Market Modifier Master of Business Administration

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1 SUBJECT: Market Modifier Master of Business Administration PURPOSE The University of Calgary is seeking provincial government approval to increase Master of Business Administration tuition by $ for a 3- credit course (i.e., the half- course fee) in (Table 1). This will be phased in over two years ($ per year). Table 1 MBA Tuition Fees (Canadians and Permanent Residents) Market Adjustment Rate CPI Increase Rate Tuition 1, , Proposed market modifier increase Total 1, , CONSIDERATIONS In , the Government of Alberta introduced a new Public Post- Secondary Institutions Tuition Fees Regulation that rolled rates back to levels and capped future increases at the provincial rate of inflation. Since that time, the University of Calgary has continued to advocate for annual tuition increases that are minimally tied to the Higher Education Price Index (HEPI), which is more appropriate as is relates to the basket of goods required for post- secondary education. It is also typically higher than the Alberta CPI. Furthermore, the University of Calgary continues to make the case that the new regulation limits annual increases to a level below that of Canadian peer institutions. The effect of the regulated cap in Alberta is evident in a growing gap between the tuition charged within the province compared to that charged in other Canadian jurisdictions. Over the ten- year period since the cap was introduced, tuition in Alberta increased by an average of 1.6 per cent annually, while the Canadian average increased by 3.7 per cent annually. The ever- widening gap creates a competitive disadvantage in program quality, which is evident in student feedback, particularly as it relates to student satisfaction and engagement. In response to these and other issues, the Ministry of Innovation and Advanced Education (IAE) issued a call for proposals in August 2014 for Alberta s public post- secondary institutions to submit proposals to correct market anomalies. Following a lengthy consultation process, the University of Calgary submitted a proposal on October 15, 2014 to correct an anomaly in the tuition it charges for the Master of Business Administration program. Tuition rates for similar programs are considerably higher in other jurisdictions and at another institution within Campus Alberta. This program provides professional advancement towards a rewarding career and entails substantial costs in order to deliver high- quality programs. The proposed increase will link the MBA tuition charged by the Universities of Calgary and Alberta. Even with the increase, MBA tuition at these two Alberta institutions will remain considerably lower than that of U15 peer institutions. Included with the proposal was information requested to

2 2 address the proposal criteria outlined in IAE s August 2014 Guide for the Preparation of Proposals for Market Modification Adjustments to Tuition. Also included was information about the following principles, consultation approach, and process followed with respect to the proposal: Principles! Transparency. We have been fully committed to transparency throughout the process (i.e., student consultation has been extensive);! Increased costs will only affect new students. Current students will not be impacted by market modifier tuition increases;! Student Experience. Market modifier revenue will go directly towards enhancing the student experience (70% of the additional revenue generated will go directly to the program Faculty with a portion being set aside for student scholarships and bursaries; 30% will provide for central support costs associated with program delivery). These percentages are derived from the funding allocation model used in our budget for allocation of new revenue. At the University of Calgary we use an integrated service delivery model, and thus costs related to human resources, information technology, and finance are contained centrally. Central dollars for all market modifier proposals will be used to enhance student experience (e.g., increased library collections, enhanced wireless coverage on campus, classroom upgrades). Consultation Extensive student consultation has been fundamental to the process of developing the market modifier proposal. Following the announcement in July 2014, the University of Calgary immediately engaged student leaders on campus in a discussion on market modifiers and signaled the university s intention to submit a proposal. At the University of Calgary, students have been notified publicly in budget town halls and at TFCC meetings over the past three years of the intention to submit market modifiers when the opportunity arose. Consultation with student leaders from the Students Union and the Graduate Students Association has occurred through regular TFCC meetings (3). In early September, the Provost attended a Student Legislative Assembly (SLC) meeting to discuss market modifiers with faculty student representatives. Extensive Faculty- specific student consultation has occurred within the Faculty.

