Professor Marek Kwiek Director, Center for Public Policy Studies

1. Changing Contexts and Rationales: Trends in Teaching and Research Funding from a European Cross-National PerspectiveFinancing Higher Education International Conference, Warsaw, June 28, 2013 Professor Marek Kwiek Director, Center for Public Policy Studies UNESCO Chair in Institutional Research and Higher Education Policy University of Poznan, Poznan, Poland kwiekm@amu.edu.pl

2. Introduction (1) • “Who Should Pay for Higher Education and Research?” as a guiding question for this session: • Who should pay for teaching?, and • Who should pay for research? • In a European context, these are two separate questions. Why?The majority of 4.000 institutions still have a dual – teaching and research – academic mission. And they are still predominantly funded through block grants for both activities (CHEPS 2010). Additionally, through competitive external research funds. • In a global context, though, public universities are mostly teaching-oriented and their teaching function is financed mostly through fees. (83 countries out of 132 studied charged some form of tuition fees in 2011, Marcucci 2013).

3. Introduction (2) • Anglophone universities are unique for their high, and increasing, fees. They show what Donald Heller (2011) termed in the American context as “the contradiction of increasing prices AND increasing enrollments”. • In a European context, universities are only beginning to move from a Humboldtian (unity of teaching and research) to a post-Humboldtian policy pattern (a majority of teaching-focused institutions and academics, and a minority of research-oriented institutions and academics). • And major European systems do not charge fees or have nominal or low fees (whether upfront fees, dual track fees, or deferred fees).

4. Introduction (3) • “Who should pay for research?” – is a question parallel to: “Where should research funding go?” The current European Commission’s response is as follows: what is needed is more public research funding going to private (corporate) research units; and more private (corporate) funding going to public universities. • The trend of ever-growing research funding concentration in top institutions in Europe is linked to public policies promoting individual, competitive research funding. • Mechanisms of research funding allocation have changed fundamentally: in the last 15 years, the share of bloc grants has been decreasing, leading to the decline in discretionary research funding. And the share of external research funding has been rising steadily (CHEPS 2010). Research funding increasingly has to be won in fierce competition with peers. • Polandas an example: competition-based, individual public research funding comes increasingly from a new national funding agency, the NCN. Which introduces new rules of the academic game for resources and prestige (UW, UJ, UAM).

5. Contexts and rationales (1) • Historically, in postwar Europe, different political, economic, ideological and social contexts, were leading to different rationales for public funding for both teaching and research. • European trends in the last decade and a half have been similar in countries with different welfare state traditions and different levels of affluence: • HE is predominantly publicly funded. Fees are still either non-existent, or nominal, or low. And R&D funding: on average, in the OECD European economies, about 70 percent is spent in the business enterprise sector, and about 30 percent in the university and government sectors combined.

6. Contexts and rationales (2) • In the ideological context of financial austerity of the 1990s and 2000s, and a new practical context of the economic crisis, various new models of university organization and university funding are tried out. • Consistently, at national and EU policy levels, a higher influx of business funding for academic research is expected, linking the world of business with the academy. • The notion of “academic entrepreneurialism” (which includes e.g. more organizational independence through more “non-core non-state income”) is becoming ever more resonant in the EU higher education and research policy communities. • (A new tool to “measure” different dimensions of entrepreneurship and to self-reflect on each of them by individual institutions is in its pilot phase in the European Commission, 2013).

7. Contexts and rationales (3) • In the post-war period of higher education massification in Europe, both teaching and research were massively funded by the national states. Then the period of growth (Vannevar Bush’s “endless frontier” view of research) was replaced by a period of scarcity since the mid-1970s in some countries and, almost everywhere, since 1990s, though. • In the expansion era, both higher education and research were viewed as public (and collective) goods. Public goods deserved massive public funding. • As Gareth Williams (1992: 135) reported to the OECD: “During the great expansion … it was widely accepted that only public funds could provide the resources needed. More and more institutions and students came to a greater and greater extent under the umbrella of state funding. By the mid-1970s the idea of higher education as a publicly provided service was overwhelmingly the dominant model”.

8. Contexts and rationales (4) • From a global perspective, European – almost fully tax-based higher education – is exceptional (“one of the last hold-outs of free higher education”, Marcucci 2013). • Still more exceptional is Poland with its tax-based public and fee-based private higher education in the last two decades, with ensuing consequences for the changing public-private inter-sectoral dynamics. • Globally, there is a striking diversity of tuition fee and support systems: • “National realities vary from situations where no students pay tuition fees to situations where all students pay fees, and from countries where all students receive some financial support to those where few receive support”. (Callender and Heller 2013).

