A REVIEW OF HEA FUNDING MODEL

In early June, the HEA released the “Higher Education System Performance 2014-16”, the first annual system performance report in which the HEA presents how Irish HEIs are delivering those national objectives set out for them in the “National Strategy for Higher Education to 2030”. The performance based framework for the system governance of higher education in Ireland undertaken by the HEA is designed to serve multiple purposes, from the delivery of national priorities, to the increase of the visibility of performance of the system to government and the wider public, and to the identification of institutions’ strategic niche and mission.

 

One of the key issues addressed in the report relates to the reform of funding model, as means of improving the accountability and efficiency of the system. Although the overall level of funding of HEA-funded HEIs has been declining since 2007/08, the percentage share of public expenditure on tertiary education institutions in Ireland is still much higher than the OECD average, as well as, to a less extent, higher than the EU21 average. As shown in table 1 below, after a rapid increase from 1995 to 2005, peaking at 84.5% in 2005, Ireland’s public expenditure as a proportion of total expenditure declined to 82.6% in 2008 and further to 81.2% in 2010. The number for OECD average was only 68% in 2010, and for the EU21 average it was 76.4%.

 

Table 1 Percentage of share of public expenditure on tertiary education institutions

1995 2000 2005 2010
Ireland 69.7 79.2 84.0 81.2
OECD average 76.7 75.6 70.9 68.0
EU21 average 86.3 85.5 81.5 76.4

Source: HEA (2014).

 

It is projected that the overall level of funding of HEIs will continue to decline further in the coming years to 2016. There are a few measures which have been announced in the hope of maintaining funding levels. Firstly, the government expects privately paid student contributions will amount to 19% of total institution income by 2016, through ways such as an increase in the student charge. Secondly, the HEIs are hoped, if not required, to diversify the sources of funding for research, in particular by doubling funding from EU competitive research funds through the Horizon 2020 programme. To be more specific, Ireland aims to win €1.25bn of competitive funding from the EU over the next seven years, which seems, even in the HEA’s view, to be a highly challenging target.

 

Thirdly, the HEA calls for further changes to the funding model in order to support implementation of the reform agenda for higher education, changes which would shift funding towards performance based. In its newly published report, the HEA describes its funding allocation model consisting of three inter-related elements: a formula-based core funding element, a strategic funding component, and a new element of performance funding. In general, the performance is measured under the headings such as: widening access and improving student experiences; teaching and learning; research performance; and engagement with industry and community.

 

The introduction of the performance funding is arguably the most interesting aspect of the new model, an element that could encourage competition and improve efficiency. In many countries, such as the UK, this component has been implemented for a while. After a few times of modification, the public funding for research in the UK is now administrated under a ‘dual support’ system – partly from the Higher Education Funding Councils and partly from other sources such as the Research Councils and charities. In general, the majority of teaching and research grants for UK universities are from the Funding Councils, which calculate the level of teaching funding for each institution according to some formula based on its student numbers and mix between different subjects (similar to the core funding in Ireland).

 

Research funding is allocated in a more complex way of the Research Assessment Exercise (RAE), a method of assessing the research of UK HEIs from 1992 and which has been succeeded by the Research Excellence Framework (REF) in 2014. This exercise is said to have set up a ‘competitive mechanism’ within the higher education sector for the distribution of scarce research resources. Based on a peer review process, RAE rates the quality of research conducted in UK HEIs and counts the numbers of research-active staff. Consequently, funds will be allocated in accordance with the quality (from 1 to 5*) of the work undertaken.

 

Many studies have examined the results of RAE in English universities, and confirmed significant variations between them. In 2001, for example, as high as 90% of subject areas in the prestigious Loxbridge group (London, Oxford, and Cambridge) achieved ratings at level 5, compared to only 7% of subject areas that were rated at level 5 in the new (post-1992) universities. An overall finding is that new universities in the UK only secure a rather small share of the total research subsidy, grants, and contracts, while the majority still flows into established universities which are more research-intensive.

 

In comparison to the UK model, the performance funding model being undertaken by the HEA is rather different. On one hand, unlike in the UK where all institutions are benchmarked against the same standards, the performance indicators vary from one institution to another in Ireland and are thus non-comparable. It all begins with a process of strategic dialogue between the HEA and each institution, in which the two bodies align the missions, strategies and profiles of individual HEIs with national priorities, and then agree on how to measure its performance against its strategic objective indicators of success and to allocate funding. Those performance indicators are in detail presented in a so-called “Mission-based Performance Compact” between individual institutions and the HEA. In essence, Irish HEIs are benchmarking against their own performance and objectives, rather than against the other institutions.

 

On the other hand, the HEA approach is more comprehensive than the REF exercise as it not only considers the research capacity of individual institutions but examines a wide range of activities in which HEIs participate. Therefore, it seems more like a different version of ‘Strategic Plan’ that individual institutions have developed, only this version has been a collective output between the institutions and the HEA. It is, indeed, important that each Irish HEI is improving its performance and impact towards a higher level than its previous ones. An issue remaining unresolved is that, without an universal benchmarking framework of the whole sector (e.g. the research quality measurement in the REF), it is difficult for individual institutions to build up a roadmap to compete against other institutions, as well as global ones.

Advertisements

2 thoughts on “A REVIEW OF HEA FUNDING MODEL

  1. Can you explain what ‘Percentage of share of public expenditure on tertiary education’ means? The statistic is incomplete without explaining what the denominator is.

    Also can’t believe your last statement. It is jargon rich, but seems to lack meaning. Plenty of institutions do just fine without a REF. Can’t see that the extra cost is justified.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s