Doing the business
One question that universities and other higher education institutions may have to address in the period ahead is how they can generate the revenues that will make up for the shortfall in public funding. Clearly it is possible to reduce expenditure on education – in fact, the ultimate ‘efficiency gain’ would be to admit the student and, instantly, hand them a degree parchment and say goodbye. The cost of that would be minimal, but obviously it would not satisfy anyone’s quality expectations. So on the understanding that a student is entitled to a quality education with an acceptable ratio of students to staff, reasonable facilities, good source materials in the library, and buildings maintained to at least a minimum level, I have calculated that the current unit of resource – i.e. the sum of money paid by the government to pay for each Irish or EU student’s education – is now about €250 per student less than the actual cost of providing such an education. So if a university has, say, 7,000 undergraduate students in this category, they are losing it €1.75 million.
We could theoretically deal with this in one of three possible ways: (a) stop admitting Irish or EU undergraduate students, or at any rate reduce their numbers significantly; (b) admit the students, but adapt the programmes to the financial realities and accept there may be quality risks (larger classes, reduced materials, out of date equipment and less well maintained buildings); or (c) develop other income streams in order to subsidise undergraduate education. I shouldn’t neglect to mention the other option, which is to look again at how students are funded, and either adjust public funding levels or else introduce student contributions; none of that seems likely to happen right now.
If you take the view, as I do, that option (a) is not possible for political and indeed ethical reasons, and that option (b) should not be adopted without at least trying to do something better, it seems to me that higher education institutions must all now develop much more vibrant commercialisation strategies. This does not mean that the core activities should be commercialised – nobody is anticipating that Diageo will sponsor lectures – but rather that we need to look much more closely at how we can exploit commercial opportunities in appropriate contexts. For example, we should look at how consulting can be organised and developed as a business, or how university services could be built up as commercial businesses that also look for external customers as part of a business strategy.
The business model for higher education has, I believe, been fatally undermined. We will need to ensure that we protect our educational core activities through revenues secured on the basis of our expertise. And if we do so successfully, we may also be able to use such success to lessen the bureaucratic influence of government over our activities. In the absence of tuition fees, I see no realistic alternative.
Explore posts in the same categories: higher education, universityTags: commercialisation, tuition fees, university funding
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March 31, 2010 at 7:40 am
Well how was that for irony. Yesterday’s switch on of the Large Hadron Collider disappointed the scaremongers by not producing a black hole in Switzerland, but instead Anglo Irish’s figures produced one in Ireland. That’s the worry now, that income generation of any sort in the public sector is being used to fill the billions of debt we’ve now inherited from a failed private sector. So perhaps an additional option on your list might have been to transfer the universities to NAMA’s care, award ourselves bonuses and let our grandchildren deal with the problem.
March 31, 2010 at 3:08 pm
Swiss bankers perfected the art of creating black-holes decades ago: they are way ahead of you physics guys. Banking is not rocket science. Its not even brain surgery.
Unlike the Irish black holes, the money appears elsewhere, whereas we are just getting screwed.
March 31, 2010 at 11:43 am
Perhaps we lecturers could all wear AIG tee-shirts and begin every lecture with a plug for our sponsor.
March 31, 2010 at 12:02 pm
There are no easy choices here. But I think looking to non-EU students to generate more cash is a good idea and is a strategy avidly pursued elsewhere e.g. Australia. The recent EU paper mentioned in this blog suggests that producing graduates is something we are good at.
Plan (b) is not really a runner in the long run but maybe a useful stop-gap. I don’t know what other income streams are around. The private sector is not awash with cash at the moment so it could be difficult in the short run.
I think the universities need to make a better case for the re-introduction of tuition fees.
March 31, 2010 at 12:05 pm
Perhaps we could simply swap our students for Australia’s – everybody gains.
March 31, 2010 at 1:12 pm
Yes, I see what you mean Sally. The Australian students pay fees to the Irish university, and the Irish students pay fees to the Australian university.
Meanwhile our students get a bit of sun, and theirs get a bit of culture.
March 31, 2010 at 12:33 pm
Fees.
40.—(1) A university may determine and charge fees of such amounts for student registration, courses, lectures, examinations, exhibitions or any other event, service or publication held or provided at or by, or produced by, the University.
(2) An tÚdarás may review with the universities the fees charged or proposed to be charged by the universities for student registration and courses, and for lectures and examinations relating to those courses.
(3) Arising from a review under subsection (2), An tÚdarás may, without prejudice to subsection (1) and after consultation with the Minister, advise the universities on the fees which in its opinion should be charged.
This I lifted from the 1997 Act.
It seems to be saying that you can charge Fees as you decide and while the tÚdaras may advise and opinion after consultation with the Minister the final call is yours.
If this situation holds why is it your business if the Government decides to pay Fees, full or otherwise. That connection is between the Gov’ and the student. Surely, it is you business to cost your service and send a bill. That you send one bill or that bill divided by 20,000 should not matter to you.
If I’m reading the Act correctly.
March 31, 2010 at 2:56 pm
Are you suggesting that the universities are in fact free to charge tuition? Sounds to good to be true.
March 31, 2010 at 4:16 pm
Ah, Kev’ not just free, required. Required by Active Statute, where this Statute is Marked, Measured and Gripped by a High Court Visitor.
Well it seems to say this ?.
April 1, 2010 at 2:38 am
Ah, it’s not that simple. You are right about what the Act says, and we could charge whatever fees we like. But under the ‘free fees’ scheme the money would have to be paid by the government. And it has made it clear that whatever we charge that is above the sum they determine will simply be removed from the block grant…
April 1, 2010 at 2:13 pm
Actually it is that simple.
Since 97, Trinity ‘is’ in Ireland. FOR THE FIRST TIME.
March 31, 2010 at 8:59 pm
FvP, is Vincent right about this? I’ll confess to not having read the Universities Act from start to finish…surely this can’t be right, can it? Someone would have mentioned it. Wouldn’t they?!
March 31, 2010 at 10:25 pm
Interesting post. Though it seems to me that if universities did decide to remake themselves as – in part at least – much larger-scale purveyors of ‘consultancies’, it’s only a matter of time before the business world would start wittering on about unfair advantage/needing to level the playing pitch etc. They could probably even cite WTO GATT agreements on the nature of service provision to make their case.
And as for turning to the business world for some sort of sponsorship for university work… wasn’t that one of the founding principles of Media Lab Europe? MIT and the Princes of FDI to sort out Ireland’s education and R&D inabilities / ignorance, and so on. That sorry story should at least give pause for thought in all this.