3 Process July 14 Aug 16 Sep 1 Sep 2 Sep 5 Sep 8 Sep 9 Sep 9 Sep 10 Oct 8 Oct 2 Oct 8 Oct 9-14 Oct 15 TBD Dec 12 3 Premier announces that market modifiers may be considered in the upcoming months Provost discusses announcement with Tuition and Fees Consultation Committee (TFCC) Provost briefs Deans and requests Faculty expressions of interest Ministry announces call for proposals and releases market modifier guidelines Faculties submit expressions of interest (seven received) Provost meets with TFCC to discuss market modifiers Senior team reviews seven expressions of interest and selects three Provost consults with the Students Union (SU) and Students Legislative Council (SLC) Faculties conduct consultations and town halls with students Provost updates TFCC on market modifier consultation with students Faculties submit proposals following consultations and town halls with students University combines three market modifier proposals into one government submission University submits market modifier proposal by government submission deadline Minister notifies post- secondary institutions of market modifier results If approved, proposals move to Board of Governors for approval Even if the proposal is approved, government regulation has limited annual tuition increases to a level below that of the annual increase in the cost of program delivery. This has reduced overall revenue available to public post- secondary institutions, which makes the revenue generated by this proposal necessary to partially offset inflationary cost increases. Additionally, even with the increase, the gap will continue to grow between the tuition rate at the University of Calgary and the national average because government regulation limits annual increases to a level below that of Canadian peer institutions. The University of Calgary continues to advocate that tuition increases should minimally be tied to HEPI (higher education price index), which is more appropriate as is relates to the basket of goods required for post- secondary education. It is also typically higher than the Alberta CPI. NEXT STEPS The Minister of Innovation and Advanced Education (IAE) is currently reviewing the University of Calgary s proposal to correct this market anomaly. The proponents will develop the budget and two- year forecast based on the approved tuition and fee increase. Students will be notified about the increase in the calendar, program publications, and the university website. ROUTING AND PERSONS CONSULTED Tuition and fees are reviewed by the Tuition and Fee Consultation Committee (TFCC) and approved by the Board of Governors. Consistent with section 3 of the Public Post- Secondary Institutions Tuition Fees Regulation, the University of Calgary established a process for holding consultations with students to discuss annual increases in tuition fees. That process is led by a Tuition and Fees Consultation Committee (TFCC), which is chaired by the Provost and Vice- President (Academic), and includes representatives of student organizations and administration to ensure open two- way communication on matters related to tuition and general fees is included in the annual budget process. This committee typically meets bi- weekly between September and December, but continues to meet monthly between January and August to examine other course fees. SUPPORTING MATERIALS Attachment 1 Comprehensive Tuition Schedule Attachment 2 Market Modifier Proposal

4 Attachment 3 Letter of support from MBA Students 4

5 5 ATTACHMENT 1 COMPREHENSIVE TUITION AND FEE SCHEDULES Table 1 MBA Tuition Fees (Canadians and Permanent Residents) Actual Proposed Projected Projected Projected Total Thesis- Based MBA Program 11, , , , , Half Course - Total w/o 2010 MM 1, , , , , Half Course - Total with 2010 MM** 1, , , , , Half Course Total with 2015 MM* 1, , , , , Total Thesis- Based MBA Program 11, , , , , Notes: Course tuition is calculated on a credit basis Estimated increase for subsequent 3 years is assumed to be 2.2% Fee increases are applied in Spring of each year Table 2 MBA Tuition Fees (International Students) Actual Proposed Projected Projected Projected Thesis- Based MBA Program 25, , , , , Half Course 2, , , , , Half Course with MM* 2, , , , , Thesis- Based MBA Program 25, , , , , Half Course 2, , , , , Notes: International Graduate student tuition = regular international graduate tuition times 2 Audit Fee = one half of the tuition fee Proposed increase for is 2.2% Estimated increase for subsequent 3 years is assumed to be 2.20% International Students do not pay the MBA Market Modifier implemented in Fall *Current students (admitted prior to Spring 2015) are not assessed market modifier

