Current Model and Proposed Corridor Models A Funding Model Primer Current Model and Proposed Corridor Models

Introduction Who is funded by the funding model? Full and part time domestic students in credit courses Who isn’t funded by the funding model? Nursing students, international students, apprenticeship, contract training, non credit What isn’t funded by the funding model? SNR, Nursing, French Language, Special Needs

Introduction Funding models are the mechanism by which the majority of the college system’s operating grants are distributed by the government Of the $1.445B in operating grants to the colleges in 2015-16, $1.146B or about 80% was allocated using the funding model

Introduction The college system has had two long term models in the past 20 years –the original share of the pie model and the more recent base plus growth Both models were based on a presumption of growth across the province at a time of demographic growth and successive governments pursuing an access agenda The current model reduced the degree of competition for students among the colleges

Introduction The province is entering about 10 years of widespread declining demographics of the post secondary aged population although some areas, such as the north, have been in it for a few years already

Enrolment All funding models in the last 30 years have been based on weighted enrolment known as Weighted Funding Units (WFU’s) The weightings take into account the cost , duration and intensity differences of programs across the system

Current Model Grants since 2009-10 have been generated on a base plus growth model For most colleges their grant is based on their share of the system’s enrolment 3 and 4 years ago ( 2 year average/2 year slip) Once the funded enrolment is established for each college, it is then multiplied by the WFU value, ($4277.45), to generate their grant

Current Model This model allows colleges to know their grant ahead of the start of each fiscal year so they can plan Every change in a college’s enrolment, no matter how small, results in a grant change

Current Model The declining demographics are expected to reduce college enrolment which will then reduce their grants, and reduce them very unevenly across the regions of the province To maintain reasonable levels of grants to support programming, a new, less enrolment sensitive, model is needed

Corridor Model The principle of a corridor model is that a college’s grants will not change as long as it stays within a specified range of enrolment, known as the corridor It is designed to desensitize funding funding from moderate changes in enrolment It still uses averaged and ‘slipped’ WFU’s to determine if a college is within its corridor

Corridor Model The corridor model’s parts The “midpoint”- which is the enrolment level upon which grants are based while a college stays within its corridor The ceiling - the point up to which colleges must absorb enrolment growth without additional grants

Corridor Model The floor - the point above which a college’s grants will not change if they decline The model starts by setting the “midpoint”, the enrolment level upon which grants will be based

Corridor Model Typically this uses an historical average to both smooth out yearly fluctuations in enrolment, and to ensure that enrolment is known It can be set on a system wide basis under which every college uses the same years or it can be individually negotiated under the SMA process

Corridor Model For the corridor model to ‘work’ for at least 5 years, the ceiling and floor need to be set at levels that will keep most colleges in their corridor for that length of time Modeling using provincial demographic forecasts by region indicate that to keep at least half the colleges in their corridor needs a floor of -7%

Corridor Model Since not many colleges are forecast to grow, the ceiling does not have to be very high, and growth colleges themselves want it low so they do not have to absorb significant enrolment growth on fees alone. For that reason a ceiling as low as 1% would be desirable.

Next Steps COP has recommended a corridor to the Ministry The Ministry must now consider this advice and go to Cabinet for a decision on the design of the new funding model A new model could be implemented as early as 2017-18 with a transition period