9. Contexts and rationales (5) • Funding rationales do change over time: the public good rationale is as weak today as never before (Altbach 2007). Higher education is increasingly viewed as a private (and individual) good, leading to private and individual benefits (especially high wage premium for higher education). • The current growth of the global cost-sharing agenda is grounded in changing social beliefs. They includeviews on • the role of higher education in society and economy, • the changing distribution of benefits from higher education between individuals and society, and • the role of state providers and state provision of all welfare services in general, and views on who should pay for mass access to higher education in particular. • Intergenerational conflicts about the distribution of public support for various social demands isstill another dimension in aging European societies (Kwiek 2013a).

10. Contexts and rationales (6) • Funding rationales in Europe are strongly embedded, • in public ideologies (or grand “macroeconomic narratives”, Williams 2012) about the role of all public sector services;and, • in the realities of public finances and the future prospects for all public services. The rise of neo-liberalism, with its view of reduced state roles in public services provision, is an especially telling example. • Changes in public finances (and in public ideologies)may lead to changes in funding policies. • Finally, historically brand new contexts (such as the economic crisis in Europe) may provide entirely new arguments for both increased public funding – and for decreased public funding for higher education. • And European responses to the crisis (see 2008-2012 data below) are different across the continent. Arguments for more public research funding are mostly economic, and for more higher education funding are both economic and social.

11. The Economic Crisis and Public Funding for Universities in Europe, 2008-2012 • A clearly ambiguous picture emerges: there are both winners and losers in the crisis period (no inflation-adjustment is made here). There are no clear European patterns in terms of funding levels: • Biggest winners: DE (+23%), NO (+22%), SE (+22%), BE (+19%), AT (+15%), and PL (+12%). • Biggest losers: IE (-20%), HU (-20%), LT (-19%), IT (-15%), the UK (-10%), and ES (-9.5%). • In the biggest systems in 2012, public funding for HE ranged from: • 25 billion EUR in Germany and 20 billion in France, to • 10 billion in the UK, 7.2 billion in Spain and 6.6 billion in Italy (all countries in the 1.3-2.5 million students range).

12. Cost-sharing and knowledge economy • There are two separate sets of rationales for increasing private funding for higher education: • political/ideological • economic/financial. In different periods and countries, one or the other set is more powerful. Cost-sharing in HE (a shift in cost burden from governments to parents and students) has thus two distinct appeals: • private, individual gains should be privately, individually funded,and • the permanent austerity of all public sector services should lead to higher private contributions, easing the burden on the public purse. • Rationale for funding academic research in Europe in the last decade and a half has been linked to the “knowledge-economy discourse” of major international organizations (especially the OECD). It supports the critical role of (research-intensive) universities for national economic competitiveness and growth.

13. Example: Fees and Poland • “Who Pays? Who Should Pay?” (see Johnstone and Marcucci 2010) in a Polish context: these are highly context-dependent questions. And highly nationally-sensitive issues. Poland will provide a unique story of a changing public-private dynamics in a rapidly shrinking student population in 2013-2025. • Poland is exceptional from a global perspective: private shares in enrolments have been decreasing; but also absolute enrolments in the private sector have been decreasing. • Private higher education sector is expected to have fewer students every year. According to the Ministry’s recent scenario (2012), enrollments in the private sector are expected to plummet from recent 32 percent to 12 percent, and from recent 600.000 to 150.000 students in 2022 (Kwiek 2013b). • For a system in which there are 324 private institutions, it is an enormous challenge. And fees in both sectors may fundamentally change the inter-sectoral dynamics in the system, e.g. they may allow to survive more private institutions than in a landscape with tax-based public sector.

14. Research funding from macro-level, meso-level and micro-level (individual) perspectives • For research funding, we have full national aggregated data (gross domestic, higher-education and business enterprise expenditure on R&D, or GERD, HERD, and BERD) and full institutional data across Europe. • Now we have also a comprehensive individual-level dataset based on a large-scale “Changing Academic Profession” survey, with 18.000 responses from 11 countries. • We finally know how research gets funded at an individual level: who gets what in terms of academic generation and seniority, gender, age, clusters of academic disciplines, institutional types, and academic ranks across Europe. We know the share of research funding by its source: either from own institution; or from public research agencies; government; business firms or industry; or private not-for-profit foundations. • The powerful micro-level data collected across Europe in a comparable format (with about 300 different variables) provide ample opportunities to study research attitudes, behaviors, and research funding patterns in Europe.

