Legislative Assembly of Ontario

ANNUAL REPORT, OFFICE OF THE PROVINCIAL AUDITOR, 1990

MINISTRY OF COLLEGES AND UNIVERSITIES

CONTENTS

Monday 4 February 1991

Annual Report, Provincial Auditor, 1990

Ministry of Colleges and Universities

Adjournment

STANDING COMMITTEE ON PUBLIC ACCOUNTS

Chair: Callahan, Robert V. (Brampton South L)

Vice-Chair: Poole, Dianne (Eglinton L)

Bradley, James J. (St. Catharines L)

Charlton, Brian A. (Hamilton Mountain NDP)

Conway, Sean G. (Renfrew North L)

Cooper, Mike (Kitchener-Wilmot NDP)

Cousens, W. Donald (Markham PC)

Hayes, Pat (Essex-Kent NDP)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings NDP)

MacKinnon, Ellen (Lambton NDP)

O'Connor, Larry (Durham-York NDP)

Tilson, David (Dufferin-Peel PC)

Substitutions:

Cunningham, Dianne E. (London North PC) for Mr Tilson

Daigeler, Hans (Nepean L) for Mr Conway

Fawcett, Joan M. (Northumberland L) for Mr Bradley

Haeck, Christel (St. Catharines-Brock NDP) for Mrs McKinnon

Hope, Randy R. (Chatham-Kent NDP) for Mr Hayes

Clerk pro tem: Carrozza, Franco

Staff: McLellan, Ray, Research Officer, Legislative Research Service

The committee met at 1405 in room 228.

ANNUAL REPORT, OFFICE OF THE PROVINCIAL AUDITOR, 1990

Consideration of the 1990 annual report of the Provincial Auditor.

The Chair: I call to order the first sitting of the public accounts committee of this historic year. You have before you the agenda, and perhaps, before we proceed to the first deputation, I have been asked that on 26 February we have a deputation from Joseph Virgilio, who is the chair of the York Region Roman Catholic Separate School Board. The same gentleman appears on the 28th. He has asked us, and it seems to me to be logical, that he should only have to come on the one occasion, so I am requesting that we have him come on the 26th and we will perhaps extend the sitting a bit to allow him to put together the two times. Is that agreeable to the committee? Agreed. All right.

And on the 28th, since that frees up the 28th in the morning, we have had a request from the former chair of the Lakehead Board of Education, an Evelyn Dodds. She was apparently the chair of the board when, during the issue that is involved with Lakehead, the auditor was requested to look into that matter, and she has requested that she be allowed to appear. I know that seems to be reasonable. She would probably be the person most knowledgeable on the issue, so I am suggesting she fill in the slot on the morning of the 28th. Is that acceptable to the committee? Seeing no one objecting to it, that will be the case then.

The final item is that our researcher has requested that we give him half an hour on 5 February. You will note at 11 in the morning we are in closed session, and the researcher has asked that we give half an hour of that to him to address us. On the 26th a similar situation exists; we are in closed session at 11 in the morning on the 26th. He has also asked us for 30 minutes there. That is just to ensure that he has an opportunity in the event that we get carried away, as we will find can so often happen. Any difficulty with that?

Mr Cousens: We have a closed session for the 26th that is not listed on our agenda.

The Chair: Yes, the 26th, you should have it on there; Tuesday 26 February at 11 in the morning.

Mr Cousens: No.

Ms Poole: No.

The Chair: Oh, is that right? Where is the clerk?

Mr Cousens: I would not worry about it. That is fine. If you say it, that is good enough.

The Chair: Yes, I will tell the clerk that that is the case. It must be a new agenda he has prepared then, but I will check that afterwards. Having said that, we can now get down to the business of today.

MINISTRY OF COLLEGES AND UNIVERSITIES

The Chair: I would like to welcome the deputy minister, Dr Thomas Brzustowski, is it?

Dr Brzustowski: Mr Chairman, that is very close.

The Chair: That is very kind of you. I probably botched it good.

Dr Brzustowski: Seven out of 10, maybe eight.

The Chair: Perhaps you would be kind enough to introduce the other people who are presenting with you, and then we would be happy to hear from you and then of course there will be questions, I am sure, from the committee.

Dr Brzustowski: Mr Chairman, if you would allow, I would first of all like to explain my presence here. Members of the committee are probably aware that I have assumed a new set of responsibilities, in fact as of 1 February, so I am no longer the Deputy Minister of Colleges and Universities. Dr Bernard Shapiro holds that position. But since I was the deputy minister while these audits were taking place, it seemed appropriate to come here and discuss them.

I would like to introduce on my left, your right, Jamie MacKay, who is the director of the university relations branch in the ministry, and on my right and your left, David Lyon who is executive co-ordinator of corporate planning and services for MCU.

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I really would like to thank the committee for the opportunity to present and discuss the ministry's response to the Provincial Auditor's reports on these inspection audits of Trent University, the University of Guelph and the University of Toronto. I did not realize that we were going to be so honoured as to be here for your very first session, but this is an important issue and we take it very, very seriously.

The Provincial Auditor's audit of these three universities is, in a sense, a milestone event. These audits are the first ever conducted by a servant of the Legislature in the universities.

In 1987, when the Provincial Auditor announced that he would conduct inspection audits of the university community under section 13 of the Audit Act, he defined "inspection audits" as "examinations of accounting records." He also said, and I quote from the letter of the time, "Although value for money observations may arise as a byproduct of inspection audits, the audits cannot be specifically value-for-money oriented."

Let me state from the outset that we in the Ministry of Colleges and Universities believe that the Provincial Auditor's initiative in conducting these inspection audits has been beneficial and constructive for the ministry. The ministry has taken seriously the observations and findings of the Provincial Auditor and his staff and we have discussed all three audits with his office as each was released.

Where they apply to the ministry, the audit findings have prompted the ministry to review existing policies and procedures which I will describe shortly.

From the ministry's perspective, the findings of the audits fall into two types, those that are within the statutory and regulatory control of the ministry itself and those others that properly fall under the respective jurisdictions of the three universities. I understand that officials of the three universities have been invited to appear before the committee and therefore I will restrict my comments to those matters that are within the purview of the ministry. It would only be appropriate for the universities to address audit observations that relate specifically to the operation of their institutions.

It is by acts of the Legislature that the universities of Ontario are autonomous institutions. This means in essence that they have the freedom to determine who will be admitted to the university, how they will receive their university education, the academic standards against which they will be assessed and the manner in which the university will be administered.

The Ministry of Colleges and Universities provides public funding to the universities in the form of operating grants to enable the universities to deliver university education. In so doing, the ministry formulates policies and prescribes the basis upon which the distribution of operating grants is achieved.

I might add, parenthetically, that because of the statutory autonomy of the universities and because the ministry's role is so very limited, it is in fact possible for the staff of the ministry who work in this area to be limited to something like three dozen people.

The existing accountability framework between universities and the ministry is predicated on this statutory relationship and the statutory provisions of each university's enabling legislation. The ministry's policies and procedures respecting the funding of and the distribution of funds to the universities is embodied in something we call the Ontario Operating Funds Distribution Manual; that's a permanent document of the ministry updated on a regular basis.

With the committee's indulgence, I would like to spend some time to highlight the significance of the manual and the university's legislative independence before I comment specifically on the audit findings relating to the enrolment reporting systems.

Section 7 of the Ministry of Colleges and Universities Act permits the minister to make regulations, among other things, for prescribing the terms and conditions under which grants are provided, defining "enrolment" and "student" for the purpose of legislative grants and requiring that enrolment be subject to approval of the minister.

Although no regulations have been made pursuant to section 7 of the act, the Ontario Operating Funds Distribution Manual in effect serves the purpose of a regulation and sets out the basis on which funds are distributed and the reporting requirements necessary to demonstrate entitlement to such funds. This manual prescribes the terms and conditions under which universities receive general purpose operating grants and the distribution of specific targeted funds which represent the balance of operating support. These targeted funds carry with them specific accountability and reporting measures to ensure that their expenditures by the university achieve the purposes for which they were intended. An example might be a fund targeted for the purchase of undergraduate laboratory teaching equipment or library materials. That is a targeted fund.

The amount of general purpose operating grants that a university receives is to a very large extent determined by the size and type of its enrolment. Without going into the complexities of the funding distribution formula, and they are considerable, a formula which takes into consideration past and current enrolments in the process of determining the university's entitlement, until recently and in general, the higher the enrolment and the more academic activity-intensive the enrolment, the greater the entitlement. The intent obviously is in some way to reflect activity in the entitlement, both in terms of the numbers of students and the amount of service these students obtain.

Universities are therefore expected to report their enrolment accurately to ensure that they receive their proper share of the total general purpose operating funds available to the university system as a whole. To ensure that there is consistency and equity among the universities in their enrolment reporting, to avoid over- and underentitlements, the Ontario Operating Funds Distribution Manual sets out the enrolment definitions, eligibility policies and reporting procedures.

Having said that, I wish to make the observation that Ontario has 22 universities and university-related institutions, no two of them identical, each having its own mix of programs and specializations and each operating under its own academic and administrative imperatives. Each institution serves a diversity of needs and interests within a very diverse student population.

Enrolment definitions and eligibility policies therefore are set by the ministry in the manual to embrace the most common definitions and occurrences within the university system, relying on specific rulings on application by the universities to the ministry on interpretational issues. I think if we tried to write a manual which catered to every conceivable situation which already exists, let alone the ones which will develop as programs evolve, the manual would be the thickness of a dozen phone books. We do rely on the manual and we do rely on specific rulings to interpret the manual in particular cases.

Each year, universities are required to submit audited financial statements. This is a major element of accountability of the universities to the ministry. In addition, for some of the universities it is a requirement that their reports be tabled in the Legislature each year, and again, I say "some" because some of the university acts do specify that requirement; some others do not.

The reports outline the financial position of the institution and, along with accompanying notes, describe any contingencies or extraordinary transactions in which the universities may have participated.

The ministry also receives on an annual basis a comprehensive and standardized report on the revenues and expenditures of the universities prepared by the committee of finance officers -- universities of Ontario, which is a subcommittee of the Council of Ontario Universities, in turn a representative body of the universities.

Each year by 31 December, following the conclusion of the academic year, every institution must submit to the ministry an audited enrolment report indicating its weighted enrolments, measured in something called basic income units, BIUs, and also tuition income. The university's external auditor, that is, the auditor appointed by the board of governors of the university, is responsible for attesting to this report's contents through procedures as prescribed in the Ontario Operating Funds Distribution Manual and submitting an audit opinion to the deputy minister. This audit requirement is designed to provide assurance to the ministry regarding the completeness and accuracy of the university's enrolment count within limits of materiality as prescribed.

