UBC Budget 2022: Impact of the Vancouver Five-Year Enrolment Plan on Faculty Finances

At the Vancouver Senate meeting of February 9, 2022, the enrolment targets for 2022/23 were put forward for approval. The accompanying documents (p. 94ff) give a 5-year forecast for FTE degree program enrolments in each faculty on the Vancouver campus to 2026/27. I have taken these forecasts and run them through the Tuition Allocation Model (TAM) to see what faculties might expect over the next 5 years.  In this post, I present some of the results of this analysis along with some commentary.  I have used publicly available data only.  The enrolment targets for 2022/23 for the Okanagan campus were presented on February 24, 2022 (pp. 21ff), but a 5-year forecast for the Okanagan campus was not included in this report to the Okanagan Senate. 

The UBC Administration has presented a 5-year forecast for enrolments in degree programs in the Vancouver faculties to the Vancouver Senate as part the documents supporting approval of the enrolment targets for 2022/23.  Table 2 in this report (p. 97 of the linked document) gives forecasts for UBCV Normal Load FTE by Faculty/School and Fiscal Year for all programs.  I will focus primarily on the three largest first-degree undergraduate faculties, namely Applied Science, Arts, and Science and apply the TAM based on their forecasted enrolments to see the effects of this plan on undergraduate tuition revenues. (Faculties also have tuition revenues for graduate students and non-degree students.  I do not consider these. Nor do I consider other sources of revenue faculties may have.)

I will also discuss the key parameter in the TAM that determines how much is allocated to the Academic Excellence Funds (AEF) and how it affects the overall allocation outcomes.

My first caveat for the reader is the enrolment forecasts are given for undergraduate degree registrants, not course enrolments. One way to look at the faculty tuition revenue I present is to imagine it as base income for a faculty, but then a faculty has both accounts payable (for its students taking courses in other faculties) and accounts receivable (for students from other faculties taking its courses). For some faculties, there is a net gain, but not for others. Unfortunately, I have not found any public data giving direct and detailed data on inter-faculty “service teaching.” While I could make estimates of these variations based on degree requirements, I have chosen not to do so, though I will make a few comments on the variations as we proceed.

These inter-faculty exchanges of tuition revenue do not affect the Central Administration’s allocation from the TAM.

A quick review of the TAM

Last year, I wrote a detailed post about the Tuition Allocation Model (TAM), so I will give only a brief summary of it here. I will encourage the reader to look at the section on the Academic Excellence Funds in this previous blog post, however.

The TAM determines how much of the tuition revenue goes to each faculty, and how much to funds controlled by the Central Administration (`the Centre’).  It differentially treats tuition paid by domestic  (DOM) students  and tuition paid by international (ISI) students.

The Centre gets ~7.5% of gross tuition revenues off-the-top to put towards student financial aid (SFA) and to manage bad debt.

The remainder of the tuition revenues is then allocated as follows.

For DOM tuition, the Centre gets 25% and the Faculties get 75%.

For ISI tuition, there is a differential treatment for tuition fees up to a 2016 base rate and the tuition fee increment over that 2016 base rate.

For the ISI 2016 base tuition fees, the Centre gets 35% and the Faculties get 65%.

For the ISI incremental tuition above the 2016 base rate, the Centre gets 2/3 of this incremental tuition for the Academic Excellence Funds (AEF).

(Note, the key parameter I mentioned earlier is the fraction 2/3 in this part of the model.)

The remaining 1/3 of this incremental tuition is split 35% to The Centre and 65% to the Faculties.

Enrolment Forecasts 2022/23 to 2026/27

There are two key features of the overall 5-year enrolment plan for Vancouver campus:  (1) UBC will stop taking more domestic students than the BC Provincial Government funds by the end of this plan, and (2) overall international student enrolments do not grow over this 5-year period. There are significant changes in some individual faculties, however. As a consequence, UBC will leave its recent phase of enrolment growth, which may reduce some of the pressures on the faculties’ teaching missions, amongst other things.

The Normal FTE enrolment forecasts for Applied Science, Arts, and Science are in Table 1 (data from Table 2 on p. 97 of the Senate report).  One Normal FTE is 1 student taking a normal full credit load.  In Applied Science, a normal load is 37 credits, while in Arts and Science, it is 30 credits.

Faculty DOM/ISI 2022/23 2023/24 2024/25 2025/26 2026/27 5-year change 5-year %change
AppSci Domestic 3,985 4,015 4,005 3,982 3,965 -20 -0.50%
AppSci ISI 1,595 1,598 1,602 1,592 1,584 -11 -0.69%
Arts Domestic 8,486 8,199 8,026 7,928 7,890 -596 -7.02%
Arts ISI 4,226 4,123 4,037 3,981 3,956 -270 -6.39%
Science Domestic 7,155 7,067 6,976 6,916 6,887 -268 -3.75%
Science ISI 2,151 2,250 2,321 2,369 2,393 242 11.25%

Table 1.  Normal FTE enrolment forecasts 2022/23 to 2026/27.

