plan, Ontario will move away from a long-term practice of funding institutions largely based on their enrolment levels. Instead, the province will see how institutions measure up against new performance metrics and fund them accordingly.

Some faculty groups in the province suggest this will further destabilize an already starved system. But the Government of Ontario is banking on the idea that metrics based on student success – in the classroom and out in the workforce – will not only improve the quality of postsecondary education in Ontario, but the careers of the province’s workers and the productivity of the industries they work in.

Let’s take a look at the actual metrics.

They fall into three main buckets – skills and job outcomes; economic and community impact; and productivity, accountability, and transparency. That final grouping won’t be tied to funding and won’t be explored immediately in terms of setting metrics.

The skills and job outcomes metrics will include a focus on graduation rates; graduate employment rates within a related field; graduate employment earnings; experiential learning opportunities; and the skills and competencies students have built up by the time they complete their studies.

When it comes to the economic and community impact of an institution, government funding will be tied to the local impact of enrolment; the economic impact of the institution itself; research and funding capacity; and the ability of the institution to drawn research dollars from the private sector.

Of course, what these metrics will really measure – and how much money will be tied to success or failure – depends on the institution in question. As part of its move towards performance-based funding, the Government of Ontario negotiated new Strategic Mandate Agreements (SMAs) with every university and college in the province. Those agreements allowed each institution to take a bit of a personalized approach to what the metrics mean for them. They’ll also be allowed to average their numbers over three years so that their funding doesn’t crater after a bad one-off year.

What this means is that many institutions will find ways to make their metrics work within the new framework and therefore, while 60% of all funding will be based on those metrics, they won’t see a 60% swing year after year based on their performance. Based on past data, a bad year delivering on metrics would probably only swing about 1.3% in funding for most schools. That’s still a big deal for institutions that are already cash-strapped to begin with but it’s not the world-ending news some might have expected when the government first spoke about a 60% performance-based funding envelope.

When evaluating whether this switch will show tangible benefits to graduating students or the workforce they are poised to enter, one other thing to consider is that almost all of the focus appears to be on the undergraduate level. Graduate level degree programming, by comparison, appears to be more of a nice-to-have in the Government of Ontario’s plan and is largely missing from this skills-focused funding approach.

This is an enormous gap that ignores the reality of life-long learning in today’s careers that often span multiple jobs and even multiple industries, requiring a worker to embark on new training or retraining to keep up. It’s a gap we continue to address at Keypath Canada through our partnerships with postsecondary institutions, offering graduate-level programming that specifically addresses the skills gaps experienced by workers and employers alike. While it’s certainly a sign of progress to see governments focus some attention on that skills gap, they are unlikely to make much of a dent in the areas of the economy where it is the widest if their focus is restricted to undergraduate study.

Whether this shift in funding or any of these metrics will improve the quality of postsecondary education or outcomes for students in the workplace remains to be seen. Management consultant Peter Drucker is famously known for coining the phrase, “What gets measured gets managed”. But what’s being measured – and how – is just as important.

Get in touch with us if you're interested in learning more.

This article originally appeared on LinkedIn