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I cannot overemphasize the importance of this audited enrolment report submitted to the ministry by the university. It is this audited enrolment report which serves as the basis for determining the general-purpose operating grant of the university. This is the report also which provides assurance that the definitions, policies and requirements of the manual are being adhered to in a consistent manner from year to year.

Earlier on I mentioned that specific accountability measures are in place for targeted funds. Where appropriate, the ministry has also required universities to report specifically on targeted programs through the same external auditors. If I may, I would now like to focus on the specific findings of the university audits as they pertain to the ministry. What I am about to say refers to the detailed audit reports on the three universities provided to me by the Provincial Auditor and the ministry's respective responses. I will not refer to these materials in detail but will only address them in a summary fashion, because copies of the documents are provided to the committee for your information and because we are here to answer your questions afterwards.

On 20 December 1990 the Provincial Auditor provided the ministry with a summary of the audit results of the inspection audits that were carried out. In that summary, the Provincial Auditor emphasized his concern that accountability is inadequate and needs to be improved. We too believe that accountability for funds distributed to the universities is of paramount importance. In this connection, we note that the Provincial Auditor did not report any instance in which funds provided by the ministry were not spent on purposes for which they were intended.

We also agree that the weaknesses pertaining to enrolment reporting in specific institutions, if allowed to remain unaddressed, call into question the equitable distribution of funds among the institutions. In this regard, the auditor's observations are helpful and I want to assure the committee that the ministry is always alert to looking at improvement opportunities where inconsistencies may exist and be shown to exist.

I would now like to deal with one of the Provincial Auditor's main observations that seems to be common to all three audits, and that is the issue of distinguishing, for enrolment reporting purposes, between what we call honours and general arts and science students. Universities, for purposes of enrolment reporting, provide the ministry with a count of students and the programs in which they are enrolled. Based on this report, the ministry generates a weighted enrolment count by applying the applicable program weight which varies from program to program. For example, a general arts and science program carries a program weight of 1.0, whereas a doctoral program carries a program weight of 6.0. This means that in the weighted enrolment count, a single doctoral student would count in the same way as six students registered in a general arts and science program.

Upper-years honours arts programs carry a weight of 1.5 and upper-years honours science programs carry a weight of 2.0. Again, without going into the intricacies of the funding distribution formula, it is fundamental that all student counts be translated into a common measure of weighted enrolments, and I should add a remark here, Mr Chairman. It may seem out of context -- it appears again later -- but I would just like to underline for the committee that the issue in the enrolment weights and the enrolment counts is the distribution of a fixed sum of money made available by the Legislature among the universities. There was a time early on in the operation of this formula where the amount of money made available responded to the enrolment count, but that is no longer the case. It is a distribution of a fixed sum.

Specifically, in connection with Trent University, in his report on Trent University issued in April 1988, the Provincial Auditor commented that the enrolment data reported by the university were incorrect. The Provincial Auditor reported instances of non-compliance with ministry and university guidelines on the determination and reporting of students enrolled in the honours arts program.

The Provincial Auditor also claimed that since 1982: "Trent has received approximately $11 million that might otherwise have been granted to other universities. This resulted from the university reporting enrolment data based on criteria that had not received the required ministry approval. The situation was exacerbated by the failure to even adhere to the university's established criteria. Furthermore, unless the ministry approves the criteria retroactively, this will also result in higher future funding than Trent is entitled to."

The ministry replied to these observations in a letter to the Provincial Auditor in September 1988. I would like to briefly summarize the reply to the Provincial Auditor pertaining to these issues. This goes back into history some time, two decades in fact.

In 1968 the ministry approved Trent University's policy to use marks as a way to distinguish upper-year honours from general students for enrolment reporting purposes. However, in 1982 Trent University failed to specifically request approval for the revised criteria adopted for differentiation of honours students. A revision had passed through the senate of Trent University. In fact, the ministry was informed but the letter did not explicitly ask for approval.

The ministry's position is that if Trent University had requested approval in 1982 for the change in revised criteria, permission for that change would have been granted, especially since the changes were approved by Trent University senate and were not inconsistent with the previous approval to that university, and with the practices of other universities.

Subsequent to the Provincial Auditor releasing his report, Trent University requested and received from the ministry retroactive approval for the 1982 change. I would like to assure the committee that Trent University has been told that it must request approval from the ministry prior to the implementation of any such future changes. Trent University has agreed to ensure prior approval is obtained in the future.

Regarding the finding on the overpayment of the operating grants resulting from this lack of approval, it should be noted that the $11-million overpayment or estimate of overpayment is based on the Provincial Auditor's understanding that Trent University had never received approval for its policy of differentiating honours students back in 1968. The ministry has recalculated Trent University's grants on the basis of ministry approval received in 1968 but not in 1982, and on the actual formulae in use during the periods in question. Based on this recalculation, the ministry has determined that Trent University received approximately $1.3 million more in operating grants over the period 1982-83 to 1986-87 than it would have received had it not changed its criteria for differentiating honours students.

In the matter of the University of Guelph, in his report released in July 1989 the Provincial Auditor expressed concern that the differentiation between honours students and general students under the existing university funding policy was open to wide interpretation and possibly to inequities as well.

The ministry's response to the Provincial Auditor was to note that subsequent to the release of the Trent University audit report, the issue of funding honours arts and science programs in all universities was referred to the Ontario Council on University Affairs for advice and recommendations.

I am now able to inform the committee that the council, after examining this issue, provided an advisory memorandum to the minister, number 90-V, in November 1990, which was accepted by the minister. New ministry reporting guidelines based on that advice will take effect in the 1992-93 academic year. The result of implementing these new reporting guidelines will reduce the variability in classifying general and honours students and introduce greater inter-institutional fairness and consistency in reporting practices.

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In the matter of the University of Toronto, the Provincial Auditor in his report on the University of Toronto issued in July 1990 noted that the university has not differentiated its arts and science students into general and honours categories since 1969. The Provincial Auditor correctly points out that the university had an agreement with the ministry permitting it to apply a common funding weight of 1.2 for its arts and science students.

The Provincial Auditor contends that first-year students should have received a weighting of 1.0 regardless of the programs they were in, and that this special funding arrangement has provided the university with significantly more funding for its arts and science students than other universities. The university, as a result, received a comparable amount of funding for its upper-year arts and science students while annually receiving between 33% and 42% more funding for its first-year students.

In the 1989 fiscal year the university claimed 3,000 BIUs, these basic income units which are the product of the weight and the number of students, or approximately $13 million more, in the Provincial Auditor's opinion, than it would have had had all first-year students been counted at the weight of 1.0 rather than 1.419. It was further noted by the Provincial Auditor that if all other universities in Ontario had been funded on the same basis as the University of Toronto they would have been entitled to a total of $55 million to $75 million dollars more in the 1989 fiscal year.

In responding to that, we have to go back to the origin of the funding weight calculation of the University of Toronto. The origin of this funding weight calculation, using the university's arts and science two prior years' enrolment, goes back to 1969-70. During the 1972-73 fiscal year the University of Toronto indicated that due to a general shift in the balance between arts and science, and four- and three-year programs, the university was losing grants relative to other Ontario universities. The feeling was that the prior arrangement was not giving the university a fair measure of entitlement.

As a result of this particular representation from the university, and after careful consideration, a method of revising a what we called blended program weight was established. This weight is applicable to all years of study of the program based on the weighted average of actual degrees conferred on three-year arts and science, four-year arts and four-year science students.

Just parenthetically, the idea was that if one looked at degrees, the distribution of degrees actually granted by the University of Toronto, the question was: What formula weight, if it was applied to all the students enrolled in arts and science, would give the same entitlement to the university as the people graduating in those degree categories with their rigid formula weights as applied to everybody else? It was in this way that the number 1.419 was arrived at.

As the ministry indicated by letter to the Provincial Auditor on 14 September 1990: "The formula for determining the blended weight was implemented only after careful review and discussion by the joint subcommittee on finance of the Committee on University Affairs and the subcommittee on operating grants of the Committee of Presidents of Universities of Ontario." I should add that the Committee on University Affairs was the minister's arm's-length advisory body, the precursor to the Ontario Council of University Affairs of today. It was the government advisory body. The initial weight was recalculated for the first time in 1972-73 after a careful review by the joint committee on finance and operating grants.

The formula that had been originally developed in 1969 remained essentially unchanged. Since the original blended weight applied to all four years of study, it was, and continues to be, appropriate for subsequent revised blended weights to be applied to all four years as well. The weight was changed from 1.2 to 1.4.19.

The ministry therefore cannot agree with the audit report's suggestion that first year enrolment be reported at a weight 1.0 and with the funding implications suggested which are based on that opinion.

It should be noted that the decision to establish the blended weight was determined in an open process involving consultation with representatives from all the institutions, people who had a great, great interest in the equity of the outcome. Except for the very early years of the operating formula grants, formula weights have not affected the total amount of funding made available to the system. They have only affected the distribution of funds among the institutions. In other words, no additional funds would have been provided to the system by applying the University of Toronto's blended weight to the entire system.

I would like now to comment very briefly, drawing to the end of my remarks, on some specific audit observations. In his reports on Trent University and the University of Guelph, the Provincial Auditor noted that there were incorrect recordings of students at the count date and also that some foreign students were ineligible for inclusion in the count totals. These points relate directly to the university's external auditor reviewing the universities' systems of internal control to ensure a proper cut-off of enrolment was performed by the university's admission office and that foreign students were correctly classified in the enrolment count report.

There is a cut-off date. It is called the count date. It is the numbers as of that date that are counted.

The ministry cannot answer for the audit verification procedures employed by the university's external auditor other than to state that as a result of the Provincial Auditor's observations, instructions regarding audit verification procedures were reviewed. Changes resulting from the review will be reflected in revisions to the Ontario Operating Funds Distribution Manual for the 1991-92 fiscal year. The universities' external auditor will receive the manual under normal distribution procedures.

The Provincial Auditor also found instances where enrolment counts were in error. In an enrolment reporting system where some 700,000 student records are reported to the ministry annually, reporting errors can be expected to occur at the institutional level. The manual recognizes this reality and prescribes a materiality limit of 2% for enrolment reporting errors.

The Provincial Auditor in his 1989 annual report stated: "...errors identified during our audit (University of Guelph) represented only 1.9% of reported enrolment. Under existing procedures an error rate of up to 2% is considered tolerable."

