Faced with a government budget constraint, there has been a lot of talk in Ireland about the search for new funding models in universities and other third-level institutions. The issue was also addressed in the Dublin Economics Workshop in Cork last week, at which I gave a presentation. My presentation, an output of the Tionchar project funded by the Irish Research Council, was on the economic impact of Irish HEIs.
Although focusing on a different research question, our analysis has the potential to contribute to the current policy debates about the future financial sustainability of higher education in Ireland.
With the use of a number of data sources, both secondary and primary, we examined the total income of each Irish HEI and how it was divided between intermediate sales to other production sectors and sales to final demand sectors such as households, government and exports.
It is clear that income from the Irish Government account for a large share of total income for both the university and IoT sectors. Nevertheless, there are considerable differences between the two sectors in that universities were more successful than IoTs in sourcing international funding. In other words, IoTs were more reliant on state support than universities, and displayed a limited diversity of income sources. Figure 1 below shows in more details.
The limited diversity of income sources should be paid much attention to, as it clearly affects the so-called ‘Balanced-Budget’ multipliers of Irish HEIs (after netting out the impact of government support from the conventional ‘Type II’ output multipliers). See Figure 2 below.
Obviously, Irish HEIs are not at the same level of resilience, or difficulty, in the context of the fiscal crisis starting from 2008. Nor do they have the same capability to diversify the income sources to maintain the financial sustainability. No matter what decisions will be made by policy makers, they should avoid a ‘Broad-Brush’ approach across all the HEIs but develop a more ‘Tailored’ approach which takes into consideration the different features existing between universities and IoTs.