Note that Applied Science has small reductions in both domestic and international enrolment, so is forecast to have stable enrolment over this 5-year period.

Arts, however, is forecast to have large reductions in both domestic and international student enrolment over this 5-year period. The reduction in domestic enrolment is expected given the goal of reducing enrolments to funded levels, but it is unclear to me what is driving the decision to reduce international student enrolment in Arts as well.  The Senate documents do not provide any rationale.

Science shows relatively flat enrolment over this 5-year period, but the almost one-for-one trade of domestic students for international students has a large impact on tuition revenues, as we will see later.  Again, the reduction in domestic enrolment is in keeping with the over goal to keep to funded enrolment levels.  The increase in international student enrolment will mean the percentage of international students in Science degrees will increase to 26.6%, which is still below that of Applied Science (28.9%) and Arts (32.7%) (pp. 104 and 105 of the Feb. 9th Senate docket).

Tuition Revenues over the years 2022/23 to 2026/27

As a member of the Board of Governors Finance Committee, I started this exercise to try to understand the financial impacts on the academic mission of the Vancouver 5-year enrolment forecasts. While the budget coming to the Board at the end of March is only for 2022/23, it will include significant financial commitments that will affect the university’s finances for many years to come.  It seems prudent to assess how well the faculties will fare under this enrolment plan: can UBC afford to spend on large-ticket items outside of faculties and continue to grow as a leading research and teaching institution?

To do tuition revenue calculations over a 5-year period, I have chosen to evolve tuition fee rates using the same model the Board of Governors has passed in recent years: a 2% increase in domestic tuition, a 2% increase in continuing ISI tuition, and a 4% increase in tuition for new ISI students. The Administration has not proposed any such 5-year tuition plan, but I think the assumed increases are reasonable for the exercise at hand.

First, let’s consider undergraduate programs in the Faculty of Applied Science, but excluding the School of Nursing. Table 2 has three sections: (1) basic data, (2) the TAM allocation to the faculty and its breakdown, and (2) the TAM allocation to the Centre and its breakdown.  The large growth in the ISI tuition increment over the 2016 base is noteworthy and is driven primarily by tuition rate growth in this case.  (Changes to ISI enrolment also affect this quantity, though for Applied Science, there is little change in ISI enrolment over this period.)

The overall growth in the TAM allocation to Applied Science is 7.2% over 5 years, which would be less than inflationary growth in expenses over this time period if the current rate of inflation persists. (Collective agreements are in play this year and the outcomes of these negotiations will determine substantially the inflation rate of UBC’s payroll. As well, inflation rates for many goods and services are high, which affects UBC’s purchasing power and also asserts pressure in collective bargaining.)

The tuition revenue for cross-faculty course enrolment is evenly shared by the two faculties involved. Undergraduate students in Applied Science degrees take courses in other faculties and fewer students from other faculties take courses in Applied Science, so the net inter-faculty exchange of tuition revenues is likely negative for Applied Science. 

2022/23 2026/27 % change
Gross Tuition $112,010,799 $127,670,451 14.0%
ISI Tuition differential over 2016 $16,261.25 $23,407.62 43.9%
ISI enrolment 1,595 1,584 -0.7%
DOM enrolment 3,985 3,965 -0.5%
Faculty TAM $56,461,441 $60,526,376 7.2%
Breakdown DOM $19,165,963.18 $20,755,394.61 8.3%
2016 base ISI $31,034,124.61 $30,820,096.16 -0.7%
Faculty share ISI increment over 2016 $6,261,353 $8,950,886 43.0%
Total ISI to Faculty $37,295,478 $39,770,9822 6.7%
Centre TAM $58,619,186 $68,773,938 22.3%
Breakdown DOM $6,388,654 $6,918,465 8.3%
2016 base ISI $16,710,682 $16,595,436 -0.7%
Centre share ISI increment over 2016 $3,371,498 $4,819,708 43.0%
Total ISI to Centre $20,082,180 $21,415,144 6.7%
AEF $19,557,606 $27,958,477 43.0%
Student Financial Aid (SFA) $9,520,918 $10,851,988 14.0%

Table 2.  Estimates for the tuition revenue allocation for students in undergraduate degrees in the Faculty of Applied Science, excluding the School of Nursing.

The outcome for the Faculty of Arts, captured in Table 3, is interesting due to the large charges in both domestic and international student enrolments. The TAM allocation to the faculty grows less than 1% over this 5-year period, which would be far less than the expected inflationary growth of expenses over this period. (I wrote about some of the budget pressures on faculties last year.)

Of course, Arts will receive tuition revenue from other faculties for students taking courses in the Faculty of Arts — for example, students in the BSC in Science are required to take at least 12 credits in Arts.  On the other hand, Arts students also take credits in other faculties  — for example, there are BA degree programs in Science disciplines, and the BA has a 6-credit science requirement for courses that can be taken from a number of other faculties. Tuition revenue for cross-faculty registration is split evenly by the two faculties, and while some individual departments may see large enrolments of students from other faculties, the net inter-faculty exchange of revenue may be relatively small.