The University of Toronto, as described by the Provincial Auditor, has been claiming "pre-commerce students" as commerce students. The ministry's reporting guidelines state that a student enrolled in a selection of courses which might be classified under different formula programs of study should be classified in the formula program in which the majority of the courses fall.

The ministry believes that whether the University of Toronto has in fact correctly classified the commerce students would depend on whether the majority of courses taken in the first year were applicable to the commerce degree and not whether they were formally registered in a commerce program. As stated in the Ministry's letter in the letter to the Provincial Auditor: "...the ministry has never required that students be formally registered in formula programs of study, since these are simply broad funding categories."

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We will now turn to the more general questions. I note that the Provincial Auditor has expressed some concern about the accountability of the universities, particularly with regard to their efficiency, effectiveness and economy. Part of that accountability for their effectiveness rests in the assurance that the graduates have been provided with an education of the highest quality. At the institutional level, no new programs may be launched without an internal academic review and approval by the university senate or equivalent body. In addition, for all graduate programs and professional undergraduate programs, funding recognition is not provided by the ministry until the program has been reviewed by the academic advisory committee of the Ontario Council on University Affairs, recommended to and then accepted by the ministry. At the graduate program level, the quality control is even more rigorous: All graduate programs undergo a rigorous accreditation review by the Ontario council on graduate studies on a cyclical basis. To borrow a motto, quality is job 1, in this area as well as many others.

Ultimately, the question inevitably arises as to whether society has been and continues to be well served with the amounts of public funds entrusted to the universities to deliver university education and engage in research. I would just like to spend a few moments and give some illustrations for the committee to draw its own conclusions as to the effectiveness of the Ontario university system.

In comparison to the other provinces, Ontario in 1988-89 ranked ninth in operating grants for full-time equivalent, FTE, students. Ten years earlier, in 1978-79, Ontario had ranked eighth. Over the 10-year period from 1978-79 to 1988-89, the operating grants per FTE student declined by 23% in real terms, indicating the substantial economies achieved by the Ontario universities over that period. The ratio of full-time students to full-time faculty increased from 12.6 to 15.2 over the period from 1980-81 to 1989-90.

To add to that parenthetically, there will be those who would not use the word "economies" to describe the fact that the universities have dealt with an operating grant decline of 23% per student in real terms; they might use some other words to describe that situation. The fact is that the institutions have had to operate in a way which called on their ingenuity, their ability to achieve economies. On the basis of their output, my opinion is that their effectiveness has not declined.

On the output side, enrolment grew 25.3% from 248,800 students -- this is a head count -- to 311,800 students over the same period. Applicants to undergraduate studies increased in number by 48% between 1977 and 1989 at a time where the 18-24 age group was declining. Over this period, the universities met the challenge of this increased demand and maintained an admission rate of about 35% of applicants. I should just slow down right here. When one tosses around percentages like this, one is using a single index to describe a very, very complicated situation. The number is far larger if one looks simply at those applying from the high schools, a much higher percentage, but if one includes other people coming back and applying other than high school, that 35% describes it overall. This resulted in an increase in the participation of this age group, the 18 to 24 age group, of nearly 5%. Today, almost one in five 18- to 24-year-olds participates in university education.

The remarkable statistic is the next one. The participation of grade 9 students -- that is, those who are in grade 9 one year, and one looks at them again four or five years later -- in university education grew from 16% in 1971 to about 24% in 1989, from one in six to one in four. Women students now make up 55.1% of the university student population, and that number was only 49.2% at the beginning of the decade. Between 1979 and 1989, there were increases of 19% in bachelor's and first professional degrees, 14% in master's degrees and 16% in doctoral degrees awarded. The trend in bachelor's and first professional degrees has increased steadily for virtually all universities from a total of 37,517 to 44,587, and these are degrees granted per year, in the 10 years since 1979.

The Ontario university system produces the largest proportion of graduates in Canada, granting some 43% of all degrees awarded in 1988. Operating income for Ontario universities, however, represents approximately 32% of the operating income for the whole of Canada.

In addition to the development of a more educated populace and the training of people for the professions, universities conduct basic and applied research. Researchers at Ontario universities must compete for sponsored research funds not only with their institutional colleagues but also with other researchers across the province, Canada, and on occasion the competition is worldwide. Over the last 10 years, sponsored research funding per full-time faculty in Ontario universities has increased by nearly 50%. Ontario universities are major participants in the research programs of the federal granting councils.

In conclusion, I am pleased to report to the committee that as a result of the Provincial Auditor's findings on enrolment reporting, the ministry has undertaken two initiatives.

The first is a review of the relevant sections of the Ontario Operating Funds Distribution Manual. This has resulted in changes effective 1991-92 to address the enrolment reporting weaknesses observed by the Provincial Auditor.

The second is a review of the issue dealing with the reporting of students in honours or general arts and science programs by the Ontario Council on University Affairs. The ministry accepted the council's recommendations contained in its advisory memorandum, resulting in new reporting guidelines which will come into effect for all institutions in the 1992-93 enrolment reporting cycle.

The ministry notes the reference made by the Provincial Auditor to improving the accountability of our universities through the universities' external auditors conducting comprehensive or value-for-money audits by which the universities' efficiency, effectiveness and economy are assessed.

On the surface, this is an interesting concept and while the ministry is receptive to exploring its applicability to strengthening the existing accountability relationship, we believe that the other stakeholders, that is, the universities and their external auditors, need to be involved in such an exploration. The comprehensive approach to auditing universities is, to our knowledge, still at an experimental stage at best; there is a lack of empirical evidence that points to successful applications.

The universities remain fully responsible and accountable to the public by virtue of their respective and enabling legislations and their governance structures, for the proper expenditure of public funds, and to the extent that a value-for-money approach to conducting their audits will enhance the discharge of these responsibilities, it is a matter that is deserving of their consideration.

However, given the current extent and degree of public knowledge and accountability described earlier, it may be unrealistic to expect that a new auditing approach holds the prospect for significant improvements in efficiency, effectiveness and economy.

That completes my opening remarks to the committee. My staff and I would be pleased to answer any questions of the committee members. I thank you for your attention.

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The Chair: Perhaps you would be good enough to identify the two gentleman sitting with you for the purposes of Hansard, and then we can inquire if they have any comments.

Dr Brzustowski: On my left and your right, Jamie MacKay, the director of the university relations branch of the Ministry of Colleges and Universities, and on my right and your left, David Lyon, executive co-ordinator of corporate planning and services for the Ministry of Colleges and Universities.

The Chair: I do have members who would like to ask questions. Perhaps before I open it up I should ask, Mr MacKay, do you have anything to add?

Mr MacKay: No, I do not.

The Chair: Mr Lyon, do you have anything to add? All right, then we will proceed to questioning.

Mr Cousens: The presentation that has just been made in part answers the question I want to ask but it still leaves it there. It has to do with what an audit is. When a university completes an audit of its enrolment, it has to meet guidelines, where an outside auditor would have said it adheres to these guidelines and so it goes. But now you are coming out, as you say on page 15, with the new procedure which will hopefully remove any of the inconsistencies that have existed or taken place in the past. First, is this document ready for review at present? Is this something that could be tabled with the auditor and maybe ourselves to have a look at, just so we can see what changes you are bringing about and how comprehensive it is?

Dr Brzustowski: I would like Mr MacKay to answer that, because he has been involved with the work of that document.

Mr MacKay: There are two things we did as a result of the Provincial Auditor's work. One was to refer the matter of honours-general reporting to OCUA. We could certainly distribute the advisory memorandum they submitted to the minister, which will explain how honours and general students will be counted for funding purposes in the future. We also did a general review of the operating funds manual to look for other kinds of inconsistencies like the honours-general. Were there any other possibilities for similar kinds of misunderstandings, if you will, to develop between the ministry and various universities?

In that process, we cleaned up a lot of relatively minor things that could have led to misunderstandings. We also developed what we think is of fairly major significance, that is, a questionnaire the external auditor will have to fill out when he has completed the enrolment audit. We can certainly distribute a draft of that. That will be going into the manual for the next fiscal year. That is a result of considerable discussions with the office of the Provincial Auditor, the universities, their auditors, along with the ministry. That will, I think, provide us with a little more assurance that if an external auditor finds some mistakes in a particular year that may not have been over the 2% materiality limit but nevertheless were found, that we would have some assurance that something was going to be done about that, because the ministry would be told that something had been found in that questionnaire. That is something we have never had before. We had just the auditor's expressed opinion that the enrolment count is accurate within 2%. So we certainly can distribute both of those.

Mr Cousens: It would be helpful during the deliberations we are carrying on here if we had it sooner than later.

Mr MacKay: We can distribute copies of the manual. We have some summaries of what the OCUA recommended here, which is probably a little easier for you than the complete memorandum at any rate. We also have copies of the questionnaire that we can distribute.

Mr Cousens: The answers are good. It proves the value of having the auditor, and also the working relationship you have established in continuing to liaise with the auditor.

One other side question I have that ties into it: I am an old Queens man, but I also went to U of T. I see you are wearing your Queens tie, so you are okay.

The Chair: Did you go there one after the other?

Mr Cousens: In the front door and out the back probably, the same as you.

I think the deputy minister covered over it almost as if it was a nice thing, but I think there has been some favouritism to U of T as you look at section 12, especially in giving the common funding weight of 1.2 for arts and science students. I think the auditor highlighted that as an issue, yet in the response that has been just read, it almost makes it as if: "Well, no problem. It's still one big pot, and it just means they got a little bit more than someone else."

I have a few questions. First, I think your answer is a little less than I would have hoped, because I think we want to have as much equity as we possibly can in this divergent system. Second, I would hope that if there is any other example where favouritism is being shown to one university over another that we are doing everything we can to somehow make them all equal and common.

Dr Brzustowski: It is very clear to me that my answer was not good enough, because I think I failed to make the point that I think the matter is entirely equitable. Let me try to explain it.

The University of Toronto has a certain number of first-year arts and science students for whom the weight is 1, as it would be for anybody else. Then it has a certain number of second- and third-year and so on students in the honours programs for whom the weight would be 1.5, and upper-year students in the general programs for whom the weight would be 1, and upper-year students in the honours science programs for whom the weight would be 2. So they have a whole bunch of students for whom the weight would be 1, some others for whom it would be 1.5 and some others for whom it would be 2.

They have chosen not to distinguish, because of administrative difficulties, I am told, between students at the time they are enrolled. Students sometimes make their choices quite late, having many options open to them and so on. The question then was: With that mix of students, if one were to count only the heads, what average formula weight should be applied to all of them so that the result would come out exactly the same as if they had been counted the way the other universities count them? That was the mathematical problem.

