Most of Nova Scotia's universities are in the red. Here's why, and what's next

Nova Scotia's universities are planning cuts, program reviews and tuition increases to grapple with budget shortfalls over the coming year.

All of the province's large universities are planning to run a deficit in 2025-26.

The troubled times come amid a significant drop in international enrolment, a government-mandated tuition freeze for some students and stagnating provincial funding.

Here's the financial outlook for each university over the coming year:

• Acadia University: $2.8-million deficit.
• Atlantic School of Theology: $7,551 surplus.
• Cape Breton University: $6.8-million deficit.
• Dalhousie University: $20.6-million deficit.
• University of King's College: $750,000 deficit.
• Mount Saint Vincent University: $1.59-million deficit.
• NSCAD University: $1.245-million deficit.
• Saint Mary's University: $2.8-million deficit.
• St. Francis Xavier: $1.966-million deficit.
• Université Sainte-Anne: not provided or published.

This is not business as usual.

Most universities are accustomed to surpluses, not deficits. Dalhousie University, Cape Breton University and Mount Saint Vincent University have reported surpluses every year of the last five up to 2023-24, but all three are in the red this year.

Some universities have had a deficit in at least one of the previous five years, and St. Francis Xavier University and the University of King's College have run deficits in several recent years.

The president of the Atlantic School of Theology, Rev. Heather McCance, says although the school has a very small surplus on the books right now, the new collective agreement with faculty reached on July 1 will affect the budget, but until it is ratified, she cannot provide more details.

For decades, provincial governments provided the majority of the operating revenue for universities, but across Canada that percentage has dropped from about 55 per cent in 2012 to closer to 40 per cent in 2023.

Nova Scotia is no exception. Although the province gave a two per cent increase in the operating grants to universities this year, it is not keeping pace with inflation. Government funding now makes up 33 per cent of university revenue in this province.

Many universities turned to tuition to compensate, and the global market was the focus of these efforts. International students pay a premium for studying at Nova Scotia universities, paying more than double or even triple the tuition rates charged to Canadian students.

Cape Breton University threw its weight behind this strategy of enticing international students, to the point that 77 per cent of its student body in 2023-24 came from outside Canada.

Other universities had smaller but still significant proportions of international students, with Saint Mary's at nearly 28 per cent, Université Sainte-Anne at about 27 per cent, and Dalhousie and Mount Saint Vincent at 21 per cent the same year.

But in January 2024, the federal government announced a cap on international student permits amid concerns about the effect of skyrocketing numbers on the housing market and to crack down on so-called "diploma mills."

In September, Ottawa further reduced the intake of international students by 10 per cent, and included graduate students, who had previously been exempt.

The effect has been drastic and swift.

Cape Breton University, for instance, had 6,974 international students in 2023-24, but that fell by 1,200 last year and is expected to continue dropping this fall.

Dalhousie's international enrolment fell from 4,279 in 2023-24 to a projected 3,382 in 2025-26.

Acadia had 489 full-time international students in 2023-24, and that's expected to drop to 374 in 2025-26. As of March, applications to Acadia from would-be international students had fallen by 58 per cent from the previous year.

Mount Saint Vincent is anticipating a 5.5 per cent drop in international enrolment.

Peter Halpin is the executive director of the Association of Atlantic Universities. He said universities in the region rely more heavily on international students than other parts of Canada, with an average of 30 per cent of enrolment coming from abroad, compared with 20 per cent in the rest of the country.

Halpin said Nova Scotia universities overall lost more than 14 per cent, or more than 2,000 international students last year alone.

"That represents a major revenue loss for many institutions, and 2025 looks equally as grim, quite frankly," he said.

Peter McInnis is the past president of the Canadian Association of University Teachers and the former president of the St. FX Association of University Teachers.

He said the days of relying so heavily on income from international students are likely over.

"It might change a little bit, but I don't think it'll ever be the numbers that it was before," said McInnis, who is also an associate professor of history at St. FX. "That was never going to last, it was never going to be sustainable.… It was always going to be unstable and volatile."

The processes that international students must go through now to get a student visa and attend university are so onerous that students are choosing to go elsewhere, said Halpin.

"The damage to Canada's brand internationally is very, very significant. International students have options, and right now Canada is not perceived as a welcoming country."

Other reasons for the financial pinch universities are experiencing include fluctuating interest income, province-mandated tuition freezes for some students and contractual increases to expenses, including labour costs.

Some universities have said they will be implementing across-the-board cuts to departments, axing programs, reconsidering their real estate footprint, tapping into special reserves of funding, not renewing contract staff, considering retirement incentives and increasing tuition for out-of-province and international students.

Most schools do have other sources of funding, including from capital campaigns, endowment funds and research grants, but those sources are often tied to specific uses and cannot be applied to operating budgets for day-to-day use.

"Immediate decisions must be made to generate additional revenue, find efficiencies across both the administrative and academic sectors, and live within our means," reads Acadia's budget document. "Without intentional and significant change, Acadia is heading down a path of being financially unviable in the short term."

Despite the current situation, McInnis said universities are still worthy of investment and support.

"We actually have a really vibrant educational system in the province and it's something that we should sustain," he said.

Halpin agreed.

"They make such a valuable contribution to Nova Scotia's economic growth and attraction of talent and driving the research agenda and creation of new business that, you know, I think there's always going to be a place for strong competitive universities in the province."