Funding Scottish higher education

Following the outcome of the UK spending review, the Scottish government has now published its draft budget for 2011-12, and as part of that has indicated the funding to be allocated to higher education. Recurrent funding will be reduced from £989 million in 2010-11 to £926 million, which represents a cut of just over 6 per cent. This is a marginally smaller cut then the reduction being applied to Scottish government spending overall, and therefore signals, at least in some measure, a desire to continue to support higher education as a priority. Nevertheless, it is still a significant cut, and it will not be easy for some of the universities to cope with it.

The key passages in the budget statement as regards higher education include the following:

‘Though the Scottish Funding Council’s budget is falling we have agreed with the further and higher education sectors that they will work collaboratively and efficiently to manage this reduction without reducing overall learning opportunities. Both sectors have agreed that core college and university student places will be maintained. In addition, and mirroring the position in England, the Scottish Funding Council’s main research excellence grant will also be protected in cash terms.’

And…

‘The scale of the reductions required mean that we have had to take the difficult decision to reduce the overall resources for the further and higher education sectors in Scotland. In doing so, we have been very clear that our objective, in this current economic climate, is to continue to protect student numbers and to protect our investment in research. We have asked the sectors to extract maximum value from the unprecedented levels of investment they have received over the past four years by managing these reductions through greater efficiency and collaborative working. They have responded to this challenge. So we have agreed with the sectors that we will work in 2011-12 to preserve the number of core college and university student places. In addition, and mirroring the position in England, the Scottish Funding Council’s research budget will also be protected in cash terms.’

The Scottish government will, it appears, stay away from any student contributions for now. But it is clear that the existing arrangements for funding, even with the visible support the government is giving higher education, will not be sufficient over the medium term. There should be interesting discussions ahead.

Considering New Zealand

There are many similarities between New Zealand and Ireland (and perhaps Scotland). Ireland’s population is 4.2 million, as is New Zealand’s (Scotland has 5.2 million inhabitants). New Zealand, like Ireland, formerly had a high dependence on agriculture, and indeed like Ireland sold most of its key agricultural products to Britain (which negotiated a special arrangement for NZ produce when entering the EU). New Zealand’s GDP, at US$116.5 billion, is lower than Ireland’s US$ 190 billion or so, but like Ireland it has over recent years experienced a highly damaging recession, with the economy contracting very substantially over five quarters – indeed New Zealand’s recession began earlier than that of most industrialised countries.

New Zealand has eight universities, Ireland has seven. Again as in Ireland, there have been gradual cutbacks in higher education funding over the past few years, so that funding per student was in decline. But unlike Ireland, as New Zealand seeks to come out of recession it is increasing rather than cutting higher education funding.  A joint report was commissioned by the government and Universities New Zealand, and this recommended that an additional $40 million should be invested in university teaching and research. According to the study, this investment will produce an increase in GDP of 0.12 per cent. This might not seem much, but when growth is on a knife edge it can make a crucial difference. In any case, I suspect that the indirect effect would produce a much larger GDP increase.

There are certain realities we now need to face. However much every sector in Ireland needs to be re-assessed with a view to finding savings, cutting higher education will have a knock-on effect on economic performance, as well as creating social problems. Ireland still needs to compete globally – in fact, it needs to more than ever – and this is not the time for reductions in resourcing. If the exchequer cannot produce the necessary funding (as may well be the case) we have to face up to the imperative to find the money elsewhere. This is a game with very high stakes, and the penalties for getting it wrong may be severe, and will not be amenable to easy or short term correction.

The New Zealand comparison should be instructive.

The policy and strategy on paper clips, or maybe toilet paper

In this era of exponential cuts in higher education, expect to see more of this sort of thing: Texas A&M University* has decided, as part of its quest to save money in the face of budget cuts, to stop supplying free toilet paper to student residences. This will save it some $80,000 – but the actual sum it has to find is a staggering $60 million. In that context, no amount of thrift in the bathroom will contribute much to plugging the funding hole.

But this story sums up the quandary in which universities in a number of countries now fund themselves: how to respond to major reductions in public funding at very short notice. Furthermore, universities notoriously spend a very large percentage of their income on salaries, and a good deal of that expenditure cannot easily be cut at short notice – because of tenure, but also because of substantive teaching and research needs, which if not met will provide further income issues. In the mad rush to find something, anything, university managers often start with non-pay items, some of them really minor. The impact, even cumulatively over several categories, is modest, but the negative impact in terms of faculty attitudes and morale can be major. Throughout my time as President of DCU I tried to avoid taking such measures at all (beyond the occasional request to colleagues to be responsible and careful in their expenditure under all headings), and to focus instead on a strategic response to funding and revenue issues.

None of that can detract from the simple truth that, for many universities in a number of countries, the options for responding to cuts are running out. The higher education landscape is changing.