Where to get the information on what proportions these students actually are enrolled? The university proposed simply to look at the evidence of the degrees they get, and assume that the proportion of degrees granted carries to the student body that is enrolled. With that, the formula weight of 1.419 was derived at, not to give Toronto a privileged status in funding vis-à-vis other universities but to acknowledge that their administrative procedures are different, to honour that, and make sure they get the same amount -- no more and no less than the other universities would. It is quite clear that my first answer was not up to snuff on that.

Mr Cousens: That is fine. I guess the conclusion I would draw from that is that if there are any other areas in which one institution of the 22 that exist in our province where there is special treatment or consideration being given, I would hope we have identified that or within your ministry you have identified it, unless it is one of those political decisions where the new minister is going to look after McMaster or something.

Dr Brzustowski: The other institutions would be heard from.

The Chair: I would not touch that one with a 10-foot pole.

Mrs Cunningham: He told me he is taking care of Western.

Ms Poole: I have a few questions about the targeted funding. You pointed out in your document that the auditor did not find any instances where funds provided by the ministry were used for other purposes than they were intended. What recourse would you have as a ministry if, for instance, you allocated to a university specific funds for improvement of its library program, if they had a surplus from that fund and then transferred it over to buy more lab rats or something in the science department. Do you actually have any recourse? If the money is spent, it is obviously very difficult to get it back. You do not want to cut down their entitlement for next year because if they have a set enrolment you do not want to deprive the students. What do you do in those instances?

Dr Brzustowski: Let me try to answer it first in general terms before I ask Jamie MacKay for some specific. The question presumes that there are more instances than in fact I could put my fingers on. In cases where the university has felt it has wanted to spend the money on something which might be beyond the interpretation of the targeting, the ministry has been consulted, and sometimes those consultations have in fact taken the form of negotiations involving a number of people. This was the goal for which the language of the targeting letter was written -- "If you can achieve that but go outside the language, that's okay" -- but these things are negotiated in fact.

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There has not been, in my memory, and that is three and a half years, an example of egregious behaviour which would require some sanction such as withholding of some amount of next year's grant, for example. One can always do that, of the same targeted envelope. It just has not been necessary, but there is a great deal of talking about interpretations, there is a great deal of talking about whether this particular expense is acceptable under the envelope or not. Jamie could perhaps fill you in.

Mr MacKay: The faculty renewal program is one example, where the government is supporting the appointment of 500 new faculty positions over a five-year period. Each position is supported for five years and each year a university has to submit documentation to us that, first, it has hired the number of faculty we are supporting. Then they have to provide certification that the money has actually been spent at the end of the year. Where we have a specific targeted fund, we have usually two or maybe three steps in terms of approving the original expenditure plan, receiving a certification from the executive head of the institution that it has in fact spent the money like it said it was going to, and then an audit report signed off by its external auditor. Because some of these targeted programs have different kinds of attentions than others, we will sometimes vary those accountability procedures to reflect the actual program. We have threatened on occasion to withhold grants, but we are always able to negotiate a deal once we start making those kinds of --

Ms Poole: It sounds like you are quite confident that the procedures in place are working quite well and that there not only has not been abuse of it but that the potential for abuse is quite limited.

Mr MacKay: I think you have to remember that the actual amount of targeted funds is relatively small. Most of the funding goes according to this enrolment-based formula. Yes, I would say that for those targeted programs we have, we are quite confident that they are being used for the stated purposes.

Ms Poole: My other question was regarding enrolment and entitlement. On page 5 the statement was made, "Until recently and in general, the higher the enrolment and the more academic-activity-intensive the enrolment, the greater the entitlement." Then not too long after that, when you are talking about the weighted enrolment, I had the impression that this historical way of dealing with it had changed. Please forgive me if I am asking a redundant question.

Dr Brzustowski: Oh, you are not. I am very happy to explain this. The reference to "until recently" has to do with the fact that the distribution of funds to the universities right now is still governed by the basic income units, still has enrolments and program weights to define entitlement, but it also has the additional condition of something called an enrolment corridor. Enrolment corridors have just been negotiated for all the universities by the Ontario Council on University Affairs.

The universities are told, then, that their enrolment corridor defines the number of basic income units for which they will get a grant. Plus or minus 3% enrolment fluctuations around that number, the grant will not change. It really is a stabilization of enrolments, some attempt to make the funding requirements predictable from both sides. The universities know that if enrolment falls below the midpoint of their corridor, they will lose tuition-fee income. If it rises above, they will gain only tuition-fee income; the upgrading grant does not change.

So while I went into some detail in talking about formula weights and entitlements, the reference to "until recently" had to do with the fact that that enrolment corridor is now in place and the proportionality between additional enrolment and additional funds no longer exists.

Mr Cousens: With these transition grants, as you call them, how much does that amount to in this whole cost of running the ministry, having to do with your corridors?

Dr Brzustowski: It was the transition from the old scheme to the new scheme. The transition grants are being phased out. Jamie, can you offer a number?

Mr MacKay: I believe for the current year $54 million is going to the universities under the transition grants envelope. A total of $91 million was committed over a period of five years starting in this current year. It is basically full average funding for each additional basic income unit as institutions move up to these new enrolment targets.

Dr Brzustowski: That represents 5% of the total funding in the system.

Ms Poole: Do I have time for one more question? It was related to Trent University and I have to declare my bias and conflict of interest in that I am a Trent graduate. I would not want anybody claiming I was trying to sneak a good one in for the Gipper here.

My understanding from what you have said in your commentary was that Trent had established a separate criterion in 1968 shortly after they were founded and that this criterion was not renewed more as a technicality than anything in 1982, although actually, when they were changing the criteria they notified the ministry but did not actually say this is all right. Is that an accurate rendering?

Dr Brzustowski: That is close to it. The big change in the 1960s was that Trent decided that marks, performance would be the basis of classifying students either as honours or general. That had been accepted by the ministry at the time. The change they made in 1982 was simply the level of the marks. I saw the letter that had been found in the files. It almost seems to me that if someone had added one more sentence to that letter saying, "Well, this is what we're doing, this is what the senate approved and it doesn't meet with the ministry's approval," the answer could have gone back, "Yes, because it's consistent with what you've done before and what others are doing." But it did not, and the ministry did not reply.

Ms Poole: Trent had a somewhat unique attitude towards education. When I went, and that was not too long after it was founded in 1968, our seminars and tutorials were unbelievably small. You might have 12 in a seminar and for anybody going to the U of T this would be incredibly unbelievable.

The Chair: Not when I went.

Ms Poole: Not when you went?

The Chair: That was a long time ago.

Ms Poole: That was the Stone Age. Things have changed since then, Mr Chairman. But what I am wondering is, how does the ministry recognize this type of small university with a very different basis, a very different approach to academics where the small unit is very much encouraged and insisted upon? I understand since then that Trent has obviously grown and the tutorials and seminars would be much larger. Do you have anything in your criteria which would recognize the fact that you might have the same enrolment as another university but that the two have very different philosophies?

Dr Brzustowski: It is very interesting that this particular question is being asked about Trent. I can say yes, even though the distribution formula based on formula weights and student enrolments does not recognize that. Trent has had, historically, and has again for the better part of two decades now, something that is called the Trent differentiation grant. It is sufficiently differentiated that Trent is the only one that gets it. I am quite sure that the decision that was made at the time to offer that grant to Trent recognized the very point you have just made.

The Chair: Was that entrenched?

Dr Brzustowski: Entrenched in Trent.

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Mrs Cunningham: On this whole issue or I suppose new process of having the Provincial Auditor involved across the province, the end recommendation, as I see it from yourself, is that it was useful at the time. There appears from this report that some universities want to get into it, this value-for-money audit, in the format you may have wanted to or you may not want them to or whatever. In the beginning it looked as if that never was the intent. But you are basically saying it was a useful process probably from time to time and that would be it.

Dr Brzustowski: Let me go back to the beginning. I feel that the inspection audits that were formed by the Provincial Auditor were important. They have led to findings which have caused us to improve our practices and procedures and in the two ways that Jamie described in greater detail than I had. There is no question that the process is better, the accountability is better for that. As far as the value-for-money auditing is concerned, I do not see universities having to be restrained from leaping headlong into that. I am not convinced that in terms of universities that is a proven art and I say that also from the position in my former life of having been on a university audit committee for some years.

The fact is that when an institution has as visible an output in countable quantity whose quality is controlled by a lot of independent means, and we know what the inputs are and we know in comparison across university systems within this country that they are using less input, less resource to achieve the same output, then I say to myself that you would have to have a pretty cast-iron method guaranteed to give additional improvements before you spent a lot of time on it. I do not see that that has arrived yet, but I would underline that the ministry finds what the Provincial Auditor has found and the process we have set up for the Provincial Auditor going back and forth with staff and also in discussing changes with the universities and with the Ontario Council on University Affairs -- all of that has, I think, made more intimate and solid and has increased the integrity of the accountability process of the institutions. I believe that firmly.

Mrs Cunningham: I happen to share your view given the kinds of things I have done in the past as well. Some of these discrepancies, and that is what I would call them, probably based on public policy when it comes to grant formulas and what not for use of a better word, why are they not being picked up by internal auditors? I would say the same about school boards, by the way.

Dr Brzustowski: Again, I am not an expert in this area, but I assume that the cost of the auditing deals with the size of the sample and with the materiality limits, and I suppose at a great deal more cost one could increase the size of the sample. One could go that way. I know you mentioned internal auditors. Many universities do have internal audit departments which work closely with the external auditors. Why they are not being picked up is hard to say. I think the universities will have to answer that question, but from my point of view, one part of the answer is that in addition to the workload, the growth, the universities have faced a great increase in complexity and let me explain that.

One part-time student taking one course is treated as one fifth of a full-time equivalent student, with a normal course load being five. But each part-time student must have an individual admission decision, must have an individual file, an individual student record, an individual set of course promotion decisions and advice from an individual on an individual time slot, so the administrative workload associated with the growth of part-time enrolment, for example, is very significant.

The part-time enrolment is well over 100,000 people at the moment in the universities. So I would say a growth of complexity is part of the problem, but perhaps the university officers who are here will be able to answer the question more specifically.

Mrs Cunningham: I did not mean to exclude the external; I meant by both. Given the funding of universities and the amount of work they are being asked to do with the limited amount that they get sometimes, I am not saying people do it on purpose, but from time to time people just say, "Boy, this has been going on for 15 years and maybe I've read it wrong or something." From time to time it is just so tough out there that, given just the description you gave around the part-time, I suppose the better argument would be with the people who put the formula in place in the first place.

