Posts tagged with services.

Low inflation may be bad for students

Joey Coleman, January 25, 2010 at 2:53 PM

 

Last week, Statistics Canada released the Consumer Price Index for 2009 showing inflation in Canada for last year averaging 1.3 per cent. This report, which very few students (or sometimes parents) pay attention to, has the greatest impact on student fees of any Statistics Canada measure  - it is the rate used by most universities to decide ancillary fee increases.

 

At first glance, the CPI report  is great news for students, with the 2009 yearly rate lowest in British Columbia  at 0.4 per cent and highest at 3.0 per cent in P.E.I. and New Brunswick , scheduled increases to indexed student fees will be at an all-time low in some parts of the country.

 

The indexing of fees to CPI is designed to prevent inflation from eating away at the value of student fee contributions to services and avoids constantly holding referendums to increase flat fees due to inflation.

 

Until now, the system has worked. CPI usually hovers between 2 and 3 per cent.

 

The lack of increase is not good news for universities as their human resource costs are not indexed to CPI; they are set by collective agreements. The increases in salary and benefits for employees of ancillary-fee funded services average 2 to 3 per cent at most universities.

 

The anomaly in CPI, caused by the downward pressure of the recession, has caused an imbalance between revenue and expenses. 

 

It is for this reason that ancillary fee-funded university services such as career services and athletics are facing larger deficits. There are only two ways for universities to erase these deficits: cut services or increase fees.

 

Students will have to choose which "solution" they prefer. They can hold referendums to increase their ancillary fees or accept cutbacks to the services they fund.

 

The most desirable "solution" is to increase fees by an additional 2 per cent this year and leave the fees indexed to CPI continuing into the future. Hopefully, the economy will rebound and CPI will bounce back to a healthier rate.

 

The alternative is permanent cuts to ancillary-fee funded services, since future fees will never make up for a shortfall this year.

 

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