6 6 ATTACHMENT 2 MARKET MODIFIER PROPOSAL 1. Program Name of the program, stipulating majors / first levels of specializations Master of Business Administration (MBA) 2. Market Anomaly Demonstration of market anomaly over program duration The market anomaly over the two- year year duration of a Master of Business Administration (MBA) is $7, % lower at University of Calgary than the average of a selected group of peer institutions ($39,900 $32,500 = $7,400), and 59% below Haskayne s main central Canada competitors (i.e., Toronto, McGill, Western, Queens, York), some of whom offer MBA programs in downtown Calgary. Figure 2 Tuition Fees for Full- Time Canadian MBA Students in Two- Year Degree Programs ( ) University of Toronto $91.5 McGill University University of Western Ontario Queen's University $77.0 $79.5 $79.5 York University $65.8 University of Brilsh Columbia Dalhousie University Average Proposed Haskayne McMaster University Simon Fraser University University of Waterloo Haskayne University of Saskatchewan University of Manitoba Thompson Rivers University University of Victoria University of Okawa University of Alberta $44.8 $44.0 $39.9 $38.5 $36.7 $35.5 $32.7 $32.5 $28.0 $27.9 $27.5 $26.0 $24.0 $23.6 Laval University University of Montreal Concordia University $9.0 $7.5 $7.0

7 3. Tuition 7 Information about the change in tuition fees Tuition will increase by $ from the current rate of $1, for a 3- credit course (i.e., the half- course fee) in This will be phased in over two years ($ per year), which will result in the total 3- credit course tuition being $1, in and $1, at steady state in Market Adjustment Rate Market modifier Rate* Market modifier * Tuition 1, Proposed MM Increase *note: tuition rates will be adjusted by annual CPI rates 4. Increased Costs will only Affect New Students Provisions for grandfathering current students and details on phase in The provision for grandfathering current students is based on a plan to phase in the tuition increase starting with first year students taking 600 level courses in Increases to the tuition charged for second year students taking 700 level courses will be phased in when the market adjustment achieves steady state. The proposed phase- in will ensure that current students are not affected by the market modifier Year 1 - Level 600 Level 600 Year Level Consultation Information on how students have been consulted Representatives from the Haskayne School of Business met with the President and executive members of the MBA Student Society, and held two town hall meetings that were open to all MBA students. The town hall meetings were held at convenient times and locations (4:30 pm at the downtown campus, and noon on main campus). The president of the MBA Student Society provided a letter, dated September 25, 2014, which provides an overview of the consultation process and a summary of the student views (see Appendix 1). The letter states the following: With these considerations in mind, the Haskayne MBA Society, on behalf of the full- time and part- time MBA Students recognizes the potential repercussions of increasing tuition but also see this as an opportunity to increase value to the Haskayne MBA degree in the future. Accordingly, we encourage the Haskayne School of Business to proceed with this proposed market modifier towards improving the MBA program and services rendered. In response to student feedback, the Haskayne School of Business adjusted the proposed student scholarship allocation from 20% to 10% of the market modifier revenue available. 6. Benefits Identification of proposed benefits to students and the institution

8 8 The Haskayne School of Business is committed to excellence in business education. However, it has been increasingly difficult to deliver a nationally competitive master of business administration program at the current tuition level, particularly given that the MBA tuition rate at the University of Calgary is significantly below the average of a selected group of peers. The proposed benefits to students center on enhancements to the student internship program, student development program, and the ethical leadership program. For proposed benefit details, please refer to Section 8 (Revenue Plan). 7. Revenue Generated Expected additional tuition revenue if the adjustment is approved The additional tuition revenue expected if the $ phased adjustment is approved is $267,000 in This will increase to $1,068,000 annually at steady state once the $ phase- in is complete in This estimate is based on the number of course enrollees registered in the MBA program in It does not include any inflationary increases in subsequent years, which will increase the overall revenue from this proposal Year 1-267, , ,000 Year , ,000 Total - 267, ,000 1,068, Revenue Plan Plan for additional revenue The allocation of new funds from a market modifier will follow the standard university funding allocation model which allocates 70% of any new funding directly to the academic and research portfolios (Haskayne School of Business), and 30% to university- wide operational costs (see page 1). Scholarships and Bursaries (10%) These funds will be directed to scholarships and bursaries to better ensure that all qualified students can attend the Haskayne School of Business, regardless of income. The remaining 60% of the market modifier funds will be applied directly to improving the MBA program and student experience. Student Development Program. We have developed and seek to fund a value- add student development program. We have observed that there are increasing expectations among MBA students for such value- add services, referred to as wrap- arounds. For example, University of Western Ontario MBA students are provided career coaching and extensive help with résumés, interviews, networking, and career planning and strategy. Queen s and Rotman (University of Toronto) provide similar services. Haskayne has initiated a limited program by reallocating resources to provide one dedicated MBA specialist, but we require a tripling of the resource to effectively match competitive offerings. Student Internship Program. Another area of enhanced student experience is an internship program. This is particularly vital for MBA students who wish to change career paths, and for international students who wish to remain in Canada following completion of their MBA. Most top- ranked MBA programs have an internship program. We have allocated temporary funding for an internship position, but need permanent funding to develop and expand the program.

