Canadian universities have been warned that they must invest wisely and guard against political threats after a government report suggested that they emerged from the Covid lockdown with a huge budgetary surplus.

The nation’s universities compiled a record C$7.3 billion (£4.8 billion) in extra revenue in the 2020-21 fiscal year, the , thanks largely to surging investment income, higher tuition fees and lower operating costs during the pandemic.

StatCan’s upbeat numbers are regarded across higher education as almost certain to change as stock market conditions fluctuate and institutions and students resume in-person operations. Yet experts fear that politicians could misunderstand the situation and make tough pandemic-era conditions even worse by interpreting a momentary surplus as permission to cut budgets.

Abraham Fuks, a professor of medicine and former dean of medicine at McGill University, said he was “very worried” about the possible political reaction to the sector’s reported surplus. Budget conditions can shift quickly, but when the government cuts support, “getting it back isn’t on a dime”, Dr Fuks said.

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The surpluses tallied by StatCan “really do look like they are a blip”, said Sue Wurtele, an associate professor of geography at Trent University and president of the Ontario Confederation of University Faculty Associations. “There is a real danger that this might get interpreted as lessening the need for robust funding,” she said.

The U15 Group, representing Canada’s major research institutions, added its own words of caution. “A single-year snapshot of finances should not be used to draw any conclusions about university finances, other than the ability of university leaders to manage resources wisely during this unusual period,” said Chad Gaffield, the U15’s chief executive officer.

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StatCan attributed the bulk of the C$7.3 billion gain in 2020-21 to the stock market, finding that universities collected a record C$5.4 billion from their investments, compared with a C$1.4 billion average the previous five years. Overall university revenues for 2020-21 increased nearly 13 per cent to C$46 billion and expenditures fell almost 4 per cent to C$39 billion, StatCan said.

Yet despite the reported record surplus, Canadian higher education is coping with substantial challenges, much of it related to economics. Provincial funding declined to 32 per cent of total revenue from 37 per cent, StatCan said. Tuition income, in turn, grew to 29 per cent of total revenue, from 22 per cent a decade ago, driven heavily by increases in international student fees, it said.

Part of the savings identified by StatCan likely came from universities simply cutting staff and cancelling classes, said Jeanette Whitton, an associate professor of botany at the University of British Columbia and president-elect of the Canadian Society of Ecology and Evolution. “Going forward, I think we have a lot of catching up to do,” she said.

The human implications, such experts said, are troubling. of more than 1,000 post-secondary students in Canada, by the student support service Studiosity, found that more than 60 per cent of them reported feeling stressed every day, with 40 per cent seriously considering dropping out.

Academic staff, too, are seeking relief. Canada’s most populous province, Ontario, has imposed wage restraints for three years, and institutions are emerging from that just as they are hit by massive inflation, Professor Wurtele said.

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Then there are international students, who are routinely subject to tuition hikes and shortfalls in housing and mental healthcare, she said, as provinces try to cut their spending or limit costs faced by domestic students.

Graduate students in the sciences also appear to be under especially difficult circumstances in Canada because of low pay, in large part because of the . The Canada Graduate Scholarships for master’s programmes provides students only C$17,500 a year, unchanged since 2003, leading to recent protests outside the national parliament.

The U15 Group and Universities Canada, the nation’s main higher education lobby group, have both called for substantial increases in funding for the scholarships.

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That financial barrier at the postgraduate level should be especially worrying to Canada, said Marc Johnson, a professor of biology at the University of Toronto Mississauga, given that institutions in the US and other countries largely offer tuition-free pathways for postgraduate students in the sciences.

The need for greater funding “is particularly high for marginalised groups that are often under-represented in higher education”, he said.

Canada’s universities do have substantial infrastructure needs that could benefit from the past year’s financial windfall, Dr Fuks said. But it seems far more important, after the turmoil of the pandemic, for universities to spend money in areas that would raise human spirits, he said. That includes greatly expanding the postgraduate student scholarships, and creating a nationwide research collaboration to better guard against future pandemics, he said.

If such areas are not addressed soon, Dr Fuks said, Canada will see an accelerated loss of its top scientific talent. “We are going to see such a horrific brain drain to the US – it’s going to be awful,” he said.

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paul.basken@timeshighereducation.com