2022/23 2026/27 % change
Gross Tuition $229,473,066 $246,750,129 7.5%
ISI Tuition differential over 2016 $16,261.25 $23,407.62 43.9%
ISI enrolment 4,226 3,956 -6.4%
DOM enrolment 8,486 7,890 -7.0%
Faculty TAM $113,519,610 $114,332,053 0.7%
Breakdown DOM $33,181,823 $33,578,377 1.2%
2016 base ISI $66,850,274 $62,579,197 -6.4%
Faculty share ISI increment over 2016 $13,487,513 $18,174,480 34.8%
Total ISI to faculty $80,337,787 $80,753,677 0.5%
Centre TAM $115,953,456 $132,418,075 14.2%
Breakdown DOM $11,060,608 $11,192,792 1.2%
2016 base ISI $35,996,302 $33,696,491 -6.4%
Centre share ISI increment over 2016 $7,262,507 $9,786,259 34.8%
AEF $42,128,829 $56,768,773 34.8%
Student Financial Aid (SFA) $19,505,211 $20,973,761 7.5%

Table 3. Estimates for the tuition revenue allocation for students in undergraduate degrees in the Faculty of Arts.

The situation for the Faculty of Science is shown in Table 4.  Here we see the impact of what is, in effect, a trade of domestic student seats for international student seats. (Remember that domestic enrolment is being reduced to the level actually funded by the BC Provincial Government across UBCV.) Since the ratio of the ISI tuition rate to the DOM tuition rate is ~8, this change will result in a large increase in the TAM allocation to Science over this 5-year period.

The Faculty of Science would see a 13.5% increase in the TAM allocation, which may or may not a reasonable match for the inflation rate for the faculty’s expenses given the uncertainties in predicting inflation at this time. (There are also other revenues beyond undergraduate tuition fees, of course.)

While Science students take courses in other faculties (primarily in Arts), a large number of students in other faculties take Science courses.  For example, Applied Science students take Science courses, and about 40% of the students in large enrolment MATH courses are from faculties other than Science. As with Arts, while some individual departments may see large enrolments of students from other faculties, the net inter-faculty exchange of revenue may be relatively small for Science.

2022/23 2026/27 % change
Gross Tuition $132,957,448 $162,372,114 22.1%
ISI Tuition differential over 2016 $16,261.25 $23,407.62 44.0%
ISI enrolment 2,151 2,393 11.3%
DOM enrolment 7115 6887 -3.2%
Faculty TAM $68,868,655 $78,158,012 13.5%
Breakdown DOM $27,977,368 $29,309,795 4.8%
2016 base ISI $34,026,252 $37,854,403 11.3%
Faculty share ISI increment over 2016 $6,865,036 $10,993,815 60.1%
Total ISI to faculty $40,891,287 $48,848,218 19.5%
Centre TAM $64,088,793 $84,214,102 31.4%
Breakdown DOM $9,325,789 $9,769,932 4.8%
2016 base ISI $18,321,828 $20,383,140 11.3%
Centre share ISI increment over 2016 $3,696,558 $5,919,746 60.1%
AEF $21,443,235 $34,339,655 60.1%
Student Financial Aid (SFA) $11,301,383 $13,801,630 22.1%

Table 4. Estimates for the tuition revenue allocation for students in undergraduate degrees in the Faculty of Science.

The ISI tuition increment over 2016 base and the AEF

In doing calculations using the TAM, is is clear that one of the key driving factors in the model is the size of the tuition differential relative to the 2016 base. The tuition revenue increment this generates is growing at a fast rate and the Centre is allocated 2/3 of this increment for the AEF under the current TAM.  The TAM also allocates to the Centre 35% of the remaining 1/3 of this incremental revenue.  As a result, the portion of tuition revenues allocated to the Centre by the TAM grows at a comparatively healthy rate even as individual faculties see  smaller growth rates for their overall allocations.

We are entering a period where revenue growth will be driven primarily through tuition fee rate increases without the added boost from enrolment increases. Should UBC reduce the allocation to the AEF to ensure the core academic functions of the university are well-supported, especially in the face of increased inflation and the potential for tighter university budgets?

If we were to reduce the fraction 2/3 in the model to 1/2 or even 1/3, then faculties would be in a better place to address many of their issues, including some of their academic building needs.  The AEF would still show healthy growth and be a substantial tool in the Centre’s efforts to support improvements in the university. The Centre would sill receive substantial allocations into its general fund through the rest of the allocations in the TAM.  Some of the things funded by the AEF could be funded by general funds instead, but the Centre would also need to be more discerning about what it would fund through a reduced AEF.  The Centre would do less, but the faculties would be able to do more to support the heart of the academic mission.

One of the things the AEF does is redistribute revenue to faculties with limited ability to have international students through the Revenue Sharing Fund. This seems reasonable in a university so heavily dependent on international tuition revenues that institutional decisions affecting faculties are taken with ISI revenues as a built-in assumption.  Even if one adjusts the TAM to allocate more money to the faculties (as I am suggesting), there would still be a need for such redistribution of revenue.


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