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Tertiary Education Financing in Small States: Does Size Matter?. Jamil Salmi Tertiary Education Coordinator Paris, 2 July 2009. the future of tertiary education financing?. social and economic progress is achieved principally through the advancement and application of knowledge
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Tertiary Education Financing in Small States: Does Size Matter? JamilSalmi Tertiary Education Coordinator Paris, 2 July 2009
social and economic progress is achieved principally through the advancement and application of knowledge World Development Report 1998/99
outline • international trends • does size matter? • impact of the crisis
funding sources (macro) from public funding exclusively to cost sharing
fees • for everybody / dual track • undergraduate / postgraduate • national policy / individual institutions • special category students (repeaters, mature, part-time, continuing ed, foreign, out of state)
fees • one fee or program-linked? • payment upfront or delayed payment? • ceiling / freedom to set
optimal fees policy • universal • associated with student aid (Jamaica) • adjusted to cost of living index
political economy • consultation and consensus building • decentralization / autonomy
funding sources (institutional level) from dependence on public funding to diversified funding
main categories of revenues • budget • tuition fees • productive activities • donations • loans
allocation mechanisms from untied funding to performance-based funding
innovative allocation mechanisms • funding formula- output measures are used to determine all or a portion of funding formula • performance contracts- governments enter into agreements with institutions which set mutual performance-based objectives
innovative allocation mechanisms (II) • competitive funds- support peer-reviewed proposals designed to achieve institutional improvement or national policy objectives • demand-side vouchers- finance the recurrent expenses of institutions indirectly through vouchers provided to students who enroll in the university of their choice
allocation mechanisms from direct funding to indirect funding
indirect funding • grants and scholarships • student loans • vouchers
Kazakhstan experience • 20% best qualified secondary school graduates • choose university • $1,200 for public university • up to $4,000 for private university • must maintain top academic grades
Kazakhstan experience (II) • increased competition generally • some private institutions have been able to attract a growing number of voucher beneficiaries • but insufficient resources to finance all students
equity / benefits incidence • who gets what share of public resources?
evolution of tertiary education enrollments rates 80 70 60 50 40 30 20 10 0 1980 1997 2005 High Income Countries Least Developed Countries Sub-Saharan Africa Arab States Latin America and the Caribbean East Asia and Oceania South Asia
small is still beautiful • many success stories • mission focus and niche definition • strategic choice of studies abroad
small is still beautiful (II) • regional / international collaboration • multi-state (UWI, USP) • regional (I2E) • hub (Singapore, UAE) • international recruitment • Internet-based research and training
challenges (macro-level) • limited fiscal resources • economies of scale (higher investment and unit costs) • higher vulnerability to economic fluctuations • Jamaica (bauxite, banana, sugar, coffee, tourism)
challenges (macro level) • limited number of institutions reduces • possibilities for performance-based allocation • risk of inefficient use of resources (high staff/student ratios) • options for institutional diversification
challenges (macro level) • tension between national interests and regional commitments • dangers of study abroad strategy • relevance • brain drain (donor funding, special visas, financial incentives)
challenges (institutional level) • vulnerability of regional institutions / programs dependent on several countries • funding • cashflow • foreign exchange risk • islands within islands
challenges (institutional level) • small economic base means less fund-raising opportunities • quality implications • limited pool of talent • monopoly situation (as institution or type of institution) • resistance to change (political volatility)
resources flows • reduced government funding for teaching, research and student aid • reduced resources for institutions as demand falls (new domestic and foreign students, dropouts)
resource flows (II) • fewer resources from private sector (donations, contracts) • fall in stock market values reduces value of endowments and pension funds
response of tertiary education institutions • budget cutting measures • employment-related • programs and academic organization • students (number, teacher/student ratio) • efficiency measures • revenue generation • demand-linked measures • financial measures
implications for governments • increase scholarships and establish / strengthen student loan programs • include tertiary education in economic stimulus plans • R&D • entrepreneurship for innovation
opportunities for small states • innovations and startups • attracting foreign students • philanthropy • efficiency gains and no-frill options • implementing structural reforms
scenarios for tertiary education in small states • graduate unemployment & brain drain • shifting demand (from long to for shorter duration programs, private to public, foreign to domestic) • increased inequality • deteriorating quality (with fewer resources)
scenarios for tertiary education in small states • continued dependence on public funding • resources fluctuations and quality deterioration • diversified funding
State controlled Gvt budget 95% students’ fees 3% other charges 2% Autonomous Gvt budget 40% students’ fees 25% research and contract earnings 20% other earnings 10% donations etc 5% the two extremes
financial planning capacity • information and monitoring • fund-raising team • investment strategy • contingency planning