Differentiation: Where Are We?
GOVERNMENT FUNDING AND DIFFERENTIATION
Ian Bunting
CHET seminar
10 February 2012
Franschhoek
1
SECTION A: INTRODUCTION
1
The purpose of this presentation is to lay the ground for a discussion on the
relationship between government funding and differentiation in the HE system. The
main question which the discussion will raise is this:
Does the funding framework which was introduced in 2003 support the 2012
Green Paper’s conception of a differentiated HE system?
2
The discussion begins with a brief account of the role which government
funding plays in the overall governance of the public HE system. This account is
placed in the context of government steering of the HE system, which the 2012
Green Paper clearly accepts and builds on.
3
Although this presentation deals primarily with policy issues related to the
financing of the HE system, some empirical data are needed to develop the
discussions. These data, which will be limited to income only, are set out in the three
graphs and the table which appear in Section C.
2
SECTION B: STEERING THE PUBLIC HIGHER EDUCATION SYSTEM
4 The 1997 White Paper places national HE governance in a steering model. It
requires government to steer the HE system by:
(a) laying down national HE goals,
(b) specifying goals for individual HE institutions, and
(c) monitoring institutional performance in relation to these sets of goals.
5 A 2004 account of these steering mechanisms (which either had been or were
expected to be put in place) is summed up in the diagram which follows on the next
slide.
6 The quality steering mechanism is the responsibility of the CHE, and those of
planning and funding the responsibility of the DHET. The discussion which follows
deals with funding as a steering mechanism, with the main focus being on the 2003
framework and its implications for differentiation.
3
2004 ACCOUNT OF GOVERNMENT STEERING MECHANISMS
QUALITY
Institutional
quality audits
Quality assurance:
(a) all existing and
(b) proposed new
academic programmes
PLANNING
Institutional missions,
operating plans, and
academic programme
profiles
FUNDING
HEMIS data &
data
analyses
Student & staff
equity plans
2003 funding
framework
Institutional inputs &
outputs for funding
Student enrolment
plans
Government funds
allocated to HE
institutions
4
7 The basic steering features of the government funding framework introduced in
2003 are these:
(a) The framework is supposed to be a goal-oriented mechanism for distributing
government grants to the HE system in accordance with national priorities and
approved national plans.
(b) A key assumption of the pre-2003 formulas for universities and technikons was
that government’s primary responsibility was to contribute to institutional costs.
This assumption clashes with the 1997 White Paper’s fundamental principle that
academic programmes and not individual institutions are the basic elements in
a HE system. It was not as a result repeated in the 2003 framework.
(c) A further key assumption of the pre-2003 formulas also fell away: student
choices and institutional competition could not be the sole determinants of the
size and shape of the HE system. The 2003 framework stresses that that the
size and shape of the system has to be determined through an integration of
planning and funding.
5
8
The integration of planning and funding in the 2003 funding framework was
interpreted in this way:
(a) Government cannot adopt a “hands off” stance as far as HE is concerned. The
Minister must approve plans for HE system and plans for individual institutions,
and must use the funding framework to implement these plans.
(b) Since the primary purposes of HE are those of teaching and research,
institutions receive government funds for the rendering of services related to
the production of graduates, and the producing of research outputs.
9
The overall workings of the 2003 framework can be summed up in this way:
The starting point for a national budget is not a calculation of actual unit costs in
the HE system. Government decides first what services it requires from the
HE sector, what it can afford to spend on HE, and then allocates funds to HE
in accordance with national needs and priorities.
10
A picture of how the allocation aspects of the funding framework were
expected to function is set out on Slide 7 which follows.
6
GOVERNMENT FUNDING AS A STEERING MECHANISM: 2004
Preliminary 3-year rolling
budgets for Department of
Education
Reconsidered
annually by Treasury:
taking account of
national spending &
policy priorities
Annual government
higher education
budget
recommends to
Parliament
makes provision for
Government's medium
term expendiure
framework (MTEF)
EARMARKED
FUNDING transferred
at discretion of
Minister
(8% of budget in 2004)
BLOCK GRANTS
distributed to academic
programmes, on basis
of 2003 funding
framework
(92% of budget in 2004)
distributed to "deliverers" of programmes
Individual universities &
technikons
7
SECTION C: OVERVIEW OF INCOME OF THE HIGHER EDUCATION SYSTEM
11 As was indicated in the introduction in Section A, an overview of the total
income of the HE system is needed to set the context for the later discussion of key
aspects of the flow chart on Slide 7.
12 Graph 1, which follows on the next slide, divides the total income of the HE
system into three categories:
•
•
•
government funds which include all block amounts plus earmarked funds for
special purposes;
student fees which include tuition and all class fees, as well as accommodation
or residence fees;
private income which includes donations, investment income, and income from
non-government contracts for research or the delivery of other services.
13 Graph 2 on Slide 10 shows how the proportions of these income categories
changed over the period 2001-2009.
