The impact of the COVID-19 pandemic on college finances for the 2020/2021 fiscal year

Released: 2022-12-07

In 2020/2021, the first year of the COVID-19 pandemic, Canadian colleges reported a record decrease of $993.0 million in revenue (in constant 2020/2021 inflation-adjusted dollars), compared with the previous fiscal year. It was the largest loss reported since Statistics Canada started collecting data on college finances in 2001/2002 and was mainly due to a drop in revenues from fees and ancillary services. Consequently, colleges reduced expenditures by $1.05 billion from 2019/2020, which resulted in an overall surplus of $315.1 million for the 2020/2021 fiscal year.

Main revenue source for colleges remains provincial/territorial funding

In 2020/2021, the largest sources of revenue for colleges came from provincial/territorial funding (55.9%), followed by fees (32.9%), ancillary revenues (2.5%), federal funding (2.4%), investment income (0.9%), donations (0.8%) and other sources (4.5%). College fees include fees for courses, as well as other charges to students such as laboratory and athletic fees and administration fees.

Colleges are more dependent on public funding than universities. In 2020/2021, they derived 58.5% of their total revenue from provincial/territorial, federal and municipal governments compared with 43.9% for universities.

Significant decrease in revenues from college fees, ancillary revenues and donations explains record loss in revenues

Despite the rapid transition to online learning to prevent program cancellation, college revenues were more impacted than university revenues during the first year of the pandemic, mainly due to a decrease of international student enrolment. In 2020/2021, total revenue fell by 7.3% for colleges, compared with an increase of 12.8% for universities.

From 2019/2020 to 2020/2021, college revenues decreased from $13.575 billion to $12.582 billion, while their expenditures decreased from $13.314 billion to $12.267 billion. The largest decreases in revenues from 2019/2020 to 2020/2021 were in fees (-$480.0 million or -10.4%), ancillary services (-$303.8 million or -49.4%), provincial/territorial funding (-$75.4 million or -1.1%) and donations (-$45.3 million or -30.4%).

Drop in college fee revenue varies across jurisdictions

From 2019/2020 to 2020/2021, overall there was a 10.4% drop in fee revenue for colleges, ranging from a decline of 2.2% in the Northwest Territories and Nunavut to a decrease of 15.3% in Alberta. The Northwest Territories and Nunavut are heavily funded by the territorial governments and college fees accounted for less than 4% of total revenue. In contrast, Ontario (53.9%), British Columbia (36.5%), Prince Edward Island (28.8%) and Alberta (28.5%) were the provinces with the highest college fee dependency ratios.

Chart 1 
Percent growth rate of college fees, 2015/2016 to 2019/2020 and 2019/2020 to 2020/2021

This decrease in college fee revenue resulted primarily from a drop in both domestic (-3.7% or -23,922) and international (-7.4% or -11,385) student enrolments. The decrease in international student enrolment was concentrated in Ontario and British Columbia. These two provinces accounted for 84.0% of the total international college enrolment in 2020/2021 and accounted for more than three-fifths (62.6%) of the total decrease in foreign student enrolment compared with 2019/2020.

Provincial/territorial funding is the major source of revenue in most provinces and territories

Provincial/territorial funding accounted for $7.0 billion or 55.9% of total revenue for colleges in 2020/2021. While this remains the largest source of funding for colleges in most provinces and territories, it has been on a downward trend ever since it peaked at 65.8% of total revenue in 2008/2009. In 2020/2021, Nunavut (90.2%), Quebec (85.9%) and Newfoundland and Labrador (80.9%) derived most of their revenues from the province/territory, whereas Ontario (33.2%) received the smallest share. Revenue from fees, particularly for international students, has increased and has been an alternative source of revenue to make up for the shortfall in provincial/territorial funding. A recent report indicates that in 2020/2021, international students' tuition fees represented 68.0% of total college tuition revenue in Ontario.