My last question has to do with when money is discovered in this way, and it is often a paper transaction, but they are real dollars. For instance, with the University of Toronto it probably would have been $15 billion or $16 billion, given the amount of time. What happens to that money? I understand it would have been distributed elsewhere, but that is public money.

Dr Brzustowski: First of all, I really wonder the extent to which there is found money. In here the only set of remarks that could identify anything I would label found money is that amount at Trent of about $1.2 million or $1.3 million. We are convinced and it is our opinion that U of T has not been overfunded, that in fact that averaged formula weight of the U of T was designed to provide an equitable distribution and we think that is what has happened.

That is speculative, but I do not know what one could do with Trent University. Would one apply a sanction and say one should therefore decrease funding by that amount? The money has not been hoarded; it has been spent. A decreasing of funding could be seen as being punitive and prejudicial to the students there now. That would almost be a matter of public policy. I do not know, off the top, how I would try to deal with that. I want to make sure it does not happen again, obviously.

Mrs Cunningham: No. That is all I am talking about as well. I think the University of Toronto was in a surplus situation, was it not, a couple of years ago?

Dr Brzustowski: I have not heard of a surplus of the U of T in some time --

Mrs Cunningham: I cannot imagine it. It seems to me I read it somewhere.

Dr Brzustowski: -- but I am sure the people from University of Toronto can tell us that.

Mrs Cunningham: That is all right. We will deal with that later on. But even then I suppose that has to do with the difference between budgets for operating and capital. I mean, there is always a deficit if you take a look at what would have to be done with capital, whether it is improvements or new buildings or whatever, so I would agree with you.

Dr Brzustowski: Oh yes.

Mrs Cunningham: It is hard to believe there is a surplus out there. With their operating dollars I think they may have shown a surplus a couple of years ago.

Dr Brzustowski: That may very well be the case, but I think we have to be very, very careful in making sure that we recognize the fact that even though the money, the entitlement, for the operating grant is generated with reference to undergraduate enrolment, that money must be spent on everything from repairs and renovations on an old capital plant right through to paying some of the indirect costs of research that the institution undertakes and everything else. So the money does not flow in straight, well-defined channels from the entitlement formula to the spending in the institution. In one account, in one fund, there may be a surplus; in another fund there may be a deficit. It is the ultimate bottom line for the institution that matters and autonomy to manage their affairs in that way in enshrined in their acts.

Mrs Cunningham: Mr Chairman, just to ask the deputy if he could give us some advice before we lose him; at the end of each fiscal year, in most institutions there is not a lot of incentive to saving and having that kind of surplus which could be readily and more appropriately applied to renovations or capital or improvement, I do not think, within our institutions from time to time. I just wondered, in the years you have been involved, if you have any recommendation from your department as to how surpluses can in fact be honestly -- because with my question there was purpose to it -- designated as being better saved at the end of that particular year to be applied to something more efficiently down the road, rather than the piecemealing and buying of plants that we see throughout institutions as we travel about this province.

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Dr Brzustowski: Mr Chairman, that is a very interesting and very important question. I know a number of institutions have measures, have bylaws passed by their boards which allow carry-forward, a forward-year appropriation of a certain amount of money which might be left unspent at the end of the year because some position could not be filled early enough. I know a number of institutions carry forward in this way something up to 5% of their annual operating budget and therefore find themselves avoiding any wasteful rush to expend money at the end of the year.

Funds from that kind of source, money which you have to provide for the full year for a filled position but which may not be spent because somebody has quit or left or whatever, these kinds of funds are very often showing up as a surplus in one account and applied to another account, and very often to capital to renovations and repairs. It is a very good management practice, followed, I would hope, by most institutions and I know of several specifically.

The Chair: The researcher has drawn to my attention that what you may have been speaking of, Mrs Cunningham, was in the Toronto Star of 28 November 1990. It was reported that a surplus of $32 million was discovered in the University of Toronto's 1989 operating budget of $450 million. That is 75% of that budget or $333 million in a 1989 enrolment grant from the province. It quotes the auditor as saying that the university allocates the extra money to cover other costs such as capital improvements. I think that is maybe what you were referring to.

Mrs Cunningham: I do read that publication from time to time.

The Chair: The Toronto Star? It is a good paper, actually. Anyway, the researcher brought that to my attention. Perhaps that is what you were referring to.

Ms Haeck: Actually, I have two questions, Dr Brzustowski. I also have to admit a certain bias with regard to Trent. Also being a grad, that makes two of us. I am not sure how many other are closet Trenties.

In any case I am somewhat concerned that as of 1982 we have a situation where the university informs the ministry of a particular decision and basically we just sort of discover somewhat later that maybe something should have been done. How is it handled? Is there some flagging system now of pursuing that kind of letter as opposed to basically receiving it and filing it?

Dr Brzustowski: Indeed there is. In a nutshell, it is handled much more crisply now and it is even made quite explicit in the revised grand manual. Do not assume that any approval which is just a minor change on the previous arrangement or any arrangement which is a minor change on the previous arrangement will be approved unless you seek that approval. That is made explicit and there is no difficulty with institutions following that now.

Ms Haeck: To follow up on something that Mrs Cunningham had pursued I think across the whole system, the whole issue of deferred maintenance is a rather large issue. I know that both gentlemen on either side of you are probably well aware of the figures involved. Possibly they could illuminate the rest of the committee as to the obligations that the universities are truly faced with with regard to the issue of deferred maintenance.

Dr Brzustowski: I think that is an issue. The number that comes to mind most readily is because one university -- not Trent; Queen's in this case -- actually performed an audit of its physical facilities two years ago and at that time identified the cost of deferred maintenance that had to be done as something of the order of $25 million. That was one university. Admittedly it is one of the older universities in the province.

The University of Toronto undoubtedly has a great burden and a much larger burden simply because it has more buildings, and some of its deficiencies are legendary. This is a problem which will grow with time. We have a number of buildings which were built in the 1960s, at a time when energy was dirt cheap and energy conservation was not part of building design. Some of those buildings are suffering in ways that are more than just ways that give you a choice whether to fix them up or not. You have moisture in the brick and all sorts of things, bricks falling, walls having to be replaced.

There is a real problem which will be growing with time, and if enrolment stopped growing in the universities, one could imagine that the amount of money for new major projects might decline with time, at the same time that the amount of capital required for repairs of existing plant might grow, which would tell me that over the next predictable decade or so, maybe two, one should not look for any possibility of a decline in capital funding even if enrolment stabilized, because of that very reason.

Mr Daigeler: I have a couple of questions. First of all, I presume there will be somebody from the ministry for the rest of the week in case we have any questions with regard to the specific universities.

On this whole question of different grants for honours and general students, in reviewing all of the material, there seemed to be some question as to whether it still makes sense to provide different funding for those two levels. Presumably the difference in grant is based on that it costs more to educate the honours student, but from what I have seen here, this does not seem to necessarily be the argument everywhere. Why are you, even with the changes here, maintaining the granting difference between honours and general?

Dr Brzustowski: It is a very interesting question, and I think the perception is right. The funding formula had its roots, I think, in a cost study or the cost studies performed in the early 1960s in one institution and certainly the relative weights of that time were a snapshot of the relative costs of various programs.

I think sitting here we could identify a list of reasons why an honours program should cost perhaps significantly more than a general program -- on the science side, simply a greater number of laboratory periods; in the arts, social sciences and humanities, a larger number of seminars in smaller groups, more essays to be written, read and commented on, perhaps a richer selection of library holdings to support fourth-year papers, things of that sort. So there certainly is a very well justified basis for them in their costs.

It is obvious that when the change was approved for Trent in 1968, obviously another set of arguments had been brought forward within the context of Trent, which is unique. The students who were able to do more were apparently drawing more heavily on the resources of the institution, and that was the argument made at the time. I could not guarantee that today the costs are in proportion to the formula weights.

Mr Daigeler: This is what I seem to have picked up, I think, from the auditor, that while in theory it makes some sense, it stands to reason, do we really have evidence that in fact these students are using more resources and are given more resources?

Dr Brzustowski: No, we do know that. We know that students who are enrolled in honours programs, more is expected of them. They have to do more work. They have to have more contact with teaching staff. They have to draw on the library more. We do know that. You can find that in the calendars of the institutions. It is simply the requirements. Whether the costs are in the same proportion as they were 20 or 25 or 30 years ago, I just could not say for sure. But, just by reciting a list of what I see when I go to the institutions, I could very easily identify factors which are more expensive in connection with honours programs.

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Mr Daigeler: You have some questions, I guess, regarding the value-for-money type of audit, but you do not seem to have any questions with regard to the audits that have taken place so far. Again, if I read right -- the auditor himself may want to comment on that -- he was envisaging only inspection audits for the small university, the medium-sized and the large and then possibly stopping this process. I do not know whether that is correct or not. From your perspective, would you encourage these kinds of audits that we presently have to continue in the future, or do you wish to comment on that at all?

Dr Brzustowski: My feeling is that they have proved valuable. They have resulted in improvements. I think it would be for the Provincial Auditor to judge whether in his opinion his resources would be well spent in such audits to find more potential improvements or whether he and his staff think that they have found generic problems that are likely to be found and any additional investment of resources would need to have diminished returns. I cannot say that. We from the ministry have found the inspection audits of value and have, we think, materially improved our practices as a result.

As to the value-for-money audit, if, for example, an attempt in a value-for-money audit was to decide on methodology of instruction, one method versus another, I am not sure on what body of expertise the people conducting the audit would draw unless they in fact called on the academics themselves, and they are in that business of trying to improve things under the pressure of trying to be more productive all the time anyway, so I really wonder what significant improvements might arise from the additional investment of effort.

Mr Daigeler: I think what is at stake here really is perhaps the confidence of the general public in the spending of the university sector. I really get a sense that while the universities and, I think, the ministry itself probably are quite convinced that there is underfunding, I am not so sure whether the general public feels that same way. They have a perception that universities are way out there, and nobody really takes too close a look at what they are doing.

So I think in the interests of the universities themselves, to increase the public confidence in activities of the universities, first of all, I certainly would hope that the auditor would continue working in this field and, second, if some form could be found that protects the independence of the universities and at the same time reasonably assures the general public that its money is very well spent there, it would probably go a long way towards finding that extra money from the public purse that the universities are needing. It is more a comment than perhaps a question. You might want to react to it.

Dr Brzustowski: I think it is a very important comment. I certainly believe that the public must perceive all publicly funded institutions to be spending public funds effectively and to the ends that have been endorsed for them. Whether a continuing round of inspection audits by the Provincial Auditor would help develop that perception, I cannot say. I do not know.

