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Focusing INAC’s PSE Program:

Targets and Impacts

A paper prepared for the Assembly of First Nations

by

Bert Waslander

Draft Final Text

June 24, 2009

INAC’s PSE Program: Targets and Impacts June 24, 2009

Table of Contents

1. Introduction 2

2. Refocusing and enhancing INAC’s PSE program: main points 3

Education targets for First Nation people 3

Five areas where improvement is most needed 4

The pay‐off from more formal education 5

The PSE program as an essential tool 6

3. Targets for PSE enrolment and graduation 7

Recent and future graduation rates 7

Comparison with other projections 9

4. Challenges 12

Barriers to PSE for First Nation people, on and off reserve 12

Areas where improvement is most needed 14

5. The economic gains from post‐secondary education 17

The link between education, earnings and production 17

Gains in employment and earnings over a lifetime 18

Comparison with other estimates 19

Gains in GDP 21

6. The PSE program as an essential tool 22

Funding 22

Delivery of the program 23

7. Conclusion 25

References 26

1


1. Introduction The idea that the level of education of First Nation people and other Canadians should be similar is

widely accepted as a desirable objective. At present a large gap exists, both at the high school level and

at the university level. Improvement in educational outcomes will be of benefit to First Nation people,

and will enhance their contribution to the Canadian economy, whose growth is constrained because of

aging of the Canadian population.

A clear sense of what can be accomplished in education of First Nation people and what benefits will

ensue is lacking. This paper proposes targets for enrolment of First Nation people in post‐secondary

education (PSE) that will bring graduation rates to Canadian levels by 2021. In calculating these targets,

we have taken account of the present enrolment gap and the need for improvement in high school

completion as a precondition for greater participation in PSE. We also show the level of education First

Nation people will reach if the targets are realised, and what economic gains will ensue. This is the first

time education flows and stocks are combined into a single, integrated set of projections that can be

used as targets. The paper also indicates areas where improvement is most needed, and discusses the

challenge of improving education in light of findings in the research literature about barriers to post‐

secondary education. It concludes that INAC’s PSE program, as currently delivered, can play an

important role in improving participation in PSE, notwithstanding a recent audit of the delivery of the

program.

The next section of the paper presents the targets and the main findings, and the remainder of the

paper gives the details behind these main points:

Section 3 shows how the targets were set and where they will lead. It compares the targets with

other recent projections.

Section 4 discusses the challenge of enhancing PSE participation by First Nation people in light of

the recent literature. It provides background on five areas where improvement is needed if the

targets are to be attained.

Estimates of economic gains are presented in section 5.

The role of the PSE program is briefly discussed in section 6

A brief conclusion follows.

2


2. Refocusing and enhancing INAC’s PSE program: main points We propose targets for the number of First Nation PSE students from 2011 to 2021 that will raise

enrolment and graduation to Canadian rates.

To achieve these targets, there need to be major improvements in

high school completions

participation in the university stream

graduating at an earlier age

participation on reserve

participation by young men

Achievement of these targets will result in significant economic gains for First Nation people and a

larger contribution by them to the Canadian economy.

INAC’s PSE program is needed to overcome significant financial barriers to participation in PSE,

particularly on reserves. We calculate the required funding level, and comment on the delivery of the

program..

Education targets for First Nation people First Nation people tend to have less formal education than other Canadians, by quite a margin. Among

the 481,000 First Nation people of 15 years and over in the year 2006, 25,000 have a university degree.

Among the same number of other Canadians, 90,000 have a degree.1 First Nation people also have

fewer high school and college diplomas than other Canadians, and match or exceed other Canadians

only in the number of trade certificates.

Equality in educational outcomes is widely seen as a desirable goal, but feasible targets for making

progress towards this goal have not been formulated. The main purpose of this paper is to present such

targets.

At present, low rates of high school completion make it impossible for First Nation people to participate

in PSE on an even keel with other Canadians. It will take time to improve high school results. We assume

that high school results can be improved gradually over twelve years, the normal duration of elementary

and high school combined. From 2021 on, twelve years from now, First Nation people will then enrol

1 Estimate based on education data from the 2006 census, and population estimate from a recent study by the Centre for the Study of Living Standards.

3


and graduate at the same rate as other Canadians. This scenario results in the following annual targets

for the next three five‐year periods between censuses2:

Table 1: Annual targets for First Nation PSE students, in thousands, by type of education (trades, college, university, total)

Tra Col Uni Tot Tra Col Uni Tot Tra Col Uni Tot

2011‐2016 2016‐2021 2021‐2026

Graduation target 2.7 2.8 2.0 7.4 2.3 3.1 3.1 8.5 1.9 3.4 3.8 9.1

Expected 2.9 2.4 1.3 3.0 2.4 1.4 3.0 2.3 1.4

Required increase ‐0.2 0.3 0.7 ‐0.7 0.7 1.8 ‐1.0 1.0 2.4

UCEP 1.6 2.1 1.2

Enrolment target 5.3 9.6 10.8 27.3 4.6 10.8 17.2 34.7 3.9 11.7 21.1 37.9

The enrolment targets are set so as to achieve the desired number of graduates. They reflect the

standard duration of full‐time studies of 2 or 3 years for a college diploma and 4 years for a Bachelor’s

degree. The university numbers are for a Bachelor’s degree or higher and do not include undergraduate

certificates. We also allow for post‐graduate studies, and for some non‐completion.3 The UCEP number

is one‐third of the number of college and university graduates, approximately re the same share of

students as at present.

The targets for training in trades are lower than the number expected based on current enrolment

patterns. It is anticipated that, as educational aspirations change, some who would have opted for a

trade certificate will aim for a college diploma or university degree.

The targets for 2021‐2026 reflect graduation and enrolment at Canadian rates. As by then high schools

will better prepare First Nation students for college or university, participation in the UCEP program is

assumed to decline by one‐half.

Five areas where improvement is most needed high school completions

As already indicated, significant improvement in high school outcomes has to occur if PSE participation is

to increase in line with these targets. Compared to other Canadians, many First Nation youngsters do

not complete high school on schedule or at all. Tests of reading, writing and math skills at the

elementary level indicate that First Nation children are significantly behind at this early stage. It will

take time to correct this.