8
Graph 1
Total income of public higher education institutions: Rands billions
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2001
2003
2005
2007
2009
Government grants
7.1
8.4
9.9
11.9
15.3
Student fees
4.0
5.4
7.4
7.7
10.7
Private income
4.1
5.2
6.6
9.1
11.6
TOTAL
15.2
19.0
24.0
28.7
37.5
Average annual increases: 2001-2009
Government
grants
10.1%
Student
fees
13.0%
Private
income
13.7%
TOTAL
11.9%
9
Graph 2
Summary of income sources of public higher education institutions
120%
100%
27%
27%
27%
28%
28%
26%
27%
29%
29%
31%
46%
46%
44%
43%
41%
2001
2003
2005
2007
2009
80%
60%
40%
20%
0%
Government grants
Student fees
Private income
10
14 Table 1 on Slide 12 gives a detailed breakdown of the government funds
category for the three year period 2009 to 2011. The categories employed in the
table are these:
•
Block grants: these are the amounts generated by the application of various
formulas to the approved input and output data of institutions. These amounts
fall into a category of “Council controlled funds”, which implies that their use is
determined at the discretion of the institution’s highest governing body.
•
Earmarked transfers to institutions: these are grants which have to be used for
the purposes specified by the Minister, and which are reported in the income
statements of institutions.
•
Other earmarked grants: these are grants whose use is determined by the
Minister, which are not transferred to institutions, and which are not reported in
the income statements of institutions.
15 Graph 3 on Slide 13 shows how the proportions of government allocations in the
categories of block grants and earmarked transfers to institutions changed over
the period 2001-2009.
11
Table 1
12
Graph 3
Block grants & earmarked transfers to institutions
120%
100%
5%
7%
95%
93%
2001
2003
14%
15%
17%
86%
85%
83%
2005
2007
2009
80%
60%
40%
20%
0%
Block grants
Earmarked transfers
13
SECTION D: SUMMING UP OF 2003 FUNDING FRAMEWORK
16 As was illustrated in Slide 7, the 2003 funding framework follows the 1997
White Paper and the 2001 National Plan in taking academic programmes to be the
basic elements in a HE system. Table 2 below divides the government funding totals
for 2009 – 2011 (see Table 1 on Slide 12) into “programme-based” and “institutionfocused” proportions:
Table 2
DISTRIBUTION OF GOVERNMENT FUNDS:
AVERAGES FOR 2009-2011
Programme-based funding:
Teaching inputs
56%
Teaching outputs
12%
Teaching development
2%
Research outputs
11%
Subtotal
81%
Institution-focused funding
Institutional factor grants
5%
Infrastructure & efficiency
9%
Multi-campus
1%
Clinical training
2%
Research development
1%
Veterinary training
1%
Subtotal
19%
14
17 Some specific points to note about Table 2 are these:
•
Teaching input grants can placed in the programme-based block because the
funding grid of CESM categories and course-levels takes no account of
characteristics of institutions. So, for any cell in the grid, university and
technikon enrolments are treated in exactly the same way. Furthermore, no
special weightings are assigned to the enrolments of any grouping of
institutions.
•
Teaching and research output grants also take no account of institutional
differences. Graduate and research output units are given the same values
irrespective of which institution produced them.
•
The proportion grants described as “institution-focused” appears mainly in the
earmarked category. Graph 3 on Slide 13 shows that the proportion of
earmarked grants in the government funding total grew from 7% in 2003 to
17% in 2009. This implies that an increasing emphasis has been placed on
funding which takes account of the specific needs of institutions.
15
SECTION E: 2012 GREEN PAPER AND THE 2003 FUNDING FRAMEWORK
18 The introductory section said that a main question which would be raised
during the discussion is this:
Does the 2003 funding framework support the 2012 Green Paper’s conception
of a differentiated HE system?
19 The answer to this question must be that the 2003 funding framework is not
consistent with the 2012 Green Paper. The Green Paper takes as its analytical
starting points the three broad institutional categories of university, university of
technology, and comprehensive university. It could not therefore accept a funding
framework which is based on assumptions that HE institutions are merely "delivery
platforms" which could evolve and change as academic programme structures are
developed.
16
20 Some of the comments which the 2012 Green Paper makes about the 2003
funding framework are summarised below (this is not intended to be a full
summary):
•
There are questions about the adequacy of the instruments within the funding
framework to promote inter-institutional equity. It appears that the funding
mechanism currently in place may serve to entrench and even accentuate
inequalities between previously advantaged and previously disadvantaged
institutions.
•The rigidity of the current funding system may serve to discourage
mainstream implementation of a flexible curriculum framework (such as fouryear undergraduate degrees) that can cater to the diverse needs of our
students.
•Earmarked funding is an important steering mechanism to ensure that
some of the serious problems faced by our university system are addressed.
The DHET aims to make greater use of such funding to introduce and
develop key infrastructure programmes aimed at achieving greater
institutional equity in the system.
17
•
21
•
The affordability of fees must be examined carefully and consideration given to
whether there is a need for government regulation of fees charged by
universities. This could be done, for example, through a framework for feesetting by institutions which could provide parameters and processes for fee
increases.
The 2012 Green Paper adds these further points about funding:
What is needed is a HE funding regime that does justice to current individual
institutional realities, and accepts the need for redress funding in the poorly
resourced institutions.
• Subject to the resources available to government, adequate funding will be
provided to each institution to meet the expectations for quality teaching and
research, according to its agreed-upon outputs.
22 Implementation of the 2012 Green Paper, it should be clear, would require major
adjustments to be made to the principles and mechanisms which underpin the
current (2003) funding framework.
18