*PS. For those who might be wondering, A&M stands for ‘Agricultural and Mechanical’, a reference to the institution’s origins as the Agricultural and Mechanical College of Texas, in 1876.

Finding the bottom line?

In the context of an article in yesterday’s Sunday Independent newspaper on the budget and staffing cuts now being imposed on universities, Tánaiste and Minister for Education, Mary Coughlan TD, is quoted as saying that ‘the bottom line was that Irish universities would have to do more with less because of the recession’. In fairness, she also said that she would be willing to talk to the university presidents, but about what exactly?

It is now really important that our politicians and civil servants understand that, from the point we have already reached, we cannot do ‘more with less’. This is not because we don’t want to play our part in steering the country towards recovery, it is precisely because we do want to help but cannot do it this way. What the Tánaiste said indicates she believes we still have ‘fat’ in the system and that we can absorb cuts while still expanding activities. Of course in one sense she is right: we can go on adding students and teach them with fewer staff; but what we cannot do is to teach these students to an acceptable level of quality.

The universities will need to come up with an alternative vision. Simply rejecting the Tánaiste’s analysis is unlikely to get us very far. What we need is a coherent alternative view of how we should now proceed and how this would be affordable to the taxpayer. Right now there is little sign of an emerging higher education strategy in Ireland coming from the government or its agencies. We may need to do that job ourselves.

Courses and jobs at risk? And despite that, more and more students?

Here’s what’s coming our way. The Irish Times today reports on a letter sent by the HEA to the universities warning them of further cuts in budgets and staffing expected in the academic year 2010-11. The key issue highlighted by the letter is the likelihood of further staffing cuts, coming at a time when universities have already lost 6 per cent of total staff numbers over two years while admitting additional students. Budget cuts in the meantime are coming at a time when some universities are struggling with having to eliminate accumulated deficits, and all are having to balance budgets with the help of resources that simply don’t cover the costs involved in education programmes. We will be under further pressure to add to the student numbers while losing yet more money and having fewer staff to teach them.

If it’s any consolation (and it isn’t), we are not alone. Over in the UK the University and College Union (UCU) is contemplating a national lecturers’ strike over the growing number of staff redundancies. The UCU has said that redundancies have been imposed in at least five British universities. That is not something we have experienced so far in Ireland, but we have more or less reached the point where it is hard to see how further staffing reductions can be achieved without such steps being taken.

One of our key risks is that we will be defensive and reactive, and that our chief response will be to engage in a lot of firefighting. We may need to face up more directly to the fact that with the reduced resources and staffing we simply cannot run universities on the traditional model, or at least we cannot do so while maintaining acceptable levels of quality. We need to look again at how we are funded, we need to look at ways of generating additional income, and we need to look at teaching and learning methods.

And while I fully understand that there is a serious issue with public finances, and that universities cannot be exempted from cuts, we need to have a better discussion on strategy with the government than we are currently having. Just finding better ways to monitor and control the universities won’t do the trick.

Cutting to the bone

As in Ireland we prepare for a further round of cuts in university budgets this autumn – the extent of which is unknown but which are expected to be severe – it will probably comfort us little to know that we are not alone. Recent reports from Florida, for example, disclose that public universities there are being cut to such an extent that one institution can no longer afford telephones and has got rid of all fixed phone lines. That particular university has suffered cuts in public funding of $82 million and is now planning to lay off 200 employees. Indeed the situation is so bad that the university has established an ‘Office of Budget Crisis Support Services’. Ironically just as all these cuts take effect, there is a glut of student applicants.

The problems in Florida are an illustration of the confusion now spreading across many countries in relation to higher education – with government rhetoric often emphasising high-value innovation while funding cuts put in peril the institutions that must primarily deliver on this agenda.

In Ireland the reality facing us is stark. A university system that was seriously under-funded in good times, in which some institutions are facing financial issues that would in any other sector signal insolvency, is now about to be cut further. However understandable the government’s concern with public funding problems may be, it must be said that the sharp reductions in higher education funding have huge implications for the path to recovery. Renewed foreign direct investment will focus on industry links with high value university research, and domestic start-ups will often come out of university origins. It will become increasingly difficult for universities to deliver on this agenda. Indeed some will become so mesmerised by the financial crisis facing them that they will be distracted from most of their key tasks.

Of course the universities themselves must continue to look carefully at cost-saving measures, and we must demonstrate effective and prudent financial management; and of course we must recognise the budgetary realities facing the country. But we must also continue to press for  a financial framework that allows us to support the country and the drive for recovery. My fear is that the agenda for higher education, in the context of the current higher education strategic review, will focus on claims that rationalisation can save money and that universities are bad at managing their financial affairs. It is time for government (and some media commentators) to stop seeing universities as pampered institutions that could benefit from some efficiency gains, and to remember instead that we hold the keys to Ireland’s innovation strategy. As for the universities, we are more than willing to do our bit.