2 Specifically, we assume that graduation rates of First Nation people will change by 1/12th of the difference between those rates and the non‐Aboriginal rates in each year starting in 2010, so that the entire gap is closed by 2022. This means that during 2011‐2016, First Nation people will bridge 1/3 of the gap in graduation rates, and between 2016 and 201, 3/4 of the gap. The enrolment targets are proportional to the graduation targets. 3 Enrolment needed to achieve the target graduation levels is assumed to be as follows: 2 times the number of graduates in trades training, 3.5 times in college, and 5.5 times for university.

4


The largest gap is at the university level, and closing it will require sustained effort. Among other things,

better academic achievement at the elementary and high school levels will be needed, as well as more

outreach, an good access to funding.


First Nation people tend to obtain diplomas and degrees later in life than other Canadians. On average,

First Nation college and university graduates are five years older than their non‐Aboriginal counterparts

at the time of graduation. This limits the benefits their training yields, as their remaining working lives

are shorter, and increases the risk of non‐completion. Efforts to have First Nation people complete their

schooling at a younger age will contribute significantly to the improvement of educational outcomes and

the benefits that ensue. The key to this is completion of high school on schedule and with good

academic performance.


People growing up on reserve have participated in college and university training at a low rate. Both to

promote equality of opportunity and to achieve the target level of enrolment, it is necessary to improve

access to PSE by people living on reserve.


As well, among First Nation people, women have participated in post‐secondary studies in much larger

numbers than men, at a rate of nearly two to one. Maintaining this pattern while raising enrolment and

graduation to Canadian rates would mean an unrealistically high rate of participation for women. Much

of the progress in education, we believe, has to come from men.

The payoff from more formal education Better education will bring better jobs with higher pay. If First Nation people had the same education as

non‐Aboriginal people, and the same employment and earnings for each type of education, their

contribution to the economy would be 83% greater than at present. Such gains will only be realised over

time, as improvement in education is followed by further changes in the labour market.

First Nation high school graduates are likely to see their lifetime earnings increase as follows when they

obtain a college diploma or university degree:

Table 2: Percentage increase in lifetime earnings associated with completion of PSE by high school graduates, by gender

From to From to

College diploma 17% 98% 28% 79%

University degree 72% 163% 83% 142%

Men Women

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The lower percentage represents what First Nation graduates are earning at present, while the higher

gain is based on earnings of non‐Aboriginal college and university graduates. We take the view that, in

time, these higher gains will be achieved by First Nation people.

If the graduation targets set out above are achieved, then by 2026 average earnings of First Nation

people will have increased by between 22% and 41% merely as a result of more education. The

contribution of First Nation people to GDP in 2026 will increase in proportion, or by $4.7 billion to $8.8

billion.

Of course, improvement on the education front will bring many other benefits to graduates, First Nation

communities and to Canadians. Better education will contribute to changing conditions in First Nation

communities as well as the position of First Nation people in Canadian society.

The PSE program as an essential tool The proposed enrolment targets are well above the number of students currently being funded through

the PSE program. As well, university studies are more expensive per year of study, in part because

universities are in the larger urban centres, farther away from First Nation communities.

It is also important to maintain the program broadly in its current form and to leave delivery in the

hands of First Nations. First Nation people face enormous barriers to post‐secondary education in the

form of low incomes and low education of the parents of young people. These two barriers are even

higher on reserve, and distance from schools, especially universities, is a third major barrier. Secure and

adequate funding that is readily at hand can make PSE studies a realistic option for children. Control of

the funds by First Nations gives high school students on reserve assurance that funding will be available

when they are ready to move on to PSE, and First Nations can nurture their investment in their youth by

ensuring that other elements for success ‐ UCEP as needed, support networks at the institutions, etc.‐

are in place.

A recent audit of the PSE program has pointed to some problems in the distribution of the funds among

First Nations, and to some inappropriate expenditures. Although there are deficiencies in the delivery of

the program, there is no reason to doubt that the large majority of the funds is used for the purpose of

supporting PSE students. The fact that the number of First Nation students in colleges and universities is

not much greater than the number funded under the PSE program suggests that the program plays a

vital role in facilitating access to post‐secondary education.

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3. Targets for PSE enrolment and graduation Public policy gains focus and effectiveness when quantitative targets are adopted. If credible, feasible

goals are used as a guideline for action by all those who can influence outcomes, they can generate

energy and commitment, and make progress more likely. They are both a beacon and a benchmark

against which to assess progress. With respect to First Nation people or disadvantaged groups generally,

targets shift the focus from disparities to what can be done to reduce them. It is not enough to

formulate targets – they have to be accepted and taken seriously by the parties involved. However, the

analyst can propose targets in the hope that they are adopted.

With respect to education of First Nation people, targets have been lacking. The Auditor General

(AG)and the Centre for the Study of Living Standards (CSLS) have published projections of the education

level of First Nation people for the mid‐ to late 2020s. Neither of these projections takes account of the

process by which future education levels are determined, i.e. the process of schooling and graduation. In

this paper we present projections of schooling, in particular PSE participation by First Nation people. Our

projections show a gradual increase in enrolment and graduation rates of First Nation people. This

improvement is not likely to come about by itself, but may result if concerted action is taken. Our

projections are intended to be targets.

Recent and future graduation rates There is no ready source of information about PSE participation and graduation by First Nation people,

as institutions do not report the Aboriginal status of their students and graduates. The five‐yearly census

of population by Statistics Canada gives information about educational attainment such as years of

schooling and diplomas and degrees obtained, and about school attendance, but, the census being just a

snapshot, it does not paint a complete picture of education flows.

However, we can estimate the number of new graduates over a five‐year period by comparing

educational credentials in two consecutive censuses. For instance, we compare the number of

university graduates aged 30 to 34 in the 2001 census with the number of graduates for the same age

cohort in the 1996 census, when this group was 25 to 29 years old. The difference is the number of

people that graduated during the intervening five years. We can calculate the rate of graduation by

comparing the number of new graduates with the size of the age group. We do the same for all five‐year

age cohorts and for various diplomas and certificates to get a complete set of graduation rates for five‐

year age groups over the five‐year period.