From 2019/2020 to 2020/2021, six jurisdictions experienced a drop in provincial/territorial revenue, while six saw an increase. Alberta (-17.7%) saw the largest decrease, while Quebec had the highest increase (+4.2%). In 2020/2021, Quebec (link in French only), Ontario and Manitoba set up special funds to support colleges with the financial challenges associated with the public health measures put in place in the wake of the pandemic. Meanwhile, in Alberta, the reduction of almost one-fifth of colleges' provincial revenue can be attributed to planned cuts in provincial grants to postsecondary institutions.

Chart 2 
Percent growth rate of provincial/territorial funding of colleges, 2015/2016 to 2019/2020 and 2019/2020 to 2020/2021

Federal funding decreases in 2020/2021

From 2015/2016 to 2019/2020, colleges have reported a consistent increase in federal funding with annual average growth of 10.6%. However, in 2020/2021, this funding edged down by 0.3%, making up 2.4% of total revenue ($12.6 billion). Federal revenue for colleges is mainly reserved for operating activities (75.4%), whereas for universities, it is largely directed towards sponsored research (91.3%). Manitoba reported the highest increase (+74.0%) in federal funding for colleges, which was largely dedicated to the construction of the Innovation Centre project—a development aimed at expanding research and fostering innovation.

Colleges cut down on spending during the first year of pandemic

In 2020/2021, college expenditures decreased by 7.9% to a total of $12.3 billion, $1.05 billion less than a year earlier. This represents the largest decrease since the beginning of the data series in 2001/2002. Total expenditures declined for all jurisdictions, except for Quebec (+1.3%), Nova Scotia (+0.4%) and the Northwest Territories (+0.4%). Among the declines in spending, Alberta (-24.1%) had the largest, while Manitoba (-2.8%) had the smallest. Colleges in Alberta had to scale down their expenditures mainly due to the cuts in provincial funding and the anticipated revenue shortfall with the imposition of pandemic public health measures.

In 2020/2021, salaries again made up the majority (66.5%) of expenditures at the national level. Colleges reduced spending on salaries and benefits by 4.5%, compared with an increase of 3.5% in the previous year. A higher decrease in salaries was noted for non-academic staff (-5.8%) compared with academic staff (-3.9%), indicating possibly larger cuts or non-renewal in non-academic staff positions.

Chart 3 
Percent growth rate of non-academic college staff compared with academic staff salaries, 2019/2020 to 2020/2021

All jurisdictions, except for Newfoundland and Labrador, Quebec and British Columbia, had an overall decrease in salaries and wages for non-academic and/or academic staff. Alberta reported the largest decrease (-23.7%) of its spending on total salaries, while colleges in Saskatchewan registered an 8.5% drop in salaries for academic staff. The increase in salaries expenses in Newfoundland and Labrador and Quebec could mainly be explained by the rise in total enrolment of college students of 5.2% in Newfoundland and Labrador and 1.8% in Quebec. In Alberta, colleges reduced their staff as part of the provisions made in the 2020/2021 budget which included a decrease of 750 full-time equivalent positions in the postsecondary sector.

Colleges lose almost half of their ancillary revenue

Ancillary revenue decreased to 2.5% as a share of total revenue in 2020/2021, compared with 4.5% the previous year. Colleges lost close to $303.8 million, or 49.4%, of their revenue from their ancillary services and products, including revenues from residences, cafeterias, parking fees and other auxiliary services. Ancillary revenue losses were reported across all provinces, with ancillary revenues decreasing the most in Newfoundland and Labrador (-67.5%) and declining the least in Prince Edward Island (-13.0%). The decrease in on-campus presence due to changing public health directives was a major contributor to the decline in ancillary business activities and resulting drop in revenue.

Improvement in college finances expected with resumption of on-campus activities

Overall, colleges have been able to navigate successfully through the financial challenges caused by the pandemic, mainly by decreasing spending on both academic and non-academic staff. With the relaxation of most of the pandemic restrictions, college revenue is expected to increase for the 2021/2022 school year as campus activities have largely resumed and international student enrolments are expected to return close to pre-COVID levels. College expenditure may also increase as a result of higher spending on salaries and auxiliary services as campuses renew their activities.

Contact information

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