Nova Scotia's auditor general has delivered a reality check on a $25 million program designed to save money in the province's university system and finds that it failed to generate savings to justify the big expenditure.

"We're not pleased to see those results. I don't think the department was pleased as well," Auditor General Michael Pickup said.

Pickup released an audit report on Wednesday that repeatedly raised questions about government oversight in several departments.

Big bucks to save big bucks

The 2012 memorandum of understanding (MOU) between the province and universities established a so-called "Excellence and Innovation" fund in which $25 million dollars was set aside to provide funding for projects to save an equal amount of costs on an ongoing basis.

Pickup's office examined 10 of the 50 projects that got money over four rounds of funding.

Of the eight that completed status reports, two did not generate expected savings or revenue. Three did
not bother with an estimate. The report says all 10 met project criteria.

In the program's final year, the idea of savings appears to have been jettisoned. The criteria was changed to consider projects which supported innovation, collaboration and the province's economic and social goals.

Pickup concludes the program's goal was unmet and questions whether it was ever attainable.

"We would have expected more from a $25 million fund," Pickup said.

The Atlantic Universities Association declined comment on the report.

"We've just received the report and its under review," executive director Peter Halpin said in an e-mailed response to CBC's request for comment on the Auditor General's report.

New MOU on the way

Nova Scotia Minister of Labour and Advanced Education Kelly Regan says the province expects to have a new MOU with universities in place by the end of the year and it is looking at broadening the funding formula beyond enrolment.

"We want to track what's happening with our students as they come out of university. Are they getting jobs? That kind of thing. So, that is one of the things we are looking at for the MOU," Regan said.

The auditor general criticized the level of oversight for the $317 million in grants Nova Scotia gave the province's 10 universities last year.

"Most funding to universities is provided with no accountability back to the province," Pickup told reporters.

His report reveals that both have repeatedly failed since 2007 — to agree on a new formula to allocate the grant.

Running deficits

The department's response to Pickup's criticisms are included in his report. The department offers a telling explanation about the stakes involved in any change to the funding. 

Namely, that change will create winners and losers.

"The implications for those universities receiving less funding are very serious," the department said in its response.

The universities have asked government to delay implementing a new allocation formula until 2017 to give them time to deal with "forced changes" in their operating grant.

The department says without "structural changes" the universities are on track to run a collective deficit of $50 million by 2018.

Earlier this year, it lifted a three per cent tuition cap and created a window for schools to impose what it called a one-time market adjustment for tuition. Several have taken advantage with tuition increases.

Opposition critic Tim Houston of the Progressive Conservatives and interim NDP leader Maureen MacDonald both accused the government of throwing the problem of university sustainability onto the backs of students.

Michaela Sam of the Students Federation told reporters the tuition "reset" means students at the Nova Scotia College of Art and Design are facing a 37 per cent tuition increase over a four-year period.