Two sets of graduation rates so derived are presented in Table 3, for non‐Aboriginal people and First

Nation people. They show some remarkable differences between the two groups. The first thing to note

is that non‐Aboriginal people get out of the starting blocks much faster than First Nation people. One‐

third of non‐Aboriginal people of 15‐19 years have obtained a diploma, while the share of First Nation

people is less than one‐half as large. In the next five years of their young lives, more than one‐half of

non‐Aboriginal Canadians get their first diploma, and again the share of First Nation people, at 38%, is

smaller. Only in the next higher age group are the tables turned, as First Nation people obtain a first

7


diploma in larger proportions. Over all ages together, the rate of graduation is more or less the same,

but the numbers testify to a stark difference: the large majority of non‐Aboriginal people complete high

school on schedule or with only a small delay. By contrast, many First Nation people do not complete

high school, and go back later, or obtain an equivalency or a trade certificate at a later stage in life.

Table 3: Graduation rates calculated from the 2001 and 1996 censuses (per cent)

Non‐

Aboriginal

First

Nation Difference

Non‐

Aboriginal

First

Nation Difference

Ages

15‐19 33.0 14.4 18.6 0.0 0.0 0.0

20‐24 52.8 38.2 14.6 11.1 1.4 9.6

25‐29 3.4 15.8 ‐12.4 13.5 3.3 10.2

30‐34 1.7 7.5 ‐5.8 1.5 2.6 ‐1.1

35‐39 1.0 3.8 ‐2.8 0.4 1.7 ‐1.2

40‐44 1.1 ‐0.4 1.5 0.5 0.0 0.5

45‐49 0.4 6.0 ‐5.6 0.6 0.4 0.2

50‐54 ‐0.1 7.3 ‐7.4 0.4 0.7 ‐0.3

Sum 93.3 92.7 0.5 28.0 10.1 17.9

High school or other diploma or

certificate Bachelor's degree

As shown in the right panel of Table 3, First Nation people are also comparatively late in getting a

university degree, and they do so in very small numbers. Over all ages taken together, First Nation

people graduate from university at a rate that is only marginally above one‐third the non‐Aboriginal

rate. In total, according to the graduation patterns of 1996‐2001, only one in ten First Nation people

graduates from university, compared to nearly three in ten non‐Aboriginal people.

These estimates of graduation rates are not perfect. The data are from the 1996 and 2001 census public

use microdata files (PUMFs), and these are samples of 2% to 3% of the population, drawn from the 20%

of households that filled out the long census questionnaire. The two PUMF samples are independent

and do not include the same people in 1996 and 2001. As well, there are changes over time in the age

groups because of immigration, emigration and death. It would be better to have more recent

graduation rates, but the education questions were changed in the 2006 census, and comparisons

between 2001 and 2006, with few exceptions, are not meaningful. 4 In spite of these limitations, we

believe that the graduation rates in Table 3 give a fair description of recent education patterns.

These graduation rates can be used to project the number of graduates and the level of education in

future census years. Table 4 shows the projected education levels of the non‐Aboriginal and First Nation

population after the 25 years from 2001 to 2026. As shown in rows 1 and 2, the level of education of the

4 The one exception is university degrees, and the 2006 numbers for Aboriginal people are somewhat better than the 1996‐2001 trend indicates.

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non‐Aboriginal population will be higher in 2026 than it was in 2001. More than one in five persons will

have a university degree, and another one in five will have a college diploma.

The level of education of First Nation people will also increase (rows 3 and 4).However, the shares of

college and university graduates do not come close to the level reached by the non‐Aboriginal

population in 2001, and First Nation people will fall farther behind.

If First Nation people were to graduate at the same rate as non‐Aboriginal people from 2001 on, the

First Nation population would, by 2026, have more or less the same educational credentials as the non‐

Aboriginal population did in 2001 (Table 4, rows 5 and 1). This projection is not realistic, since some

eight years have passed since 2001, years in which First Nation people have not come close to

graduating at these rates.

Table 4: Historical and projected education levels (percentage distribution)

CredentialsNone

High school

diploma

Trade

certificate

College

diploma

University

degree

Education levels for: Non‐Aboriginal population

1 2001 31.0 25.0 10.2 18.2 15.6

2 2026 with non‐Aboriginal graduation

rates 17.6 27.7 11.8 21.1 21.8

First Nation people

3 2001 50.4 21.9 10.7 13.0 3.9

4 2026 with First Nation graduation

rates 32.7 32.6 14.9 13.6 6.3

5 2026 with non‐Aboriginal graduation

rates 28.9 26.5 11.8 17.8 14.9

6 2026 with move to non‐Aboriginal

graduation rates by 2021 31.9 29.7 13.5 15.1 9.7

The last line in Table 4 projects the end result if graduation rates increase gradually over the next 12

years to reach, by the year 2021, the level at which non‐Aboriginal people graduate. In this scenario,

which we propose as targets, the share without any diploma will drop to about the same level as for the

non‐Aboriginal people in the year 2001. However, the share of college and university graduates will still

be below the non‐Aboriginal 2001 shares, by 3.1 and 5.9 per cent of the working age population. First

Nation people will not catch up in these areas, but merely keep pace: the shares of the population with

college diplomas and university degrees will increase by approximately the same number of percentage

points as for the non‐Aboriginal population.

If First Nation people achieve parity in graduation rates (as they do by the year 2021 according to our

targets, as shown in line 6), parity in education levels will inevitably follow, but only after many years,

when the working age population consists entirely of people with the higher credentials, forty to fifty

years later.

Comparison with other projections We now compare our targets and projections with three other projections of education of First Nation

people.

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Firstly, in her 2004 report, the Auditor General (AG) extrapolated the change in the share of the on‐

reserve First Nation population with a high school diploma between 1996 and 2001, and found that if

this trend continued, the share would increase to the non‐Aboriginal level in 28 years (Figure 1).

Figure 1: The education gap according to the 2004 report of the Auditor General

Curiously, the AG published a similar projection five years earlier, and projected the gap would be closed

by the year 2023, 27 years from 1986. The 2004 report commented that the gap would take 28 instead

of 27 years to close. The fact that five years had passed, so that closing the gap would take 33 years

instead of 27, was ignored. Also ignored was the increase in high school diplomas among non‐Aboriginal

people, clearly evident in Figure 1. Most importantly, perhaps, the AG report did not consider how the

gap would be closed. It did not examine high school completion rates of young people on reserve.

