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Let’s do Performance Based Funding but let’s do it Right

Brace yourselves, this is a money ask.

The Provincial government has moved towards a performance based funding (PBF) model in order to move away from funding based on enrollment. Essentially, the government is trying to put more emphasis on programming and institutional performance to get away from the ‘bums’ to seats’ approach. I think this shift is incredibly positive. We should expect our institutions to advance and develop regardless of their student population.

After learning more about PBF I was excited. I couldn’t think of a better way to incentivize institutions. Shifting to PBF, while working through the provincial government’s second round of SMA negotiations, could encourage institutions to think seriously about how they differentiate and create an even greater competitive market for institutions in Ontario.

So what’s the problem? Well, arguably there actually is no incentive for universities to advance their programming or performance. The Provincial Government isn’t giving extra money to institutions that go above and beyond the guidelines in their SMA. Instead, they’re taking a ‘slap on the wrist’ approach; taking away institutional funding if they don’t meet their targets.

While I get this—institutions should meet their targets and the government should hold them accountable. Who’s to say they are or will ever strive to go above and beyond? Ontario is full of untapped potential and if we don’t give students extraordinary, innovative schools to go to they will leave.

If we want to build world class institutions, that attract the best and brightest from Canada and around the world, we need to reward institutions for innovation and creativity. We can still be critical of their programs (and we should be) but without providing incentive and allowing for some risk-taking how can we expect our institutions to compete with American and European schools?

If you look at David Tanberg and Nicholas Hillman’s paper on PBF they try to understand whether this funding model is worth the time to implement by analyzing how effective it has been in the United States. Their key findings were that, in general, PBF didn’t lead to an increase of degree completions. While this is an important conclusion to understand I don’t think this is how the Province should determine whether adding incentive and moving to a PBF model is valuable. This analysis shouldn’t only be done with degree completion in mind but rather understanding Ontario’s highly skilled workforce and the jobs students are able to get post graduation, along with many other factors.

What I will say is I think the Province is on the right track. Strategic Mandate Agreements are a good way to understand and determine where money should be spent, how Ontario institutions differentiate from one another and where our institutions plan to be in the next 5, 15, 20 years. The move to PBF is also positive and the Province should be applauded for this. However, I think after this next round of negotiations the Province should put aside a sum of money to encourage and incentivize institutions to tap into their potential, take a few risks, and ultimately start competing with schools across borders.