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The government decides how much funding goes to each province. This is done through transfer payments, called "Canada Social Transfer" (CST). According to the Government of Canada's website, CST is a federal block transfer to provinces and territories in support of post-secondary education. It also supports social assistance/services, early childhood development/learning, and childcare. The Canada Health Transfer (CHT) is also a block transfer that supports post-secondary education for provinces and territories across the country.
In 2007-08, the CST increased its base by $687 million. This was to support the move to equal per capita cash. The following year, the CST increased its base by $800 million for post-secondary education support.
The government has five other methods of transferring money to post-secondary schools:
The table below shows the grant amounts given to top institutions in Canada by the Research Granting Council. Higher Education Strategy Associates (HESA)– a research firm – released a 2020 report regarding “The State of Postsecondary Education in Canada" that states that these "three disciplinary-based councils are known collectively as “the Tri-Council” agencies" and "are the largest source of federal dollars to most institutions" (p. 44).
Figure 1. https://higheredstrategy.com/wp-content/uploads/2020/09/HESA-SPEC-2020-revised.pdf
Despite these five mechanisms discussed, there still remain various ways that the federal government funds universities and colleges.
Over the years, government funding for Canadian universities has decreased. In 1982, government funding made up 82.7 percent of operating revenues. By 2012, that number decreased significantly to 54.9 percent.