Secondly, in a recent study, CSLS presented a number of projections for education, employment and

earnings of First Nation people in the year 2026. With respect to education, the Centre presented two

scenarios: First Nation people would reach the 2001 level of education of non‐Aboriginal people, or they

would close half the gap in educational attainment that existed in 2001. By education level we mean, in

this case, the full detail available in the census, i.e., 14 different categories ranging from elementary

schooling or less to a PhD. The CSLS study did not examine what levels of enrolment and graduation

would be needed to achieve either of the projected scenarios for the year 2026.

CSLS was aware that non‐the Aboriginal education level would also increase and did not pretend, as the

AG did, that reaching some recently observed non‐Aboriginal education level would mean that the

education gap had disappeared. However, the CSLS study did suggest that it was possible for First Nation

people to reach the 2001level of education of the non‐Aboriginal population. The study calculated the

additional contribution First Nation people would make to GDP over the period 2001‐2026 if their

education level would gradually rise during these 25 years to reach the 2001 level of non‐Aboriginal

Canadians. As shown in Table 4, the end result projected by CSLS is quite unrealistic given recent

10


graduation patterns of First Nation people. Even with our targets for graduation, the gap in university

degrees would not be cut in half.

Thirdly, a recent study prepared for INAC presents estimates of PSE enrolment of First Nation people at

Canadian rates. This study used enrolment as reported by PSE institutions to Statistics Canada as a basis

for calculating enrolment rates. In the year 2003‐04, enrolment at Canadian rates was estimated to be

36.5 thousand students, comprising 21,000 in university, over 12,000 in colleges, over 2,000 in UCEP,

plus nearly 1,000 students outside Canada. The estimates in the INAC paper include full‐time and part‐

time students.

Table 5: Actual and potential number of students and estimated program expenditures, PSSSP, 200304 (Source: INAC 2005, Table 1.1)

Num ber of s tudents Total cos t (m illions of dollars )

Full-time Part-time Total Full-time Part-time Total Full-time Part-time

Number of students funded by PSSSP, 2003-04

College 8,944 1,328 10,272 168 3 171 $18,794 $2,221

University 8,151 1,564 9,715 165 5 169 $20,190 $2,913

UCEP 1,565 140 1,705 30 0 30 $18,993 $2,320

Outside Canada 752 112 864 15 0 15 $19,997 $3,047

Total 19,412 3,144 22,556 377 8 386

Number of students if enrolled at Canadian rates, 2003-04

College 10,162 2,131 12,293 191 5 196

University 16,382 4,631 21,013 331 13 344

UCEP 2,059 229 2,288 39 1 40

Outside Canada 752 112 864 15 0 15

Total 29,355 7,103 36,457 576 19 595

Dif ference or "gap"

College 1,218 803 2,021 23 2 25

University 8,231 3,067 11,298 166 9 175

UCEP 494 89 583 9 0 10

Outside Canada 0 0 0 0 0 0

Total 9,943 3,959 13,901 198 11 209

Cost pe r s tudent

The estimate of 36,457 PSE students is in between and close to the targets we propose for the years

2016‐2021 (34.7 thousand)and 2021‐2026 (37.9 thousand), with the latter representing enrolment at

Canadian rates. The targets are expressed in terms of full‐time students, and if we allow for part‐time

studies, a higher number of students would be needed to achieve the desired number of graduates. As

well, our targets are for future years, when the First Nation population of student age will be somewhat

larger than it was in 2004.

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4. Challenges

Barriers to PSE for First Nation people, on and off reserve First Nation people have incomes well below the average in Canada. Therefore, First Nation families

cannot support their children who want to pursue post‐secondary students to the same extent as other

families, and First Nation students need to obtain more money from other sources. This is especially so

on reserve (Table 6).

Table 6: Income and earnings in 2005 (census data) Population group

All On reserve Off reserve

Population of 15 and over:

Average income of those with income $35,872 $20,388 $15,993 $24,166

Persons without income (share) 4.7 8.4 8.7 8.1

Average earnings per person with earnings $36,616 $23,229 $19,300 $25,984

Persons without employment income (share) 28.9 41.1 47.6 35.4

Average earnings per person employed

full year and full time $51,505 $37,120 $32,009 $40,206

Persons employed full year and full time (share ) 36.4 23.1 18.8 26.9

Non‐

Aboriginal

First Nation

The Canada Student Loan Program takes into account the income of the family (parents) of the student,

and expects families with low incomes to contribute less to the financial support of their children in

college and university than families that are well‐to‐do. This means, of course, that loans to students

from families with modest incomes will be relatively large, and the prospect of significant debts is a

significant financial barrier.

First Nation graduates cannot expect to find the same good jobs and good pay as other Canadians. As

shown in this paper, First Nation people with a certain level of education earn less than their non‐

Aboriginal counterparts. Lower incomes combined with larger debt on which interest at rather high

rates starts accumulating after graduation make for a large financial barrier for First Nation people. This

barrier can be removed by providing financial support for First Nation students in the form of grants, as

INAC’s PSE program does.

Statistical evidence indicates that the level of education of the parents is a significant factor in the

educational choices of children. It is more important still than family income as a determinant of

participation in PSE. In this respect, young First Nation people also have a significant disadvantage

compared to other Canadians, as there is a large disparity in the education levels of mature adults (Table

7). Stronger financial support for First Nation students is one way in which this disadvantage can be

reduced. Incomes and education levels are lowest on reserves. The above arguments for a high level of

financial support for First Nation students in the form of grants apply even more on reserve than off

reserve.

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Table 6: Educational attainment, 2006 census5 Population group

All On reserve Off reserve

Share (%) of the population of 25‐64:

Without diploma, certificate or degree 13.9 39.1 49.6 30.0

High school diploma or equivalent 24.0 19.6 15.4 23.3

More than high school 62.1 41.3 35.0 46.7

Trade certificate 12.3 13.0 12.8 13.2

College diploma 20.9 17.3 14.1 20.0

University certificate below bachelor level 5.0 3.9 3.8 4.0

University degree 24.0 7.1 4.2 9.5

First NationNon‐

Aboriginal

A recent review by INAC of PSE participation by First Nation and Inuit people6 mentions these same

barriers to participation in PSE and provides additional evidence:

With respect to family income, it mentions that children of low‐income families are only half as

likely to attend university (19%) as youth from the highest income quartile (38%).