I am quite sure that the improvements which we are making as a result of these three audits will make accountability a little more orderly. I think that some sort of a plunge into a value-for-money audit at this stage of the game would have to be documented with very significant results before it attracted universal attention or even became credible.

Perhaps -- and I do not mean this as a snide remark, Mr Chairman -- the best mechanism for assuring the long-term independence of the universities and freedom from government interference and excessive detail is to keep MCU as small as it is. We have about three dozen people running this $1.8-billion system. The only reason they can do it is that they draw on the resources of others through open, working relationships with the Provincial Auditor, with the Council of Ontario Universities, with the Ontario Council on University Affairs. Everything is networked, information is shared and there is a climate of trust and openness which has government working in a very significant enabling way rather than in terms of scrutiny. Whether the public perceives that or not I cannot say, but I think public funds are very well used in that system as a totality.

Mr Cousens: One of the sections, and it is more for information I would like to have it, but at the University of Guelph -- and we will undoubtedly spend some time with them when they come and visit us for their social time -- the acquisition of microcomputers by them illustrated the way in which the university failed to follow some guidelines that I know are implicit to Management Board of Cabinet guidelines or from within the government itself, and it raises the question as to general direction and guidance that could be given at the ministerial level to the different universities and institutions.

Is there a guideline for tendering to individual universities from the ministry, and if so, could you describe it a little bit? If not, why not?

Dr Brzustowski: I am not aware of any guidelines. I stand to be corrected by my staff. Obviously it has not surfaced in three and a half years. The simplest answer I could give is that the rights to spend money in all matters of purchases dealing with resources, and all matters of human resources as well, is expressly vested in the universities in their university acts. That is the simple reason. I cannot go beyond that.

Mr Cousens: This is very early because --

The Chair: I wonder if you could move forward so that we can pick you up. We want to preserve your thoughts for posterity.

Mr Cousens: Thank you very much. They appreciate that. I do not know whether I do or not.

The Chair: Sometimes posterity is very short, as many of us have seen around here.

Mr Cousens: In that case, there is no present way in which you could, at the ministerial level, establish guidelines that would be used for different universities. I think that what happened at Guelph could well happen in other places with the acquisition of microcomputers and I would then ask, is there no way in which they can be pointed in the direction as to what is done under Management Board? It is obviously not something you have thought about.

Dr Brzustowski: No, and as I think about it now, I know that the first question that would be put to me if we proposed, even convened a meeting to discuss what should be in such guidelines, would be, by what authority? And I do not know what answer I would give.

Mr Hope: I am no university student, so I guess I will not be offended if I nail somebody for this. As a worker who has represented workers, and I look through the report and we talk about the surplus, and the surplus usually is generated from student dropout, which is caused by financial difficulty to some families who cannot afford it because their parents are governed on asset, they have a hard time staying in the schools and providing their education.

I personally feel the government has a major role in involving itself in universities and also in community colleges to make them accessible for people. What I am finding out in talking to a number of people in my community who have gone to university, they talk about extreme costs. Number one is the distribution of funds versus the ability to pay and the ability not to pay. But I think that this government should have a role in making its voice well heard.

I also feel that we have a long way to go because of the job market out there. In a recessionary time, more people tend to lean towards community colleges than universities for their education, and if we leave it in a minute number of hands of governing which ones will have access to the schools, I guess the ones who are going to be victimized are the students. That is what we have to make sure, that we as a government look at all avenues and make sure that the students' protection -- the willingness and the ability to perform in that school may be there, but the financial contribution on the part of the family is not there and I think this government does have a major role it can play.

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Maybe I am stepping a little off guard, but I was one of these people whose parents supposedly had too much in assets and I had to seek part-time employment, and seeking part-time employment does not pay for your school tuition fee and keep you in a viable university to make sure that your education will come out quality. I have no regrets going back to the workplace and coming out with the knowledge that I have, because I have understood more about working people and their ability, and I think this government does that major role, to make sure that it starts looking at the universities and also at other institutions of this nature to make sure accessibility is there. It is one of the key issues.

The Chair: Is that a question, Mr Hope?

Mr Hope: That is commenting. All the questions were put by others on the issue --

The Chair: I am being facetious, really.

Mr Hope: -- as three or four questions go by and you are only entitled to one.

The Chair: Would you like to comment on that?

Dr Brzustowski: Yes, I would. A very important point is being raised. The accessibility of the Ontario university system has been probably the guiding policy ever since I have been here and government has a very direct hand in that, in funding for the spaces available for the enrolment but also in explicitly controlling tuition fee levels. Even though tuition fee levels are an explicit power of the board's through the acts, nevertheless government, by announcing a policy on its own transfer and grants, controls tuition fee levels. If the tuition is raised above what is allowed by government, then the grant is decreased, so tuition fees are controlled.

You raised two very important points. One is the need for people to turn, very often at a time when the economy is down, to the post-secondary institutions to raise their qualifications. I think we may be seeing that again; second, the whole question of student assistance which makes it possible for those people to turn to those institutions at that time.

There is no reference in here to student assistance, but members of the committee should know that Ontario spends about $200 million a year providing student assistance for about a total of $400 million -- half of it in loans -- to about 100,000 students, and there is no question that if more money was made available for student assistance, additional categories of people could be brought in to be eligible. One could spend any amount.

Tuition fees are only about one fifth of the student's cost and the point is very well taken that there is a cost to going to university, there is a cost to going to college. Much of that cost can be forgone earnings, but much of it is out-of-pocket expense for tuition fees, books, room and board and so on. Providing assistance is one of the aims of government and it is an issue that is discussed in a different forum than this, but the policy of accessibility, I think, should be taken as underlying everything that is in here. All of that growth that has taken place that I have referred to was a response to the policy of accessibility.

There was a very short period of about three or four years when the enrolment of universities grew by the equivalent of a new University of Windsor and a new McMaster University with no new institutions being formed.

The Chair: Just to follow up on something Mr Hope had said, if I could have the liberty of asking, that was what concerned me about Trent University's approach to grants. Putting it on the basis of marks, would there not be the danger of making élitist and restricting or denying access to many of the kids who might get in if it was done on the basis of an arts program versus an honours program versus a science program?

Dr Brzustowski: Well, "élitism" is a bad word in our society.

The Chair: I did not mean élitism, but certainly denying access to young people who perhaps are not as intellectually gifted as the other people. If funding is on a mark basis, then one might conclude that in an effort to get the maximum dollars this might eliminate people who perhaps on a different level, perhaps on the level of funding that is used for other universities, would have gotten into that university.

Dr Brzustowski: That is a very interesting thought. I must say that when I spoke about Trent and the proposal that had been made in 1968, I do not have the reasoning presented by the university at that time. I was inferring that one could identify an additional cost of the honours students on the basis of their marks, because the students who have achieved more in the university will be challenged to do more and will use more resources.

Your point is well taken. If funding were to be dependent on marks and that went into an admission decision, then it might lead to consequences that would be bad social policy. The fact is that the admission decisions are made on marks. Programs are filled from the top down, very often. But most institutions give very serious consideration to individuals who have marks above the minimum, even to the extent of interviewing them to see if there is some experience, some particular aptitude, something which does not show on the paper record which might make that person a good student.

We have always felt in the ministry that the issue of financial support and the ability to get in and the issue of marks were separate. We can address the financial support to the extent that the ministry has the budget through OSAP. The other is within the purview of the universities.

It would be very interesting to see what the record is of people who are admitted with marks marginally above the cutoff. I do not have hard data on this but I do have some suggestions that people who are admitted close to the cutoff are the ones who most often drop out. That is the reason the ministry is trying to respond with programs of a transition or bridging nature or targeted funding for remedial programs, things of that sort. How much of a problem that is, I do not know, but you do raise an interesting consideration. I do not know how much of a problem that is.

Ms Poole: Based on your answer to Mr Cousens, I may already have a short answer in mind to the question I am about to ask, but I will ask anyway. It is relating to the poor safeguarding of university assets that the auditor noted, if my memory serves me correctly, in all three of the universities he audited. I can appreciate that you have made it very clear in your presentation that you have certain statutory jurisdictions and the university has others. That notwithstanding, do you as a ministry have any guidelines which would suggest the proper maintenance of assets and records relating to assets?

Dr Brzustowski: No, we do not, but I know that a number of universities have their own policies on that developed by their internal audit departments. But we have no guidelines.

Ms Poole: Would you feel that would be intruding on the universities' jurisdiction, to even try to come up with some complementary guidelines?

Dr Brzustowski: I guess the question put to me always would be: On what authority? How can you make it stick? I suppose if we were asked to help to provide guidelines based on the experience of Management Board, we would be only too happy to do so. But to make them stick is another issue.

Mr Johnson: Is it 5% of the Ontario budget that is administered by the government that goes to colleges and universities or universities specifically?

Dr Brzustowski: It is about $1.9 billion out of $42 billion or $43 billion.

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Mr Johnson: That is about 5%. When I read some of this literature I had, I was a little concerned about some of the inconsistencies. Certainly we want to review the expenditure and assure the public of Ontario that the dollars are accountable. One particular university, when it was looking at how its students met the criteria, whether they met the criteria or not was not as important as whether in fact they were even there, and some of them were not there. Whether this was deliberate or whether it was an accident, it seems to me that losing the status of 600 students is something that is not insignificant. Certainly, it is good that it was brought to our attention by the audit. Do you think that universities, which are autonomous institutions, deserve closer scrutiny with regard to their accountability?

Dr Brzustowski: It is a very short question with potentially a very long answer. There is no question that that particular example brought to our attention by the inspection audit elicited a very prompt response, that is, "You just don't do things like that" and "Now hear this" went out to all the institutions as part of the grant manual.

I am all for effective attention. Effectiveness and economy are the themes here. I am all for effective attention. If we can devise some means which will effectively increase the accountability -- the point that was raised earlier -- make it visible to the public that the accountability has been increased, avoid mistakes of that sort, if such a procedure exists which still honours for all the good reasons that it should be honoured the autonomy of the institutions, then by all means let's have it.

I do not see such a set of procedures sitting on the shelf ready to be used, but certainly we believe that the inspection audits we are discussing here today have been a positive step. I imagine that if the Provincial Auditor chose to pursue that course of action, he may at some point decide that it was not fruitful any more or he may decide at some point in the future that things are being found which warrant the exercise, the ministry's response will be altogether positive regardless of which that finding is. We will make the best use of whatever information is found to make the system always as accountable as it can be. No question.

Mr Johnson: The board of governors presently is responsible, as I understand it, to no one? They are in limbo. Is that correct? The self-imposed audits of the universities are scrutinized by the board of governors and that is the end of the line in the audit. Is that correct?

