PSA Financial Analysis – Canada

Having completed a series of posts covering an historical sociological framework for PSA - Part 1, Part 2, and Part 3 - it now seems appropriate to provide a modern financial perspective in support of the model. Though prior posts have applied the PSA model to higher education (HE) finances in the American and Chinese systems, it is important to offer a more nuanced financial picture. To this end, I offer a two-part series in which HE financial data from Canada and Australia is used to demonstrate the viability and desirability of PSA. Followed by Australia, this post looks at Canada.

Historical Roots of the PSA Model – Part 3

First in Bologna and then in Paris, this series has looked at the 12^th and 13^th century origins of the modern higher education institutions (HEIs) we refer to as universities and colleges. Described as a process of confluence and conflict, the heritage was casually framed within power analyses common to sociology. Then, as today, there were macro economic and political forces that acted to transform and maintain the functions of higher education (HE), while individuals and groups jockeyed for favourable position within the system social milieu. We have seen that the modern conception and expression of a university are derived from the Latin, universitas, which in its original academic form were groups of teachers and students united in pursuit of intimately related and mutually beneficial goals that had manifest and latent impact on HE and society at large (Merton, 1957). We have also seen how the introduction of endowed colleges and salaried lectureships inserted a wedge of powerful papal and royal interests into the teacher-student relationship. As a result, our inheritance was not a university of masters and scholars, but of bloated buildings, budgets, and bureaucracies.

Historical Roots of the PSA Model – Part 2

In revealing the historical roots of PSA, part one of this series looked to the emergence of higher education in 12^th century Italy, where, “Emphatically, Bologna was a student university…” (Haskins, 1923). The final installment of the series looks at its professional pedigree in the 19^th and 20^th centuries; while this second post looks to Paris, France, for the medieval choreography of confluence and conflict that produced modern higher education institutions (HEIs). With power dynamics adjusted through economic and political maneuvering, Paris adds momentum to the shift in higher education (HE) from individuals to institutions – a shift that PSA aims to reverse.

Historical Roots of the PSA Model – Part 1

When people first learn of PSA, they tend to view it as something without precedent. It is not. Like most “new” ideas, it is merely a mix of what came before. This first of a three-part series identifies one such precedent – Medieval higher education in Bologna, Italy. Part two examines emergence of the same in Paris, France. While part three explains how the 18^th century introduction of professions and professional societies instructs PSA. Together, they provide historical grounding for the PSA model of higher education (HE).

[NOTE: See Part 2 and Part 3 of the series.]

Financial Liberation of Higher Education

 

I have updated some of the key numbers that support the PSA model. I decided to post my calculation document in raw form. The numbers speak for themselves, but I’ll provide some elaboration.

[NOTE: Here are links to financial analyses of the Canadian (2022) and Australian (2022) higher education systems.]

All calculations are based on the 2016-17 academic year and are in constant 2017-18 USD. Data has been averaged across 2 and 4-year public institutions and is presented in full time equivalent (FTE) measures. The data sources are the National Center for Education Statistics (NCES) and the College Board (CB). Calculations do not include weighting for 2-year vs. 4-year institutions or undergraduate vs. graduate level of study.

Two notable calculations:

a)   Maintaining the current number of FTEF and an annual practice expense of $200,000, the PSA model can provide HE for 34% of the total revenue in the HEI model.

b) At 34% of total revenue, PSA can provide not only a sustainable, respectable living for all FTEF, but tuition-free HE to 11,239,067 FTESs for a 10% increase in FTESs.

As always, I invite feedback and collaboration.

Full Time Equivalents

Full Time Equivalents		Student Ratio
Faculty (FTEF)	680,510	15.5
Graduate Assistants (FTEGA)	98,599	107.2
Other Staff (FTEOS)	1,162,004	9.1
Students (FTES)	10,565,751	N/A

[FTEF entails instruction, research and public service. All graduate assistants are considered part time. Figures are for 2 and 4-year public HEIs combined. Source: Snyder, et al., 2019, pg. 262 and 283.]

PSA sample practice expenses

Amount	Item
$10,000	Salary of academic practitioner (gross)
$3200	Other salaries, wages, and commissions (teaching assistant)
$2000	Rent (office and lecture services, facilities, and equipment)
$200	Advertising
$100	Printing and shipping
$200	Office supplies and equipment (computer, phone, business cards, etc.)
$200	Website hosting, maintenance, internet fees
$50	General business insurance
$150	Health insurance
$200	Retirement
$500	Society membership and other professional fees (accountant, professional development courses, etc.)
$16,800	Total

Practice expenses are based on professional prerogative and so in reality will display considerable variety. These numbers - $16,800/month or $201,600/annum - are for a solo practice with office assistance and facilities, face-to-face teaching facilities, and a teaching/graduate assistant. These numbers are consistent across cities in North America. It is also important to note that under these calculations the mean, median and mode of income distribution are the same, with a range of zero – so, every academic earns the identified practice scenario income.

PSA practice funded by select current HEI model sources

Source	Per FTES	Total FTES	Per FTEF
Revenue
Total Revenue	$37,797	$399,353,690,547	$586,844
Appropriations & Non-operating Grants	$10,523	$111,183,397,773	$168,382
Tuition & Other Fees	$7,666	$80,997,047,166	$119,024
Expense
Instructional	$10,832	$114,448,214,832	$168,120
Instructional, Research, Public Service, and Academic Support	$18,959	$200,316,073,209	$294,361
Instructional, Research, Public Service, Academic and Student Support	$21,036	$222,261,138,036	$326,609

[Formula used in calculations: (Source per FTES) x (Total FTES) ÷ (Total FTEF) = Per FTEF (Practice Funding/Revenue). Source: Snyder, et al., 2019, pg.386, 387, 394.]

With this sort of financial liberation in higher education amazing things are possible. Maintaining the total revenue per FTES and a practice expense pf $200,000/annum, the number of faculty could increase by 66% or 449,143 FTEF – or as PSA prefers, FTE Academics. With an academic-student ratio of 1:15.5 that would also mean a 66% or 6,961,719 increase in FTES. Graduate assistance would increase by 1145% or 1,031,054 FTEGA. The flexibility in PSA finance also means there is room for more liberal student expansion and retention numbers, along with tuition and expense-free HE.