The paper points to evidence that parental education is more important than family income in

predicting participation in PSE.

As for the perceived return on investment in a college or university education, the INAC paper

shows that college and university graduates experience less unemployment than persons with

high school or less, but that outcomes for First Nation people, especially on reserve, are not as

good as for non‐Aboriginal people.

Clearly, the INAC review supports the idea that major barriers exist and that these are particularly large

on reserve. The INAC paper also reviews the experience and attitudes of the people concerned:

Among First Nation youth on reserve, 53% identified inadequate funding as a barrier to post‐

secondary education, while 48% mentioned poor academic preparation, 28% mentioned not

being welcome on campus, and 20% thought PSE was not necessary.

Among the reasons for not pursuing PSE, 59% mentioned that they needed to support the family

and 40% pointed to a lack of funds. Other reasons were: not wanting to leave the community

(27%), poor grades (25%), no need for PSE (20% and disliking school (18%).

First Nation youth often do not feel motivated to seek out information about PSE funding, which

may stem from a lack of confidence in their ability to qualify for scholarships or loans.

5 Source: Aboriginal Peoples of Canada, 2006 Census. Population not adjusted for under‐enumeration. The education statistics are as reported in INAC 2008. 6 INAC 2009, pages 14 to 20.

13


Further, the INAC paper provides evidence to show that students receiving funding from the PSE

program are older than borrowers under the Canada Student Loan Program. With the higher age of

students come more family responsibilities. Almost one‐third (30%) of Aboriginal university students

have children, as do almost half (47%) of Aboriginal college students. As well, Aboriginal students are

more likely to be female: in 2006, 77% of university graduates and 69% of college graduates who were

funded under the PSE program were female. Among non‐Aboriginal people, just slightly more than one‐

half of graduates are females.

The higher age of First Nation students indicates that there are major barriers to participation, barriers

that have kept them from pursuing and education at a younger age. The higher age is a further barrier,

in that older students tend to have children and family responsibilities that may cause them not to

complete their studies.

Areas where improvement is most needed A the beginning of this paper we pointed to five areas where there need to be major improvements if

the target of enrolment and graduation in PSE at Canadian rates is to be achieved:






From the discussion up to this point it should be clear that these are all areas where large gaps exist

between the non‐Aboriginal population and First Nation people. We take the view that in Canada

generally, participation and performance in education is at a very high level. If First Nation people are to

reach these same high levels, improvement is needed most where the gaps are largest. For instance,

one should not expect First Nation women to enrol in PSE in larger proportions than other Canadian

women to make up for lower participation by First Nation men. This is not realistic since the

participation rate of Canadian women is so high. By the same token, First Nation people in urban areas

should not be expected to compensate for low participation by people on reserve.

We now provide some further background and commentary on high school completion and academic

skills, the university stream, and age at graduation.


At present, First Nation youth complete high school in much smaller proportions than their non‐

Aboriginal counterparts. This is evident from the graduation rates in Table 3, which gives rates for the

first diploma or degree. For most, the first diploma is a high school diploma, but for some it is high

14


school equivalence, or a trade certificate that can be obtained by persons without a high school

diploma. It seems probable that persons who obtain their first education credential in their thirties or

forties are less likely to have a high school diploma and more likely to have equivalence or a trade

certificate. If so, Table 3 shows that First Nation people not only complete high school at a later age than

other Canadians, they also do so in smaller proportions.

More direct evidence is available from the 2006 census (Figure 2). At the time of the census somewhat

more than one‐half of North American Indians (status and non‐status) had a high school diploma.

Among their non‐Aboriginal counterparts, the share was greater than 85%.

Figure 2: High school completion rates, Canada, ages 2024, 2006

Source: J. Richards et al (2009)

In Saskatchewan, during the period 1995‐2005, between 65% and 80% of high school students complete

grade 12 in three years after starting grade 10. However, among Aboriginal students, only 25% to 32%

did so (Steeves et al (2009)). In that province there were also significant differences between the two

groups in average marks and various test scores, according to the same source.

Figure 3: Average perschool meetexceed ratios, 200102 to 200506, British Columbia’s FSA tests

15


Source: J. Richards et al (2009). Average over 366 schools in 43 districts throughout Britisch Columbia. Each school

has at least 30 Aboriginal students who participated in the FSA test.

There is also evidence of differences in academic skills at earlier stages. In British Columbia, Foundation

Skills Assessment (FSA) testing at the grade 4 and 7 levels in provincial schools has revealed significant

differences in reading, writing and numeracy skills between Aboriginal and non‐Aboriginal pupils (Figure

3). The chart indicates averages, over a large number of schools, of the share of pupils who took the FSA

test that met or exceeded the standard set by the province (who “passed” the test).

This evidence, from two recent papers by Richards et al and Steeves et al, and further evidence found in

these papers and a third recent paper by Friesen et al, indicates strongly that disparities in academic

skills and participation in schooling exist not only at the PSE level, but throughout the twelve years of

elementary and secondary education. Michael Mendelson has shown that Aboriginal high school

graduates participate in PSE at the same rate as other Canadians, and the large majority of high school

graduates in Canada enroll in some type of post‐secondary training. All this leads to the conclusion that

significantly greater PSE participation can be achieved only if more First Nation youth complete high

school.


The greatest difference in enrolment and graduation at the university level. As noted, universities are in

the larger urban centres, far away from places where many First Nation people live. This and the longer

duration make university studies a daunting prospect for many, both in terms of the time commitment

and financially. Academic skills are more important for university than for other streams and play a large

role in selection and preparation. Better performance in high school is a precondition for greater success

at university. More high school diplomas at an early age will also help greatly.


16


We estimate that Aboriginal and First Nation people graduate at college or university about five years

later than non‐Aboriginal Canadians (Table 8). The difference in the age at which people obtain their

first diploma, at more than 7 years, is even greater.

Table 8: Average estimated age at graduation

First diploma College diploma University degree

non‐Aboriginal people 19.2 20.0 25.1

First Nation people 26.6 25.2 29.9

These estimates of the age of graduation in Table 8 are derived from the 1996 and 2001 census PUMFs.

