The Different Consequences of State Funding Cuts to Irish HEIs

During the Celtic Tiger years, state investment in third level institutions in Ireland saw significant growth. This upward trend was maintained even within a short period after the collapse of the property bubble. It was the financial crisis of 2008 that dramatically overturned the pattern, with the national economy sharply declining.

For universities and IoTs, as well as a number of other private HEIs, the main consequence was the reduction of state funding, as part of the government’s measure to address the urgent issue of public debt.

In a few previous blog posts, I have described the extent of funding cuts in Ireland and compared national policies in this matter amongst the EU countries. A less examined topic is the consequence of state funding cuts at the institutional level.

It is reasonable to presume that some institutions could be more badly hit than the others, while the higher education sector was, undoubtedly, having a tough time as a whole. In this blog post, I compare such differences between Irish HEIs, with results presented for the university sector and the IoT sector separately, considering the fact that most IoTs are much smaller than universities in terms of size.

1 The university sector

Figures 1 and 2 below show the changes in the university sector in sources of income between 2005-06 and 2011-12.

In general, income increased in the first 3-year period and then declined in the second 3-year period. The only exception was fees, which increased throughout the whole period, reflecting the shift of policy focus on funding. For the 7 universities, state grants decreased by 35% between 2008-09 and 2011-12, while fees increased by 10%. By the end of 2011-12, fees accounted for 43% of total income, nearly double of the share of state grants.

Figure 1
Figure 1
Figure 2
Figure 2

2. The IoT sector

Figures 3 and 4 below reveal the changes in the IoT sector. While most trends in this sector are similar to those in the university sector, there are still some differences.

For the 14 IoTs, state grants decreased by 27% between 2008-09 and 2011-12, while fees increased by just under 5%. By the end of 2011-12, state grants accounted for 45% of total income, which was higher than the share of fees (37%), and which was also significantly higher than that in the university sector (24%).

Figure 3
Figure 3
Figure 4
Figure 4

3. The 7 universities

In Figure 5 below, I show the changes in sources of income between 2008-09 and 2011-12 for the 7 universities, measured as percentage points.

The decrease of total income of NUIG – less than 15% – was the smallest in compared to the other 6 universities. DCU and UL were worst hit, with total income shrinking by nearly 35%. Reduction of state grants was most serious in the three largest institutions, namely UCD, UCC and TCD. While fees increased in all of the 7 universities, NUIG, MU and UL were the leaders in terms of receiving bigger amount of money paid by students. Lastly, UL was the only university which was able to secure more research grants in 2011-12 than in 2008-09, while the amount of research grants decreased by more than 20% in both UCD and TCD.

Figure 5
Figure 5
Figure 6
Figure 6
Figure 7
Figure 7
Figure 8
Figure 8

Figures 6, 7 and 8 above place the 7 universities in scatter plots, in the hope of revealing if there exist any association between the change in total income and each of the other factors.

A series of correlation analyses showed that the share of fees in total income was most significantly related to the change of total income (Correlation Coefficient = 0.78), while the share of state grants in total income was moderately related to the change of total income (Correlation Coefficient = 0.56). The share of research grants in total income was not significantly related to the change of total income (Correlation Coefficient = 0.24).

That research grants only having a limited impact on the overall change of total income was, in part, resulted by the fact that research grants only account for a small percentage of total income in all of the 7 universities.

4. The 14 IoTs

In Figure 9 below, I show the changes in sources of income between 2008-09 and 2011-12 for the 14 IoTs, measured as percentage points. At the sectoral level, IoTs were less badly hit by the state funding cuts than universities. During this period, a few IoTs actually saw their total income increasing, led by Limerick (14.6%), Dundalk (8.2%), Sligo (3.1%), Blanchardstown (2.4%), and, very moderately, Athlone (0.1%). This is a striking contrast to the picture of the university sector, in which all institutions saw their total income shrinking by more than 10% at least. Of course, many other IoTs did not perform as well as the above ones. Among the institutions with sharpest decline of total income were Letterkenny (-17.5%), Dublin (-16.1%), Galway-Mayo (-14.3%), and Tralee (-13.7%).

In terms of state grants, with the exception of Limerick, all the other IoTs saw their funding decreased, in line with what happened in universities.

Significant differences exist though between the IoT sector and the university sector when we examine the case of fees and research grants.

While all universities received more funding through tuition fees over the period, only a handful of IoTs – 5 to be exact – increased their income in this source. Athlone was most impressive, with its tuition fees increasing by nearly 40% during the period. An alarming issue could be that most IoTs were not as capable of universities in attracting fee-paying students, who are more likely to be international students.

While almost all universities – except for UL – saw their research grants decreased, the picture of the IoT sector was reasonably more promising. Research grants received by Limerick nearly doubled, while Dundalk saw its research income increased by more than 50%.

In general, there was much more diversity in the IoT sector than in the university sector.

Figure 9
Figure 9
Figure 10
Figure 10
Figure 11
Figure 11
Figure 12
Figure 12

 

Figures 10, 11 and 12 above place the 14 IoTs in scatter plots.

Similarly, a series of correlation analyses showed that the share of state grants in total income was significantly, but negatively, related to the change of total income (-0.51), suggesting that IoTs receiving more funding from state grants were more badly hit in terms of total income. The share of fees in total income was moderately related to the change of total income (0.35), while the share of research grants in total income was almost not related to the change of total income (-0.03).

5. Concluding remarks

It is clearly shown that, during the period of 2008-2011, institutions performed significantly differently in terms of maintaining their income. Some institutions, especially a number of IoTs, showed impressive resilience. Their stories could be very interesting to be examined further.