This article was originally published in the Cape Breton Independent
Two weeks ago, Dan Price, CEO of a US company called Galaxy Payments, slashed his own million dollar salary to US$70,000 in order to raise the annual income of all of his 120 employees to the same rate. His inspiration came from a 2010 study that claimed a person’s day-to-day happiness does not increase once earnings surpass US$75,000 a year. Not only did Price’s decision seek to improve the happiness of all of his employees, it also contributed to greater income equality in a country bedeviled by growing inequality.
Canada also suffers from growing inequality. We are also deeply embedded in a culture of austerity that too often targets the less fortunate and further increases the income gap. We are told by our elected officials that the government cannot afford to fund education, healthcare, infrastructure and other services at the levels it has in the past. Meanwhile, the spigot for taxpayer-funded corporate subsidies remains wide open and tax cuts for corporations and the wealthy remain firmly in place.
In this context, Cape Breton University recently unveiled its new four-year fiscal plan, which includes a 3 percent increase in tuition next year and a 5.9 percent increase in each of the following three years. But what if CBU instead lowered tuition by 4 percent for the next four years and simultaneously contributed to a reduction in inequality?
Many people would say that such a suggestion in this age of austerity is ridiculous. But is it? Through voluntary salary cuts by high-level administrators and senior faculty in conjunction with increased government funding, CBU could indeed lower tuition by 4 percent for the next four years. Therefore, in the spirit of Dan Price, I would like to propose a plan to both CBU and the provincial government that would make university more affordable for Nova Scotia’s youth and reduce the levels of debt carried by future students.
CBU’s planned tuition increases for Canadian students will generate approximately $2.8 million in revenues over the next four years, or an average of $700,000 a year. If all CBU administrators and faculty who earn over $100,000 a year were to accept a five percent pay cut, that would make approximately $375,000 available annually to help reduce tuition costs for Canadian students attending CBU.
But there is no reason why high-level university administrators and senior faculty should impose austerity on themselves when it is ultimately the government’s responsibility to ensure affordable education be made available to all Canadians. Therefore, such pay cuts must be contingent on the provincial government providing $2 in additional funding to CBU for each $1 the university saves in pay cuts. Consequently, the province would provide an additional $750,000 a year in funding to CBU, resulting in a total in excess of $1.1 million annually to be used to reduce tuition costs for domestic students.
Such a plan would generate $4.4 million over the next four years for CBU, which is $1.6 million more than the $2.8 million in revenues that the university’s fiscal plan proposes. As a result, instead of raising tuition by more than 20 percent over the next four years, CBU would actually reduce tuition by 4 percent.
So why set the bar at $100,000 a year for pay cuts? Well, not only is it a nice round figure that allows those affected to continue comfortably meeting their basic needs, it is also the approximate equivalent in Canadian dollars to the US$75,000 amount in the aforementioned happiness study. But why should high-level administrators and senior faculty be willing to make such a commitment? Obviously it would not be in their immediate self-interest. After all, like medical doctors, professors are required to take ten years of university education (and often accumulate significant debts) before they can even begin to start earning an income.
But given the growing problem with income inequality in Canada and the fact that the average income in Nova Scotia is $43,000, such a commitment by those at CBU who are in the top 10 percent of the nation’s income earners would constitute an admirable gesture regarding the need to redistribute some of the country’s wealth. In effect, such a move would be the equivalent of a self-imposed five percent income tax increase on high income wage earners at CBU to help fund post-secondary education. Consequently, it would be an example of the sort of social gains that could be achieved if taxes were raised on all high income earners, such as corporate executives, throughout Canada.
It would also set an example for the provincial Liberal Party, which has made it abundantly clear in both its latest budget and Bill 100 that it does not value post-secondary education. Therefore, a willingness on the part of high-level administrators and senior faculty at CBU (and any other university in the province for that matter) to make such a commitment would place significant pressure on the government to fulfil its social responsibility with regard to post-secondary education by increasing funding to reduce tuition costs and eventually achieve tuition-free university.
One only has to look at Newfoundland for an example of how austerity with regard to public funding of universities is not inevitable. Annual tuition at Memorial University is only $2,500, compared to $5,500 at CBU. The principal reason for this is government funding, which covers 85 percent of Memorial’s operating costs, thereby allowing it to charge significantly lower tuition rates than the rest of English-speaking Canada where government funding only accounts for 55 percent of university revenues. Clearly, as Newfoundland has shown, provincial governments can provide sufficient funding for post-secondary education if they possess the political will.
As a result of affordable tuition in Newfoundland, some 3,200 of Memorial’s 15,000 Canadian students are from out-of-province with more than 1,000 of them from Nova Scotia. The percentage of Memorial’s students who come from other provinces has grown from less than five percent in 2000 to over 20 percent today because tuition costs have increased throughout the rest of Canada.
Given this reality at Memorial, CBU could take an even bolder step by listening to the suggestion of its students’ union president Brendon Ellis, who responded to the university’s fiscal plan by stating: “I don’t think there is a better way of advertising and competing with our competitors up in Halifax … than having the lowest tuition. I think that’s a tremendous way to grow as an institution.”
Canadians constitute approximately 70 percent of CBU’s students and they pay about $13 million in tuition annually. If CBU were to lower its tuition from $5,500 a year to $4,000 annually, it would attract more students from throughout Nova Scotia and the rest of English-speaking Canada. It would most likely capture many of the Nova Scotia students who go to Memorial to save on tuition because Cape Breton would be much closer to home.
If having significantly lower tuition rates than other universities in the province were to increase CBU’s enrollments by 1,000 students then it would generate the same revenues from tuition as it currently collects. Meanwhile, there would be little additional cost to educating an extra 1,000 students because declining enrollments in many areas of the university in recent years means that most classes could handle the increased numbers without hiring additional faculty. For instance, a class that currently has ten students would increase to 13. Similarly, a class of 20 students would increase to 26. From a faculty point of view, such a move would eliminate the possibility of layoffs that currently exists.
Furthermore, an additional 1,000 students from throughout Canada attending CBU would provide an economic boost to the CBRM due to the money they would spend living here and engaging in the local economy.
The state is ultimately responsible for ensuring affordable education is available to all Canadians, which is why Nova Scotia’s provincial government should follow Newfoundland’s lead and value the education of our youth. Having said that, high-level administrators and senior faculty at CBU have also received pay raises each year while students have become increasingly burdened with debt due to constantly rising tuition rates. It’s time that we all addressed this growing inequality in our province and began investing in the future. And high-level administrators and senior faculty at CBU could lead the way by following the example of Dan Price.
Author: Garry Leech is a member of The J. B. McLachlan Media Collective and a lecturer in the Department of Political Science at Cape Breton University.
