Canada’s Universities: Cost Pressures, Business Models, and Financial Sustainability – An Update

In 2014, CAUBO commissioned a study of the overall financial sustainability of the Canadian university business model from consultant Ken Snowdon. The objective of the report was to generate healthy discussions, both off- and on-campus, based on a common understanding of the issues that underpin financial sustainability in Canada.

The report identified several factors which, when combined, form what was referred to as the ”Perfect Storm” and led many finance officers and others, to question the financial sustainability of their own existing business model.

Each factor – income constraint, demographics, structural deficits associated with research and salary increases, pension deficits, and a growing backlog of deferred maintenance – was examined in some detail to determine the impact on university finances.

To take stock of the university sector’s current financial state, the report author has prepared an update, which was presented at the CAUBO 2018 Conference in Vancouver.

Is the financial sustainability of universities still at play?

According to the author, “… Canada’s universities are better off today than one might have expected given the number and severity of challenges confronting the sector in 2012-13. Increases in both domestic and International enrolments have helped provide the wherewithal to address a number of financial pressures. But there are serious financial stresses in some institutions where demographic realities are resulting in enrolment challenges, provincial economic circumstances are affecting government grant levels, and questions are being raised about academic sustainability. While making adjustments to the ‘business model’ Canada’s universities are still faced with major challenges and increasing risk as they head towards the second decade of the new Millennium.”

Download the updated report and conference presentation.