15. Micro-level (1) • So “Who Pays” for research in Europe. First, in most countries, 50-65 percent of research funding is clearly “external” (as opposed to be coming from “own institution”). • Research funding is even more “external” for young academics (in their 20s and 30s): more than two-thirds in the UK and Finland, and half or more in all eleven countries studied except for Poland. • What are cross-national differences in business research funding across Europe? It is in the 3-4 percent range in more teaching-oriented systems (PT, PL, or IE), in the 8 percent range in more research-oriented systems (CH, AT, IT), and by far the highest in Germany – 12.4 percent. • In terms of age groups, the highest share of business funding is for oldest academics, for those in their 60s – almost 14 percent in Switzerland, and almost 19 percent in Germany. And in terms of disciplines, in engineering, the share reaches a quarter of all research funding in Austria, Finland, and Germany. The details are below.

16. Micro-level (2): external research funding, in %.

17. Micro-level (3): external research funding, young academics, in %.

18. Micro-level (4): business research funding, in %.

19. Micro-level (5): business funding, by disciplines, in %.

20. Micro-level (5): business funding, by disciplines: engineering, in %.

21. Conclusions and policy implications (1) • Changing political, economic, and ideological contexts lead to changing rationales for public funding. National policy solutions differ today but they point towards a common set of recommendations. • Recommendations from the OECD (“Pointers for reforms”) and the EC (“Modernisation Agenda”), despite national historical differences between clusters of European systems, point towards the following coherent picture (e.g. CHEPS “funding reform project” 2010): • cost sharing as the leading principle (tuition fees for all) • public subsidies for both public and private sectors • a combination of fees, grants AND (income-contingent) loans • formula-based approaches to funding (inputs AND outputs) • performance-based and competition-based funding combined with more institutional autonomy, and, finally, • the avoidance of reforms based on a broad agenda that encompass many policy areas.

22. Conclusions and policy implications (2) • Policy answers to the question “Who should pay” in the future are increasingly common both across Europe (and at the EU-level). • The cost-sharing agenda has never been so strong; and the desire to have more corporate research funding in public universities has also never been so strong. Policymakers strongly believe in university-business links (UBF Brussels). • The economic crisis may accelerate changes in funding policies which otherwise could be more gradual. Europe may experience a period of more radical experimentation, so far known to Central Europe swiftly adapting to new realities. • As academics love to stress (in their permanent games with research sponsors): far more future cross-national empirical and longitudinal research is needed (in this highly promising research area)… This time, true indeed! • Thank you so much for your attention!

23. References • Altbach, Philip G. (2012). "The Academic Profession". In: Philip G. Altbach (ed.), International Higher Education. An Encyclopedia: Volume 1. New York and London: Garland Publishing. 23-45. • CHEPS (2010). Progress in Higher Education Reform Across Europe. Governance and Funding Reform. Volume 1: Executive Summary and Main Report. Enschede: CHEPS. • Heller, Donald E. and Claire Callender, eds. (2013). Student Financing of Higher Education. A Comparative Perspective. Routledge: New York. • Johnstone, D. Bruce (2012). "The Costs of Higher Education". In: Philip G. Altbach (ed.), International Higher Education. An Encyclopedia: Volume 1. New York and London: Garland Publishing. 59-89. • Johnstone, D. Bruce, Pamela Marcucci (2010). Financing Higher Education Worldwide. Who Pays? Who Should Pay? Baltimore: The Johns Hopkins University Press. • Kwiek, Marek (2009). “The Two Decades of Privatization in Polish Higher Education. Cost-Sharing, Equity and Access”. In: Jane Knight (ed.), Financing Access and Equity in Higher Education. Rotterdam/Boston/Taipei: Sense. 149-168. • Kwiek, Marek (2012a). “Changing Higher Education Policies: From the Deinstitutionalization to the Reinstitutionalization of the Research Mission in Polish Universities”. Science and Public Policy. Vol. 39. 641-654. • Kwiek, Marek (2013a). Knowledge Production in European Universities. States, Markets, and Academic Entrepreneurialism. Frankfurt and New York: Peter Lang. • Kwiek, Marek (2013b). “From System Expansion to System Contraction: Access to Higher Education in Poland”. Comparative Education Review. Vol. 57. No. 3 (Fall). 2-26. • Temple, Paul, ed. (2012). Universities in the Knowledge Economy: Higher Education Organisation and Global Change. London, New York: Routledge. • Williams, Gareth (1984). The Economic Approach. In: Burton R. Clark (ed.), Perspectives on Higher Education: Eight Disciplinary and Comparative Views. Berkeley: University of California Press. 79-105. • Williams, Gareth (1992). Changing Patterns of Finance in Higher Education. Buckingham: Open University Press. • Williams, Gareth (2012). “Some Wicked Questions from the Dismal Science”. In: P. Temple (ed.), Universities in the Knowledge Economy: Higher Education Organisation and Global Change. London, New York: Routledge. 19-37.