9 9 Ethical Leadership Program. We seek to enhance our program offerings by incorporating the Guided Path ethical leadership program (custom developed at the Haskayne School) and our entrepreneurial thinking experiential course within the MBA program. These unique offerings have been developed through use of funds raised in the Calgary community, but can only be sustained over the long- term by course funding such as the Market Modifier proposed. To further enhance the MBA experience, we anticipate also seeding a student experience fund, which will provide partial support of travel for case competitions and study abroad. 9. Peer Selection Process Program- specific data (peer selection process and tuition comparison) The selection of peers focused primarily on the Canadian U15 group of research universities as the main comparison group. Institutions within the U15 are comparable to the University of Calgary along a number of dimensions that include the availability of MBA programs, their relative size and breadth of programs, the focus on research and scholarship, and complexity of their organizations. More importantly, students at the University of Calgary often refer to U15 institutions when making post- secondary application decisions. 10. Tuition Ranking Current / future tuition ranking if modifier is approved If the modifier is approved, the University of Calgary s current rank (11 th out of 20 institutions) would increase to 8 th. This move up the ranking would close the negative gap of $7,400 between the University of Calgary and its peers to $1,400, or 3.5 per cent lower than the peer average. Figure 3 University Tuition Fees for Full- Time Canadian Master of Business Administration Students University of Toronto $91.5 McGill University University of Western Ontario Queen's University $77.0 $79.5 $79.5 York University $65.8 University of Brilsh Columbia Dalhousie University Average Proposed Haskayne McMaster University Simon Fraser University University of Waterloo Haskayne University of Saskatchewan University of Manitoba Thompson Rivers University University of Victoria University of Okawa University of Alberta $44.8 $44.0 $39.9 $38.5 $36.7 $35.5 $32.7 $32.5 $28.0 $27.9 $27.5 $26.0 $24.0 $23.6 Laval University University of Montreal Concordia University $9.0 $7.5 $7.0

10 11. Students 10 Number of full, part- time and Full- Load Equivalent (FLE) students affected The number of students affected by the market adjustment will be 356 FLEs. This estimate is based on the number of students registered at the University of Calgary as reported in the Learner Enrolment Reporting System (LERS) submission. 12. Market Demand Market demand/outcome data (e.g., application, graduate employment, potential earnings, student satisfaction) The demand for MBA program graduates in Alberta is well- documented. Eighty seven per cent of MBA graduates from Haskayne are employed within three months of finishing their program and more than 95% within six months of completion. The average starting salary is $94, Cost to Students Total cost to students, including proposed tuition and mandatory fees required to complete program The total cost to students to complete the two- year program, including the proposed market adjustment and mandatory fees is $41, This estimate is illustrative and does not include any inflationary cost increase in year two of the program. Students entering the program in will only be subject to a market adjustment of $ per course. Students entering the program in will be subject to the full market adjustment of $ per course Entry Cohort Entry Cohort Cohort Year 1 Year 2 Year 1 Year 2 Total Tuition 16, , , , , Market Modifier 1, , , , , Mandatory Fees 1, , , , , Total 19, , , , , Campus Alberta Impacts Potential Campus Alberta impacts of adjustment If approved the difference between the University of Calgary and University of Alberta tuition rates will be $14, These are the only two Campus Alberta institutions offering MBA programs. Tuition UCalgary UAlberta Difference Current 32, , , Increase 6, , Proposed 38, , ,862.40* 0 *we think this cost differential is justified because of the eastern university programs that are operating in downtown Calgary now

11 ATTACHMENT 3 LETTER OF SUPPORT FROM MBA STUDENTS 11

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