N.S. not adequately monitoring universities' use of public funds: AG report

A new report by Nova Scotia's auditor general says the provincial government is not effectively funding, monitoring, or holding universities accountable for public funds.

The audit, released Tuesday morning, says over five years, $1.9 billion in public funds was given to universities for operating grants, but the allocation of those grants was "arbitrary and not supported" and based on a formula established over 25 years ago. Operating funds can be used for salaries, student aid and infrastructure, as well as executive compensation, debt servicing and other expenses.

The report also found that while some universities have a pattern of running year-end deficits, there are no indicators or benchmarks to assess their financial health and sustainability.

The department has previously highlighted concern with the long-term financial sustainability of certain universities, but it has not implemented financial performance accountability on those schools, the report says.

One specific area of concern noted in the report is that the Department of Advanced Education hasn't assessed whether $163.8 million in health education grants are achieving health-care priorities. For instance, it's unclear whether the nursing seat expansion, which has cost $65 million, has added more nurses to the workforce, the report says.

Nova Scotia's 10 universities received $2.5 billion in department funding over the last five years. On average, government funding comprises about one-third of university revenue, while the remainder comes from tuition and other fees, research funding and endowments.

On a positive note, the report says new bilateral agreements introduced this year between individual schools and the province are intended to improve accountability, and include performance targets for $46.2 million of operating grants.

Recommendations 

The report includes 11 recommendations, including that the Advanced Education Department create a new model for allocating operating funds that specifies what should be considered when determining the funding amount and that includes regular reviews.

The auditor general also recommends a plan for health education funding that details goals, costs, timelines, measurement of progress and public reporting of the effectiveness of funding.

Funding agreements with schools should include conditions that address conflicts of interest, the ability to audit, and the return of unused funds to the department, as well as performance targets. If universities do not comply with conditions, funding should not be disbursed, the report says.

The department should also define financial health of universities and development benchmarks to reflect it, and meet regularly with schools to review financial results.

Advanced Education Department responds

According to the report, the department agreed with all the recommendations.

In a statement, Advanced Education Minister Brendan Maguire said the report "confirms what our government already knew — that funding agreements signed by previous governments between the province and our 10 universities did not provide accountability to taxpayers for their investments."

The statement notes that the new bilateral agreements introduced in 2024-25 do include some performance targets. Those targets included a requirement for universities to fill 97 per cent of seats in their health-care programs and work toward providing campus housing for at least 15 per cent of their full-time students.

The agreements also include new financial reporting requirements and mechanisms to review administrative expenses, the statement said.

Newly proposed legislation

The report comes on the heels of a new bill introduced last month that would see the advanced education minister authorized to appoint up to half of the members of a university's board of governors.

Bill 12 would also allow the government to force a university to undergo a revitalization plan and to withhold funding if the institution doesn't comply. Universities would also need to link their funding decisions to the provincial government's social and economic priorities.

Maguire said last week the legislation is intended to ensure universities are "viable and sustainable" and to have warnings and "stopgaps" in place if a university is in financial trouble.

Some within the university community have raised concerns about the legislation, which they say would endanger the autonomy of universities and their ability to effectively serve their communities and society.