Redesigning the University for an Era of Fiscal Constraint

Talk to a university leader in almost any Canadian province right now and the conversation eventually lands in the same places. Budgets are tight, programs are under review, and the gap between revenue and costs keeps widening. It’s happening across the country, at institutions that were, not long ago, in decent financial shape.

In their latest budget, the Ontario government just confirmed $6.4 billion in new post-secondary funding over four years. It’s the largest commitment in the province’s history, but faculty associations have already pointed out that universities would need $3 billion just to reach the national average for per-student funding, and the new money hasn’t stopped restructuring, layoffs, or program closures already underway. Seventeen of the province’s twenty-four universities are under government efficiency reviews. Meanwhile, the international enrolment that used to buffer the gap has dried up.

What makes this moment different from previous budget pressures is that the relief valve is gone. Ontario tuition was frozen since 2019 and cut before that, a seven-year freeze the province only lifted in February 2026, allowing increases of up to two per cent annually. It will take years to catch up to 2019-levels, which does not close the gap. Meanwhile, the international enrolment that used to buffer the gap has dried up.

The question is whether new funding buys time or buys change. Without a shift in how programs are delivered and who they reach, the pressure comes back.

What provincial reviews are actually rewarding

Provinces reviewing post-secondary funding are doing it because the current formulas are indefensible and the sector knows it. BC, Alberta, and Nova Scotia are all somewhere in this process. The outcomes will shape institutional finances for years.

Provincial governments reviewing funding formulas are asking whether universities are reaching more Canadians and impacting the workforce. More seats in existing programs for existing students is a reasonable answer to a budget crisis, however it doesn’t do much to change the argument for why the sector deserves sustained public investment. Institutions that can show enrolment growth in in-demand fields with underserved populations, and make a credible case for how they plan to reach more of them, are walking into those conversations with a stronger hand.

Financial pressure doesn’t disappear because a province steps in with stabilization funding. It just shows up differently. Programs get reviewed, new positions that aren’t tied to growth are harder to justify, hiring slows down. Surviving the next budget cycle and building a model that actually works going forward are two very different things.

The wrong question is killing the right programs

The geographic model made sense when campuses were the primary infrastructure for education. Students came to universities because that was where the resources, the faculty, and the credentials were. That’s still true for much of what universities do, and campuses will always be central to the undergraduate experience, research, and community engagement. But it’s no longer true that physical presence is the only way to deliver rigorous programming.

The conversation at most institutions right now is about which programs to keep. That’s an understandable response to a budget crisis, but it’s the wrong question. The debate over Ontario Premier Doug Ford’s basket-weaving comments got framed as a fight over which programs deserve public investment. The more productive question, from a sustainability standpoint, is about delivery. There are Canadians in rural communities, in smaller cities, in mid-career roles, who want access to graduate and professional education and can’t get it because the program requires them to show up somewhere they can’t be. Rethinking delivery expands the pool without changing what’s being taught and who is teaching it.

Carleton University’s Philippe Lagassé, writing recently about Canada’s Defence Industrial Strategy and higher education, makes this case from the demand side. The federal government is making a generational investment in defence and needs trained talent the current system isn’t producing fast enough. This is a national workforce challenge, and it won’t be solved by programs available only to students who can be in one city. The supply-side answer has to come from institutions willing to rethink how programs are delivered, not just which ones survive the next budget cycle.

Revenue without expansion

The fiscal argument for online programming is straightforward because it’s one of the few ways to grow revenue without growing the cost base proportionally. No new buildings, existing faculty expertise, and programs that reach students across the country in fields where documented demand already exists. There are real investments involved, particularly in instructional capacity, but when you’ve done the work on the demand side to understand the national working learner market before you build, those investments are tied directly to growth, and grounded in labour market data and other evidence.

The demand context is worth stating plainly, even if some of it has appeared in our earlier writing. Federal Budget 2025 is reducing the public service by roughly 40,000 positions by 2028-29. Those are largely mid-career workers with strong existing credentials who will be looking for pathways into new sectors. At the same time, $81.8 billion in defence investment over five years is creating demand for trained talent that the current system struggles to produce fast enough. The scale of both shifts is significant and lasting.

The learners most likely to act on that demand are working adults, people already in careers who need graduate or professional credentials to move into new fields or advance in existing ones. They are not the audience Canadian universities have historically designed for. They have jobs, families, and geographic constraints that make traditional full-time on-campus delivery a non-starter. But they have the credentials, the motivation, and the means to enroll in programs that fit how they actually live. That audience exists at scale right now. The institutions that build for them are the ones that will look meaningfully different by the end of the decade.

A design challenge, not a budget problem

There’s a version of this where Canadian universities come out of the next five years having built genuinely new capacity. They’ve diversified revenue, reached learners they never reached before, and demonstrated to provincial governments that they’re institutions worth investing in. There’s another version where they absorb cuts year after year and emerge smaller and less equipped to train Canada’s future workforce, without having changed anything fundamental about how they operate.

The difference is whether leadership frames this as a budget problem or a design problem. Budget problems get solved by cutting. Design problems get solved by building something different.

Building online programming at the quality and scale this moment requires is hard to do alone, especially under a hiring freeze. That’s where external partners with expertise in program development, market analysis, and national student recruitment can compress the timeline considerably. For institutions that want to move, there are ways to move now without waiting for conditions to improve.