Dr Brzustowski: Their powers are specified by an act of the Legislature. Many of them, though not all of them, are required to produce a financial report for the Legislature each year. There are order-in-council appointments on each of them. David, help me with this. I am not aware of any specific accountability mechanism from the board to the Legislature.

Mr Lyon: I am not aware of any obligation on the part of the board of governors other than that stipulated in their acts to submit to the ministry the financial report or annual report, whatever the language is in the legislation. Eight of the institutions are required by statute to have their reports tabled in the Legislature.

Mr Johnson: And the rest are not?

Dr Brzustowski: The rest are not.

Mr Johnson: This is just my opinion. It seems that close scrutiny is valuable here. It certainly tightens up where the dollars are allocated and how they are used. Some of the records that are kept would be done in a way that I think would be perceived to be better if it was more closely scrutinized.

Ms Poole: Mr Chair, may I have a supplementary to Mr Johnson's question?

The Chair: You are next on the list. I am sorry -- Mr Daigeler is next on the list. Mr Daigeler, would you allow a supplementary?

Mr Daigeler: As long as I come after her.

Ms Poole: This will be very brief. You mentioned that eight universities have acts of the Legislature to which they are subject?

Mr Lyon: No. Eight of the institutions have provisions in their acts that require their annual reports to be tabled in the Legislature.

Mr MacKay: They were all created by statute except for the Laurentian affiliates. But the acts, because they were passed at different times, have different provisions in them. Whether or not an institution is required to provide an annual statement to the Legislature, they certainly all provide them to the ministry, and we do look at the audited financial statements as well as the audited enrolment statements for each institution. As the deputy noted in his remarks, we also have a document produced by the Council of Ontario Universities which reports on the financial, both expenditures and revenues, for each institution in a common format. That certainly helps us in terms of that kind of scrutiny: What are the individual institutions spending their money on? How much is spent on salaries across the system? If we want to see how each individual institution compares to that, we can do so.

However, one does ask the question at a certain point: What is the purpose of that scrutiny? We certainly want to know whether they are running high deficits in their operating accounts, because we want to be able to advise our minister whether there are going to be requests for special funding or bailouts or that kind of thing.

But, once again, because we do not have the legislative authority to direct the universities in detail as to how they will spend their money, the actual scrutiny of their statements is something we do not put an awful lot of time into.

Mr Daigeler: I have been able to take a very quick look at the document that I think unfortunately we just received today, the letter and summary report from the auditor, which kind of highlights his overall impression on the audits he has done on the three universities. I think there are a number of issues that arise out of that document.

By the way, Mrs Cunningham, the surplus you were referring to seems to be have been even higher than what was reported in the press. On page 7 of that document, the auditor is reporting, "However, we noted that in fiscal year 1988-89, the University of Toronto had accumulated an operating surplus of well over $50 million, which was transferred to a restricted fund." We may want to ask the university when it comes here how that fits in with the underfunding.

My main question here, and I am not sure whether it is fair to ask the deputy minister that question, because I think we probably ought to ask that at the political level, and the minister himself -- the final sentence in the Provincial Auditor's report I think is a pretty scary one, and I do not think for the general public a very reassuring one: "Accordingly, we are of the opinion that accountability for the significant amount of funding provided to Ontario universities remains inadequate."

The Chair: I think to ask a question like that of a deputy minister is not appropriate. It is really a matter of policy.

Mr Daigeler: I agree with you. That is why I am asking whether we have an opportunity -- I saw that on Thursday there is an opportunity for discussion. Will the auditor still be here?

The Chair: The auditor is with us constantly. He is auditing us, in fact, to determine whether or not we are giving quality for --

Mr Daigeler: I will be here only this week, but we will have an opportunity to talk with the auditor on Thursday, then?

The Chair: Oh, yes. Sure.

It is interesting that the audits that are done for the various universities can miss these things. I guess I have two questions. One of them is policy so I will not ask you, but is it the feeling in the ministry that these audits are sufficiently independent enough, or is it because the auditor is independent and goes in as a public figure? I am trying to be very diplomatic about this and sort of pussyfoot my way around. In other words, if you pay the piper, if you are doing the audit for the particular university and it is paying the tab obviously, are you going to be a little less independent than you will be if you are the Provincial Auditor? And if that is the case, should the audits be done by an independent auditor?

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Dr Brzustowski: Let me try that, Mr Chairman. Then I will pass it over to Jamie, on my left.

The Chair: If you feel uncomfortable with that, do not answer it.

Dr Brzustowski: I do feel uncomfortable, but at the same time I may be able to shed some light on that.

It is a question that audit committees of boards of governors struggle with and it is a question that is always pressed by external members of these committees. The audit firms that work for the universities are reputable public auditors. In fact, one large firm, which as I understand it has been auditing a number of institutions, has an internal group in which it discusses within the firm the kinds of things that come up and makes sure that if something has arisen in university A, they will look at B, C, D and E as well. So there is that aspect of it.

It is an issue that we have addressed in one way, and Jamie will mention that first very briefly, in response to one of the things that has happened. We have no basis for thinking that the audit we are getting is anything less than totally independent. I am not aware that the ministry has ever had any basis for questioning the integrity of the audit, but we have tried to help that along with this latest development.

Mr MacKay: I mentioned earlier that we developed this questionnaire which we are going to require the external auditor to complete upon his completion of the enrolment audit. We are certainly hoping that will help bring things to our attention and we will become a little more informed about what goes on between a university and its external auditor.

To be frank with you, when we got the Provincial Auditor's first inspection reports, we thought we had enrolment audits. We could point to an enrolment audit and say there were no problems. Now we see that there can be some problems in reporting despite the existence of these, so how can we make the rules clearer so that external auditors do not miss things, and how can we get some feedback on what is happening during these audits? That is the rationale for the questionnaire.

The Chair: I guess spot audits by the Provincial Auditor from time to time may keep things a little tighter as well.

Just finally, if I could -- Mrs. Cunningham wanted to ask a question -- I just wondered, this thing with Trent University really bothers me. There is a suggestion of $11 million by the auditor, and in your address you indicated that it is really $1.3 million. I gather that is because they did get approval for everything from 1968 to 1982 on this new basis they had of getting funds, and the reason for the $1.3 million is that they did not get it from 1982 on. Am I understanding that correctly?

Dr Brzustowski: I think, Mr Chairman, yes. It is a matter of timing. Had we had been able to locate evidence of that 1968 approval before the Provincial Auditor finished his work, we would have brought it to his attention immediately, but we located it only after he had finished his work.

The Chair: Just for the purposes of our report, because we will do a report from this, do I understand then that that is not saying that a fixed amount of those students were honours students, as opposed to general arts students; it was on the principle that Trent established of the marks of students?

Dr Brzustowski: Trent has established a principle, which was accepted in 1968, that a student will be deemed to be an honours student on the basis of the marks that student has in the program.

The Chair: But an honours student traditionally was one who went on for a four-year degree as opposed to a three-year degree. Would the auditor's report have looked at it from the standpoint of the criteria that are applicable to every other university? In other words, what percentage of honours students do you have versus what percentage of general arts students do you have? Would that be how he arrived at the $11 million, and because Trent changed the approach --

Dr Brzustowski: I will ask Mr MacKay to answer that.

The Chair: I would like to know that, because when we do our report that becomes rather important.

Mr MacKay: I think it is important to point out that most of the universities do now have and always have had what we call a differentiated program of studies for an honours student in arts or science; in other words, prescribed courses and programs that a student taking an honours program has to complete.

In the case of Trent and another university, back in 1968 they made a conscious decision not to have a differentiated program of study. In other words, as a second- or third-year student, you would not be in an honours or a general program. If you were going to graduate with an honours degree, there were certain things you had to have by the time you finished your fourth year, or you could decide to graduate after three years and graduate with a general degree. So both Trent and the other institution had no way of identifying any student as an honours student when he was in second or third year.

So the decision was made that in lieu of that differentiated program of study and a very clear indication of whether a student was honours or general, the ministry would allow those institutions to use marks as a differentiator for reporting purposes only. In other words, if they established a mark of 75% for an honours student, any student in arts or science in second or third year at Trent during that time with over 75% would have been funded as an honours student. He would have been reported as an honours, even if that student was not planning on doing a four-year degree.

That was approved by the ministry. Subsequent to the Provincial Auditor's inspection, we did find documentation dating back to 1968 where the government had said, "All right, in recognition of the fact that these institutions do not have an honours program of study, we will allow them to report students at a certain level." But we said the ministry would reserve the right to decide whether that was an appropriate criterion that they used to distinguish the student for reporting purposes.

What happened in 1982 was that Trent decreased the mark that one needed to be counted as an honours student. That had the effect, of course, of having more students --

The Chair: That would have made me an honours student. They never did that when I was in university.

Mr MacKay: Our understanding from our discussions with the Provincial Auditor's staff is that because nobody had shown them any indication that Trent had that original approval in 1968, they made their calculation dating back to the early 1970s in terms of the excess revenue which they deemed Trent to have received. Our calculation, based on our understanding of how the formula works and so on, only went back to 1982, because that is when they changed. That is when they did not have our approval for using the new mark, if that explains the difference there.

Our advisory council has done a study upon which the advice we have received is based, looking at every institution in the system and the ratio of honours to general students, and there are quite some differences. Some institutions have historically had much higher levels of honours students than others, but they will all be required to report on the same basis beginning in 1992-93, including the University of Toronto and Trent.

Ms Poole: I just want to be perfectly clear about this. The $11-million overpayment that the auditor had calculated, was that based on the fact that Trent had no honours program and therefore should not get a weighted amount for any of its students?

Mr MacKay: I do not think that is exactly how they calculated it.

Ms Poole: Maybe I should ask the auditor.

Mr MacKay: Now, we are going back about three years since we had those discussions and frankly had some technical differences, if you will, as to how the operating grants formula works. It is extremely complicated. To tell you the truth, I would have to go back and check some of our correspondence in detail and perhaps consult with the Provincial Auditor's staff to conclude exactly where our difference was. Our ministry certainly took the position that there had not in fact been an $11-million overpayment.

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The Chair: I think we should maybe let the auditor address that because that is important in terms of our report.

Mr Archer: In that situation, I thought that we had resolved the difference. The difference of $11 million versus the $1.3 million came up, I guess, a couple of years ago at the time the audit report was submitted. I thought we had resolved it and agreed between the two groups that $11 million was an accurate figure. However, I sense from the ministry's response today that we did not resolve it and therefore we will get back to the bottom of this and report to the committee before the week is out, whether we agree or disagree with the $1.3 million.

