Credit rating agency says new funding for Ontario universities a 'stop gap'

A global credit rating agency says Ontario's recent post-secondary funding announcement is only a "stop gap" that will still leave universities struggling, and which may end up hurting the student experience.

DBRS Morningstar says in commentary released today that the three-year, $1.3-billion package announced this week by Colleges and Universities Minister Jill Dunlop fails to address a "fundamental lack" of revenue flexibility for Ontario universities.

• Download our app to get local alerts on your device
• Get the latest local updates right to your inbox

The agency provides credit ratings for about a dozen Ontario universities, but the government's announcement impacts both colleges and universities and organizations representing both types of institutions have said the funding falls short of what is required.

The funding Dunlop announced is less than half of what was recommended by a government-commissioned expert panel, and she also announced a tuition fee freeze will continue for at least three more years, contrary to the panel's recommendations.

Colleges and universities have been sounding the alarm on their finances, with at least 10 universities projecting operating deficits.

DBRS says without the ability to increase revenues, shortfalls may lead to declining student experience and overall competitiveness.

This report by The Canadian Press was first published Feb. 28, 2024.