Canadian universities reported record surplus revenue in the wake of the pandemic as schools benefited from strong stock market performance last year.
According to a Statistics Canada report released Tuesday, Canadian universities raked in $7.3 billion in surplus revenue in the 2020-21 academic year, the highest since StatCan began collecting data in 2000. revenues increased by 12.8% over the previous year to reach $46.3 billion. while spending fell 3.8% to $39.0 billion.
Much of the rise in revenue can be attributed to record investment income thanks to strong equity performance in 2021. Universities earned a record $5.4 billion from investments in 2020-21, up from 44 .3 million the previous year and an annual average of $1.4 billion over the previous five years.
These investment gains coincided with strong stock market performance in 2021. The S&P 500 ended the year with a 27% gain from the start of 2021.
“Collectively, universities have shown resilience in moving quickly to virtual learning environments and have achieved better-than-expected results, despite travel restrictions affecting international students, the closure of campus services and residences operating at lower capacity,” the StatCan report says.
The record revenues were achieved despite provincial funding declining in recent years. Provincial funding represented 32.5% of total university revenue in 2020-21, compared to 36.7% the previous year.
In Quebec and NL, provincial funding accounted for half of university revenues. But in Ontario, provincial funding was only 21.4% and has declined since its peak of 42.1% in 2008-09.
On the other hand, the increase in tuition income made it possible to compensate for the shortfalls in provincial funding. Tuition revenue represents 28.8% of total revenue in 2020-21, up from 21.5% 10 years ago, especially as international tuition fees have continued to soar.
In most provinces, international tuition fees are deregulated, meaning schools can charge international students as much as they want.
In 2020-21, international undergraduate tuition fees increased by 7.1% to $32,019, compared to only $6,580 for domestic students. Some programs, like engineering at the University of Toronto, were over $60,000 for international students — and that’s not including ancillary fees.
And while provincial support dwindled, federal government support increased that year, through pandemic grant programs totaling $5.3 billion. Federal funding represented 11.4% of university revenues, compared to 10.3% the previous year.
Due to a lack of on-campus activities amid COVID-19 restrictions, universities also lost $1.5 billion, or nearly half of revenue from product sales and services, as in cafeterias, gymnasiums and residences.
Universities also reported a 3.8% drop in spending, the largest drop since StatCan began collecting data. The largest decline was in Alberta, where universities cut spending by 10.8% through austerity measures in response to provincial funding cuts.
In the year ahead, StatCan says universities are unlikely to report such high earnings, given the stock market’s decline since the start of this year. However, as on-campus activities continue to pick up, StatCan says this could lead to increased revenue from tuition and ancillary services.
“The impact of the pandemic will continue to be felt in 2021/2022, and it may take years for universities to return to pre-pandemic growth levels,” the report said.