The Chair: That might be important too.

Mrs Cunningham: Dr Brzustowski, I am not unaware, I am sure you are not either, of the overall comment of the auditor, which I think at least for those of us who are representing the public, only increases our frustration around what to do next or where we can be helpful, because I think at the same time we have a responsibility to maintain the confidence in our universities. I see my colleague over there shaking his head. We have lots to talk about from time to time, just not enough time to do it.

If we do not maintain or enhance the confidence of our universities, I feel that we are talking about a competitive economy and the availability of people to work and find jobs and have jobs in the next decade or two. It simply will not be there for Ontario, so I come from listening a lot to the advice we get wherever we go as legislators. At the same time, I sit here in frustration because I listened to Mr Prichard before the standing committee on finance and economic affairs last week talking on behalf of the Council of Ontario Universities with regard to the tremendous challenge and the critical situation we find ourselves in.

I was at the University of Western Ontario along with eight of my colleagues from southwest Ontario -- New Democrats, I might say. I am a bit lonely there, but they are awfully good at what they are doing.

The Chair: A bit lonely where? In your area?

Mrs Cunningham: Yes. What about yours?

The Chair: We are really quite comfortable. We have a lot of colleagues close by.

Mrs Cunningham: Mr Chair, I have to give my colleagues credit. I mean, they were there and trying to find out what is going on, to the best of all our ability, and asked some very good questions. But this whole frustration around the enabling act, the responsibility as the government sees it, with the accountability being for the universities to the public. I have been part of that and gone to the annual meeting of the university and understand; I mean, it is not very well attended.

Then we take a look at the external auditors, the limited assistance that they can give us, at least in my view as I have tried to follow things over the years, when we see things being fairly presented. The finance people may get some consolation out of that. I do not get a lot myself.

Then when we take a look at the inspection audits, I was thankful that they were here. I think anything we can do help the universities be better at what they do and be more accountable is most helpful in our work, because the bottom line is there is not a lot of public support, in my opinion, for increased funding for universities. Yet for those of us who know the effect that this will have on the economy, it is devastating to realize that one needs a lot of public support to put the money in the right place in this great institution that we are all part of.

I see it as right now we need a new way of being able to advise each other and be able to get to the bottom of what really ought to be happening at our universities and who should go there and for what purpose. I personally do not have an answer, but I do not think that spending a lot of time on this -- I mean, it is important and I am glad we have done it, but I think that the auditor has only added to my concern around this whole issue of accountability.

Can we be assured that money is being spent in the right places, the appropriate courses are being offered, the whole issue of professors making a major exodus in the next 15 years with no, in the words of the government, plans for succession or money there? I find us in an incredible position. Would you like an opportunity for your parting shot or recommendations?

Dr Brzustowski: Oh, I would love one, because I --

Mrs Cunningham: Because you can see that I am sincere in what we are trying to do. I can see the interest of my colleagues. I hope this particular government will not put politics before the interests of the students and the faculties, or hospitals or anything. But we are frustrated as to what to do next.

Dr Brzustowski: Well, the invitation to offer comments on this is perhaps the greatest challenge I have had in a long while. I would just make --

The Chair: Do not answer that last question, though, because --

Dr Brzustowski: No, I cannot speak about that. There are one or two other parenthetic comments I taught myself not to react to here.

Accountability for the use of public funds by public institutions is essential, and that accountability must be effective and it must be visible and it must be trusted by the public. Having said that, I would invite the committee not to overlook the obvious accountability for the money spent in the universities: known numbers of people graduating from programs of known quality at a unit cost lower than anywhere else. I would please invite you not to overlook that as an element of accountability.

But the accountability of the university in a social policy sense, which was the much more difficult question that was implicit in some of your later comments, Mrs Cunningham, is an extraordinarily difficult one, because for reasons of maintaining a place of learning free of the influence of vested interests or of the government of the day, we have established the tradition of university autonomy. At the same time, we deal with an expenditure of a large amount of public funding at a time when social policy has identified problems that need to be addressed.

The question of how one brings closure between the two is really a question that, I think, is before the members of this committee and the entire Legislature, the civil servants, the people who run universities and the public at large. It is a huge question. Where does one reach the balances between autonomy, which makes the learning process free of the influence of vested interests and, at the same time, where does one sacrifice that autonomy so that the institutions might be instruments providing solutions to society in those areas of social policy where they are uniquely qualified?

In the best of all possible worlds, the universities would rush to offer solutions to these problems by themselves, but we both know that attitudes in the universities range over the whole spectrum, from those who wish to do that to those who might wish to do it if they had thought of it but would resent anybody else thinking about it. That is going to be with us for some time. It is a structural feature of our society. It is a question of balance. It is a long-term issue. It is the most difficult question that has been put to me today. I wish I had the answer. I am sure there is no silver bullet on this, but the issue must be engaged.

Mr O'Connor: Thank you for that eloquent question just asked, Mrs Cunningham. It was actually somewhat along the lines I was thinking, as far as how we audit some of the target fund-raising to make sure it is free of any bias as far as the university and the programming is concerned.

The Chair: You mean other than government?

Mr O'Connor: Of course, we are completely out of it. This document here, which we just received, and the changes in this manual, I do not know if I am correct in assuming, are part of the results of the audit that just took place. One thing that goes back to what Mr Daigeler said earlier was: How do we measure the change? Should we maybe go beyond it? How do we follow up to make sure the changes that do take place as a result of this -- how do we measure it? Somehow or other, there should be a measurement upon this to make sure the changes in here are adequate enough. Maybe there need to be more changes. Is the questionnaire enough? Do we need more public consultation with not only the providers of the education but the consumers of that education down the road? Maybe you could spell some way we could measure it.

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Dr Brzustowski: That is a challenge. Let me try to deal with the issue of measurement. Presumably, if the Provincial Auditor were to perform some inspection audits after this manual with its changes had been in place for a year or two, and found that there were fewer problems, we would say the changes had been successful. I do not know whether the Provincial Auditor will wish to do that, but that would be one way of doing that.

The latter part of the question I find extraordinarily difficult, because to me, the only significant measure of the quality of an education is what the people ultimately achieve who have been through the system. How does one measure that? When does one measure it? I do not know. We are far better dealing with inputs than we are with outputs. When government identifies a need or a need is brought to it with sufficient frequency and our government responds to it by identifying it as a priority and then a program is set up to meet that need, is that a measure of response or is that just a measure of an additional input? It is probably the only thing we can measure in the short term, but whether in the long term it is the right thing to do, I cannot say.

I must say I find the last two questions philosophical and difficult. I am not aware that there are a lot of answers around in the English-speaking world or perhaps anybody else who has universities. I just do not know. These are the imponderables.

We are good at providing inputs. If government has been told there is a need for workers in, say, the rehabilitation sciences in a particular region of the province with a particular language skill, and as a result of the ministry's effort, a program to train these people for that area and for that language skill is ultimately open and that program meets quality standards, that, perhaps, is as much satisfaction as we can find in the short term. Whether in the long term those people stay there, whether they provide that service, whether the need for the service evolves and they evolve with that need, that is a longer-term issue. I would welcome a few easy questions after that.

Mr O'Connor: This goes to the point of public consultation, which this government is probably famous for, but ultimately we are accountable to the people of Ontario when it comes to dealing with the money we handle through the ministries, and we want to make sure that everything is handled as properly as it can be. But I would think, ultimately, there has to be some way of measuring it down the road after an audit has been performed.

Dr Brzustowski: I think that we can do. With the Provincial Auditor's help, I think one can look at the effectiveness of the changes by doing some inspection audits some years down the road. I think that is possible. I think some of the changes here are such that if they have improved the methods, then certain kinds of problems should not appear any more. I hope that that would be a simple measure. But on the other one, the measures of output based on people who graduate from what programs may be the best thing we can do in the finite term.

The Chair: We have reached 4:30. We can continue if you like. I do not know whether there are any more questions from members. We will have the ministry staff around here tomorrow and, as I understand it, perhaps throughout the week, or somebody from the ministry.

Dr Brzustowski: There will be people from the ministry throughout the week.

The Chair: I would like, in closing, to re-echo your comment that the cost of education in this province, perhaps in this country, is very inexpensive in comparison to what you would pay for an equivalent degree in the United States. I consider the U of T and some of our universities to be in line with many of the best US universities, and you would pay US$15,000 to US$20,000 for an education there. Granted, I guess if you factor in all the things like tax deductibility and the fact that we do pay for it through taxes, maybe it comes down to the same amount. I do not know. But I think we get an awful lot for the money that is paid for it. I know a lot of students out there would not agree, and I perhaps would not agree either, with my kids, with the difficulty of earning money during the summer to pay for it, but I think we do get quality education for the money.

I guess the final thing would be that university degrees these days, particularly just bachelor degrees, unless they get a large degree of co-op education involved in those periods when they are getting their degrees, a lot of these kids cannot even get jobs when they get out. They have a curriculum vitae that has, "I cut lawns for two summers," on it. They usually have to take a job with some mundane placement in order to get something on their CV so they can advance to a job. It is unlike when I got my university degree 25 or 30 years ago, that that got you the job over the next applicant who did not have one. That does not mean anything any more today. Just to respond to Mr Hope's comments.

Mr Hope: Just to respond to your comments: Who is liable? Who is the employer stipulating work experience, where these students are having a hard time? When they do get out, they have to have two years' work experience.

The Chair: That is right. That is what I am saying. What I am saying, though, is that until we bring that sort of involvement of part work, part university, all the way back up to the level of the university, certainly for an arts degree as opposed to a specific degree, we are going to have a lot of university students who will be out of work.

I am sorry, Ms Poole, you wanted to say something too.

Ms Poole: It was just a comment regarding the fact that we seem to have a discrepancy between the auditor and the ministry as to the Trent situation.

The Chair: They are going to discuss that.

Ms Poole: That is right, and I understand Mr Archer is going to look into that. At the time Mr Archer reports back to the committee, I wondered if perhaps the appropriate person from the ministry could also be in attendance, if they could be notified in advance, so if there are any questions --

The Chair: I think that would be a good idea, if we can impose on you, because it will be important to our report; that may be an issue that will go into our report. If there were two sides that were both equally acceptable, we would want to put both of them in there just to let the reader make his or her own decision as to which was more accurate.

Dr Brzustowski: Mr MacKay will be here.

The Chair: Thank you very much for coming forward -- we realize you have a busy schedule -- and for the help and the questions you have answered for the committee. We stand adjourned until 10 o'clock tomorrow morning.

The committee adjourned at 1630.