We calculated graduation rates as for Table 3, but for single years of age instead of five‐year cohorts,

and assumed people graduated two years before the 2001 census. We then calculated the average age

of people who graduated between the ages of 15 and 44, weighted by positive graduation rates.7 These

estimates are consistent with information provided in the INAC background paper cited earlier.

5. The economic gains from postsecondary education

The link between education, earnings and production Employment and earnings vary quite significantly with the level of education of a person. The higher the

level of education, the more likely the person is to be in the labour force and employed, and the less

likely to be unemployed. As well, earnings vary systematically with the level of education. A person with

a high school diploma tends to earn more than a person without such a diploma. A trade certificate or

college diploma makes for higher earnings than a high school diploma, and a university degree yields the

highest earnings. These broad facts are widely known.

Canadians take education very seriously as preparation for their working lives. They know that a better

education is likely to give them a better job. Whether because what they learn in school is essential or

because employers judge job applicants by their credentials, starting salaries vary strongly with the type

and level of schooling. Later in the working life these differences continue, whether because of what

people learned in school, including attitudes fostered there, because of an advantageous starting

position, or both. The point is that different employment and earnings for different levels of schooling

do not simply reflect differences in innate ability. The schooling itself makes a difference. It is reasonable

to assume that if an individual or group takes more education than it otherwise would, more

employment and better pay will result. This general principle applies to any individual or group,

including First Nation people. Education should be seen as an investment that gives individuals a positive

financial return in the form of greater earnings over their working lives.

We can take this one step further and recognise that higher pay reflects a greater contribution to the

economy. Employers can pay the higher wage because the employee produces goods or services that

have a greater value in the market place. If this is so, more education leads to a higher value of

7 Negative graduation rates indicate that people are moving on to a different, higher level of education. This only affects persons with a college diploma, as some of these persons graduate from university at a later stage. By setting negative graduation rates to zero we remove this problem to a certain extent. However, the estimates for college diplomas are not of the same quality as the other two types of estimates.

17


production, or, in other words, a greater gross domestic product (GDP). Better education of a group in

society does not give this group a better place in the economy at the expense of other groups, but

increases the size of the economic pie. The larger pie is a benefit not only to the group but also to the

general society, in particular through its effects on government revenues and expenditures. This is the

reasoning applied by CSLS in its recent study on the economic gains from a better educated Aboriginal

population. After reviewing the effects of education on earnings, we apply this same line of thinking to

calculate GDP gains our education targets may generate.

Gains in employment and earnings over a lifetime If people at any age were employed and had earnings as in the year 2000, a First Nation man with a high

school diploma would earn about $847,000 during his working life (Table 9). If he obtained a university

degree, he could expect to make $1,453,000, or $606,000 more. If he would obtain this degree five

years earlier, as other Canadians do, he would gain an additional $95,000. Finally, if he would be

employed as much as non‐Aboriginal Canadians with a university degree, and earn as much, he would

earn yet $679,000 more. For a First Nation man, the total potential income gain from a university degree

compared to a high school diploma is $1,380,000. For a First Nation woman the potential gain is

$779,000. This is the difference between what a First Nation woman with a high school diploma can

expect to earn during her working life, if 2001 patterns hold, and what she may earn if she gets a

university degree and earns what non‐Aboriginal Canadian women with a university degree earn over a

lifetime. Table 2 above presents some of the data in Table 9 in the form of percentage changes.

Table 9: Estimated lifetime earnings (thousands of dollars, rounded to nearest fifty thousand)

non‐Aboriginal non‐Aboriginal

earlier

graduation

earlier

graduation

No diploma 546 546 1,099 239 239 483

High school 847 895 1,411 550 581 738

Trade certificate 918 971 1,525 504 533 750

College diploma 988 1,076 1,681 705 754 984

University degree 1,453 1,548 2,227 1,009 1,077 1,329

Men Women

First Nation First Nation

In the calculations for Table 7 we have made the beginning of the working life explicit, using the ages

shown in Table 6 for the time of graduation from college or university. High school diplomas and trade

certificates, we assume, are obtained at age 19 by non‐Aboriginal people and age 22 by First Nation

people.

We believe that, in the longer term, First Nation people may well achieve the same earnings as non‐

Aboriginal Canadians, and that the higher the educational credentials, the more likely this is to happen.

Education is the ticket to good jobs, and the higher the education, the better the access to good jobs, for

any group in society. To date, First Nation university graduates have been few in number, and they have

not been in the same fields of study and have not participated in the economy in the same way as other

Canadians. This is bound to change in future years, as First Nation people follow in the footsteps of

other groups who were previously excluded from the economy, such as certain immigrant groups, or

18


women.8 Full participation in the economy on an even keel will be achieved through a process that takes

a generation or more. It starts with a determination on the part of the group in question to expand its

horizons and aim for social and economic equality. Formal education of the group is the main

mechanism (along with education of the larger society to accept the aspirations of the group).

Here are some of the ways in which such a major improvement in outcomes may come about:

First Nation people have opted for degrees and diplomas in education, law and the caring

professions, and are still under‐represented in engineering and commerce. In future we would

expect more diversity in field of study as First Nation societies evolve and First Nation people branch

out more into the larger economy.

Fist Nation people with high educational credentials have fewer years of work experience because

they graduate later, and earnings tend to grow with years of service. The influence of this factor will

be reduced if First Nation students graduate earlier in life.

First Nation people with college diplomas and university degrees have found employment in First

Nation communities, organisations and businesses, where salaries are generally below average.

Future generations will find more jobs in the larger economy.

As First Nation people take their place alongside other professionals and prove their worth,

discrimination in hiring and pay as still may exist will be reduced.

Comparison with other estimates Our estimates of lifetime earnings by education level are obtained from the 2001 census PUMF by

calculating average earnings from employment (wages and salaries plus income from self‐employment)

by single year of age and five different levels of education, for non‐Aboriginal and First Nation people.

We then add average earnings from the age of graduation (as per Table 6) up to and including age 74.

The reason for choosing this high age for the end of the working life is that the higher the education

level, the higher the age at which people still have some income from employment. Many college and

university graduates of 65 and over have earnings. Note that we simply assume that people will live and

be active in the labour market until the turn 75. We did not make any adjustments to earnings, but

simply used the average earnings levels for the year 2000 as being representative of what people with

different education levels will earn in future. Other studies tend to assume that earnings will increase

year after year.

