Preview to Coming Attractions: Ontario’s Post-Secondary Efficiency and Accountability Fund

The Ontario Government announced in February its nearly $1.3 billion response to the Blue Ribbon Panel report and the Federal Government’s announcement of caps on international students. While the financial support was clearly needed, the announcement also made clear that the government is focused on ensuring it gets value for money for investments in the postsecondary sector and will continue to freeze tuition until it is comfortable that the sector is operating as efficiently as possible.  

Before any domestic tuition increase would be permitted, the government wants to see universities and colleges find savings through greater efficiencies and is willing to fund them up to $15 million to find them through its new Efficiency and Accountability Fund. 

That approach — funding the drive to find opportunities to improve sustainability through independent reviews—comes right out of the province’s municipal playbook. What might that look like in the post-secondary sector? 

For insight into how the provincial strategy might roll out for universities and colleges, we checked in with Chris Loreto, StrategyCorp’s managing principal and leader of the firm’s Post-Secondary Education and Innovation Practice. 

You’ve worked with many of Ontario’s universities and colleges. From a macro level, what’s the current state of the post-secondary sector? 

There’s an identity struggle happening at many institutions. We talk about “the sector” as if it’s homogeneous or uniform, but that’s not really true.  

Of course, they share a core purpose to educate and conduct research, but some are large schools with national or international reputations, others were established to serve their local communities. Some are trying to be too many things to too many people.  

The first thing an organization needs to do is recognize its purpose and mission. They need to ask themselves why they are in the community and what the community needs and expects of them. It’s not easy for an institution to clearly define its identity and differentiation, but not doing so can cause mission drift, which in turn can lead to financial instability. 

How does this identity struggle fit in with the province’s recent funding announcement? 

Trying to put parameters around the focus or orientation of an institution often meets resistance —it runs up against the idea that you should let a thousand flowers bloom. But many schools can’t afford to be all things to all people.  

Governments and other players get frustrated if institutions aren’t aligning with regional economic development. When an institution isn’t attuned to local labour needs, it’s missing the chance to cultivate relationships that could be monetized to support sustainability. And it takes strong leadership to figure out an institution’s niche, and to lean into that. This is what the province wants the sector to do — identify and lean in.  

Is this why the province didn’t fully take up the blue-ribbon panel’s recommendations? 

It’s clear the province doesn’t believe institutions have done enough to really sharpen their focus in terms of their identity, purpose, and mission. And they believe there is still room for administrative efficiencies and savings in the system.  

Even the blue-ribbon panel agrees there is as much as 10% in efficiencies that could be found. So, the province isn’t fully easing the tension in the relationship as a way of pushing institutions to do that work. They’re saying, “Come back to us when you’ve shown you are taking your resource scarcity seriously and putting every dollar to its highest and best use and then we’ll figure out how we further fund you.” The province wants to see that the sector is willing to do the hard work. I don’t think the final chapter has been written on where the government’s going on funding for the sector. 

You’ve seen the province take this tack before with the municipal sector. How did it work out? 

The short version: municipalities of all sizes found hundreds of millions in savings. The province launched the Audit and Accountability Fund back in 2019 for larger centres, followed by the Municipal Modernization Fund for smaller and rural municipalities to fund third-party service delivery reviews.  

Then there was money on the table to actually implement the measures identified in the reviews. In the last five years at StrategyCorp, we’ve conducted dozens of evaluations of every kind for municipalities all over Ontario, many of them funded through these provincial programs. We’ve helped municipalities find millions in savings through organizational restructuring, digital transformation and implementing shared services, as well as identifying productivity and revenue generation gains.  

So, the province hasn’t just invented the efficiency fund for the post-secondary sector as a stop gap — they’ve tried this before, they thought it was successful and it satisfied them that municipalities were doing what needed to be done to be as efficient as possible. 

Still, colleges and universities aren’t municipalities. From your experience, what can the post-secondary sector learn from the municipal process? 

There are a lot of lessons that post-secondary educational institutions can take from the municipal example. First, scope matters. Leaders need to take the time to really understand what it is they want analyzed, and then make it very clear to everyone involved that nothing is off the table, which can be difficult. If participants aren’t truly open to learning a better way of doing things, the whole process devolves into a performative exercise. 

Second, institutions will need to be transparent about what they are doing. The minute a third-party review is announced, people get nervous, people start worrying about their jobs. If some restructuring is a possible outcome, then it’s crucial to be up front about what’s happening. Again, it’s all about scope. 

Lastly, one of the most important lessons is that the review can’t be done to an organization — it takes everyone’s full participation. So, institutions need a consultant who’s going to take the time to understand the organization and its unique context. After all, while other institutions can be an inspiration on how to do things differently, no two universities or colleges are exactly the same.  

And it’s crucial that everyone at the organization is brought on board, from the executive leadership to the front-line worker, to understand their perspectives and the opportunities they see for improvement. At the end of the day, the consultant leaves and it’s left to the people in the organization to actually drive change. If there isn’t buy-in right from the start, it’s not going to be successful. 

Anything else you learned from the municipal space that could help universities and colleges? 

I would circle back to where we started with educational institutions identifying their visions and missions. Those with strong strategic plans and thoughtfully developed goals will be more successful in identifying opportunities for improvements.  

Even in a situation where an institution may be under pressure, prioritizing doing it right is always better than doing it fast. But with the provincial funding that’s expected to flow in the coming academic year, funding deadlines may make it impossible to undertake a comprehensive development strategy in time.  

In that case, taking advantage of the service review process to clarify your strategic priorities is still a smart move. Because an effective review will force choices – and people usually do their best to avoid choices. So there is value in reckoning with those choices to become a more sustainable organization, while clarifying a strategic vision along the way.