8 Eric Howe presents an interesting example in the form of immigrants from Eastern Europe in the Prairie Provinces.

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Table 10: Aboriginal lifetime earnings in Saskatchewan Male Female

An Aboriginal person drops out of school prior to receiving a high school diploma, and does not subsequently obtain high school equivalency

An Aboriginal person obtains a high school diploma either by graduation or by subsequently completing high school equivalency, with no further formal education

$861,636 $294,350

An Aboriginal person attends a program at a university $1,386,434 $1,249,246

An Aboriginal person attends a program at a non-university postsecondary institution (a technical school), with no further formal education

$1,191,146 $646,904

$344,781 $89,502

Source: Howe, Eric (2004). As Mr. Howe makes clear in his paper, the estimates are not for all persons who identify

as Aboriginal, but only for Registered Indians.

Our estimates of lifetime incomes for different levels of education in Table 9 are just one among many

estimates of the “(investment) returns to education”. As regards First Nation people, professor Eric

Howe has produced estimates of lifetime earnings for men and women and four levels of education

based on earnings for the year 2000 as reported in the 2001 census (Table 10), the same source a for

our estimates. Howe applies a complex method to estimate lifetime incomes, in which information

about non‐Aboriginal people is used as well as information about First Nation people.

Howe’s estimates differ from ours from many reasons, including the fact that his pertain to

Saskatchewan only. However, the pattern of much higher earnings for higher levels of education is

common to both sets of estimates.

In a recent research paper, Krishna and Ravi Pendakur present the results of extensive econometric

analysis on the full 2001 census records. These records are far more detailed than publicly available

data, and this is important for data about Aboriginal and First Nation people who account for a modest

part of the population. The Pendakur study supports the notion that First Nation people gain

significantly from education in the form of higher lifetime incomes. While their incomes are generally

much lower than the average, the Pendakurs find that “returns to education” are similar for First Nation

people and other Canadians, with some variations. For instance, high school diplomas lead to a greater

income gain for people on reserve than for others. The Pendakurs find that disparities are large at any

level of education, but perhaps somewhat less so at the higher end of the education scale. They see no

evidence of a glass ceiling (barriers to access for the best jobs), but some indication of a “sticky floor”, or

somewhat larger relative disparities at the lowest education levels. They find that in cities where First

Nation people are present in larger numbers the disparities tend to be greater.

20


The Pendakur study provides more insight into the conditions for First Nation people, while confirming

the overall pattern of large disparities and high returns to post‐secondary education. The Pendakurs do

not consider how labour market outcomes may change in future.

Gains in GDP The Canadian population is aging fairly rapidly, and the large baby boom generation is approaching the

age of retirement. Over the 20 years to 2026, the non‐Aboriginal population of working age (20‐64) will

grow by only 8.3%, much less than the total non‐Aboriginal population (16.4%). This will reduce output

relative to the population. Meanwhile, the Aboriginal population of working age will grow by more than

one‐third, and so will the First Nation population of working age. First Nation people will account for

2.6% of the population of working age, compared to their current share of 2.1%. This rapid growth will

counteract the relative decline of the labour force and its effect on the Canadian economy.

First Nation people could make a much larger contribution to the economy than these numbers indicate,

by participating more fully in the economy than they do at present. The key to this is education,

especially post‐secondary education.

More education means better jobs. Higher educational credentials are associated with more

employment and higher incomes. The differences are quite large, both for Canadians generally and for

First Nation people. The Centre for the Study of Living Standards (CSLS) has evaluated the gains that may

accrue if, by 2026, North American Indians reach the education level and labour market outcomes non‐

Aboriginal Canadians had in 2001. With education, employment and earnings as at present, First Nation

people would generate $20 billion worth of goods and services (GDP). Catching up in education will add

$11.4 million or close to 60% to the GDP generated by North American Indians, and if employment and

earnings for each education level increase to become the same as for non‐Aboriginal Canadians, there

will be a further increase of $17 billion. Thus, the value of goods and services produced by North

American Indians could more than double if they would prepare for the labour market through formal

education in the same way as other Canadians and receive the same awards for that effort. Over the

period from 2001 to 2026, North American Indians would contribute between $130 billion and $312

billion more to the economy if education gradually approached the non‐Aboriginal level of 2001.

CSLS also estimated the effect changes in the place of First Nation people in the economy may have on

government revenues and expenditures, and found that this effect would be quite positive and

significant.

As we have shown, the CSLS assumption about education in 2026 could be reached only if First Nation

people graduate at the same rates as non‐Aboriginal Canadians from 2001 on. This has not happened.

With graduation rates at parity from 2011 on, part of the CSLS gains can be realised. We estimate that

GDP in 2026 can increase by $4.7 billion to $8.8 billion as a result of improvement in the education level

of First Nation people, using the same assumptions about the economy as CSLS.9

9 We calculated GDP gains using five levels of education, the same categories as elsewhere in this paper. The CSLS calculations are more detailed, with 14 levels of education.

21


6. The PSE program as an essential tool

Funding We have argued that INAC’s PSE program is a crucial tool for achieving the improvements in education

of First Nation people proposed in this paper, and needs to have its budget enlarged if it is to play this

role. Two earlier papers provide a good guide to what is needed in this regard. One paper was prepared

for the Department (INAC 2005), and another for the AFN (AFN 2007).

As these papers show, given the current guidelines for eligibility of students and the level of allowances,

the budget for the PSE program is insufficient to meet the funding needs of students currently enrolled.

The study for the AFN put present funding needs at $642 million, more than twice the actual budget.

The needs estimates comprised:

The actual capped budget of $306 million

$154 million to raise the allowance per student to an adequate level

$75 million to keep up with growth of the student source population since the year 2001

97 million to process the backlog in the number of students that has resulted from the cap on

the program’s budget

$10 million for growth in university enrolment

All but the last of these items are based on existing enrolment rates, actual costs per student, and the

terms and conditions of the PSE program. Only the last and smallest item reflects the aspiration to

increase PSE participation, and the year 2009 was early in the catch‐up process, reflecting only a very

small increase in student numbers. More representative is the number for the year 2017: $111 million

to close 30% of the gap in university enrolment. On this basis, university enrolment at Canadian rates

would cost an additional $370 million in 2017, given costs and the student source population at that

time. By 2021 the required funding would be somewhat higher, mainly because of inflation. In the years

leading up to the year 2021, funding needs would grow according to the enrolment targets, reflecting a

gradual increase to Canadian rates, and changes in cost per student.

Of course, the PSE program is not the only area where additional funds need to be applied to realise the

targets. Rather, action on a broad front at all levels of the education system will be required, probably

including more support for on‐reserve schools, intensive efforts to improve academic skills training in

elementary and high‐school, greater outreach by universities to First Nation people.

22


Delivery of the program A recent internal audit of INAC’s PSE program summarised its findings as follows:10

The funding authorities currently in use, coupled with the limited tracking of how funds are spent, do not support the sound stewardship of Program funds. Current allocation methodologies do not ensure that eligible students across the country have equitable access to post-secondary education. The Program’s performance measurement framework does not provide relevant or complete data to properly measure and assess Program results. Limited monitoring is conducted of recipient compliance with Program and funding agreement T&Cs and compliance auditing levels are inadequate.

These findings do not address the issue of adequacy of funding, which is the main problem with the

program. As shown in this paper, the program budget is less than half of what is needed to allow First

Nation people to participate in post‐secondary studies evenly with non‐Aboriginal Canadians.

As well, none of the conclusions of the audit speak to the rationale for the program. They address

mainly the performance of the department in delivering the program. That the department is lax in

executing its responsibilities as an administrator is regrettable. It would seem that the appropriate

response to these findings is to improve the administration of the program. For each finding there is a

simple remedy. First Nations can assist by complying with reasonable requests for information about

their management and results of the program.

The audit report notes that funding varies within a range from $941 per person of 18 to 34 in the

Atlantic region to $1609 in Ontario. As funding falls short of what is needed, these figures do not

demonstrate that money is going to First Nations and students who don’t need it. PSE participation of

First Nation people in Ontario is relatively high.

In the body of the audit report there is mention of use of funds for purposes other than the program.

This takes two forms. Under flexible funding arrangements First Nations have the authority to reallocate

funds from one program area to other areas. Some First Nations have used funds for the PSE program

for other ends. This is a matter of the autonomy of First Nations which overrides funding allocations by

the department based on needs. In practice, First Nations generally follow the allocation of funds

between program areas rather closely, and this is true for the PSE program as for other areas. The audit

did not uncover large transfers away from the PSE program.

The audit also found ineligible expenditures in 34 of 55 files that had details about expenditures in the

amount of $3.2 million. How large a share of expenditures this amount represents was not indicated.

10 INAC 2009, Executive Summary, page i. A fifth conclusion, not mentioned here, pertains to the Indian Studies Support program which is outside the scope of this paper.

23


The audit report noted that the ineligible expenditures were generally considered to support the

operation of the program and represented indirect costs of the program. This outcome may be a result

of lack of clarity or of inadequate funding of indirect costs. It does not represent a major departure from

the intentions of the PSE program and should not be difficult to correct.

The fact that the program budget has been subject to a arbitrary cap for more than a decade, and does

not meet the needs of the present number of students, also suggests that PSE program funds are being

used fully, or nearly so, for the purpose of supporting students. The estimates suggest that on average

students are getting considerably less than they need. It seems unlikely that they would enrol in the

numbers shown if they were getting even less because program funds were diverted to other uses.

24


7. Conclusion Education is a pre‐condition for full participation in society and the economy. Education is of strategic

importance: improvement in education is a most powerful method for bringing about improvement in

other social and economic outcomes.

This paper reviews what is known about the PSE participation of First Nation people, its causes and

consequences. It proposes targets for enrolment and graduation that take account of outcomes in

elementary and secondary education, and projects education levels and changes in economic outcomes

that will follow if the targets are realised. This is the first quantitative analysis of education stocks and

flows that takes an integrated, comprehensive approach. The targets and projected outcomes are, of

course, only as good as the assumptions and the quality of the data used to derive them.

A target is not a strategy. Clearly, to achieve the targets, a comprehensive strategy is needed. Input from

schools and school boards and PSE institutions, parents and First Nation leaders, education specialists,

provinces and INAC will be needed to make change.

Although the challenges are great and there is as yet no concerted strategy, there are positive signs.

Over the last few decades, education of Canadians has reached what may be called stratospheric levels,

and it is not surprising that First Nation people have not kept pace. The present generation of parents,

however, boosts a number of college and university graduates, and these will point the way for their

children to reach higher. As well, in recent years First Nation people have made progress in economic

terms, and disparities have been reduced.

25


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Attainment on the Labour Force, Output and the Fiscal Balance”. Paper prepared for the Educational

Branch of Indian and Northern Affairs Canada, Draft, January 22, 2009.

Friesen, Jane and Brian Krauth (2009). “Sorting peers and achievement of Aboriginal students in British

Columbia”. Paper presented at the Meetings of the Canadian Economics Association, Vancouver, May

2009.

Howe, Eric (2004). “Education and Lifetime Income for Aboriginal People in Saskatchewan,” in Jerry P.

White, Paul Maxim and Dan Beavon, eds., Aboriginal Policy Research: Setting the Agenda for Change,

Volume I. Toronto: Thompson Educational, 2004, pp. 175‐189.

INAC 2005. “Potential Expenditures of the Post‐Secondary Student Support Program”, report prepared

by Informetrica Limited, December 2005.

INAC 2007. Indian and Northern Affairs Canada and Canadian Housing and Mortgage Corporation

(2007), “Aboriginal Demography: Population, Household and Family Projections, 2001‐2026,” available

online at http://www.ainc‐inac.ca/pr/ra/abdm/adm2026‐eng.pdf.

INAC 2008. “POST‐SECONDARY EDUCATION PROGRAM: A preliminary review of First Nation and Inuit

participation in post‐secondary education based on findings from available research literature, Program

and Census data”.

INAC 2009. “Audit of the Post‐Secondary Education Program”, January 2009.

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27

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Sharpe, Andrew, Jean‐Francois Arsenault and Simon Lapointe (2007b) “The Potential Contribution of

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