Universities to lead Europe out of the crisis Challenges and responses

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1 Universities to lead Europe out of the crisis Challenges and responses Helena Nazaré, EUA President and Thomas Estermann, Head of Unit Governance, Autonomy and Funding EUA

2 Structure I. A Reminder. Challenges/Why university autonomy? II. The state of university autonomy in Europe/Greece: data trends scorecards III. Funding: Trends and the impact of the crises IV. Reform processes 2

3 A Reminder(1) Educate citizens, train researchers / professionals / innovators / entrepreneurs, supply the high qualified HR that Europe needs to boost competitiveness. Diverse missions in basic and collaborative research Capacity to foster interdisciplinary research skills and expertise Embeddedness in cities and regions as components of social and economic development Focal points for dialogue and knowledge exchange with society International cooperation building upon institutional historical and cultural links strengths and capacities

4 A Reminder(2) The overall level of education of European citizens constitute a key determinant for european competitiveness What matters for good performance is money and good governance (Bruegel policy brief 200..,Aghion et All 2008) Adequate Funding and appropriate governing instruments (autonomy) are preconditions.

5 Elements of autonomy Institutional autonomy is contingent on the diverse cultural, political, legal and historical backgrounds of Europe s HE systems All areas and elements of autonomy are related; Organisation (Governing Bodies and Selection of Leadership), Financial, Staff (Recruitment, dismissals, salaries) and Academic The Autonomy Scorecard allows to compare different sytems, (Greece does not score high!)

6 Organisational autonomy - trends External members are now included in university governing bodies in a majority of systems, though external authorities often remain involved in their selection. Universities in nearly all systems are free to create legal entities and decide on academic structures. Rectors are always chosen by the universities, although external authorities often have to confirm the appointment. Discussion for GR External candidates for leadership should be possible Only internal members in governing bodies other countries have more flexibility. Lobby. More flexibility to decide on academic structures 6

7 Organisational autonomy the scorecard 7

8 Financial autonomy trends Universities generally have block grant funding Surpluses can be kept and money borrowed in a majority of systems, but in practice, various limitations still apply. Universities in most systems are able to own their buildings, but often require external permission to sell them. The situation is complex, but universities tend to be more free to set tuition fees for MA and non-eu students. Discussion for GR Move from line item budget to block grant Capacity to keep surplus Balancing effects of financial crisis

9 Financial autonomy the scorecard 9

10 Staffing autonomy - trends Recruitment procedures are less prescribed than before. In most systems, restrictions still apply to staff salaries, although these are less likely to be due to the civil servant status of university staff. Staff dismissals and promotions remain restricted in more than half of the systems studied. The financial crisis has strongly affected staffing policies. Discussion for GR More flexibility to recruit academic and administrative staff More flexibility to decide on staff salaries Fade out civil servant status 10

11 Staffing autonomy the scorecard 11

12 Academic autonomy - trends Overall student numbers are limited in nearly all systems. Universities in Europe still have little freedom in choosing QA mechanisms. Accreditation is still compulsory for BA/MA programmes in a majority of systems. The language of instruction can be chosen freely in approx. 2/3 of all systems. Discussion for GR More freedom to select students Language of instruction 12

13 Academic autonomy the scorecard 13

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15 How to balance accountability and autonomy? Appropriate quality assurance procedures Participation of external members in institutional decision-making Financial transparency through full costing Appropriate reporting (only what is used to make decisions) 15

16 FUNDING MODELS AND TRENDS 16

17 Funding Trends: state of play On average almost 30% of universities funding comes from additional funding sources Public funding (national and regional) 6% 3% 5% 4% Student contributions Funding coming from contracts with business sector 9% International public funding 73% Philanthropic funding Service-related income 17

18 Great diversity of funding models in Europe UK universities Austrian universities 2% Public funding 10% Public funding 19% 30% student fees contracts 5% 9% student fees 14% services & philanthropy 76% contracts 35% EU research funding other (EU+philanthropy) 18

19 Balance between public and private? No single model, but dependent on economic situation, socio-economic environment, culture, etc. Greatest diversity through fees (varies between 35% (UK) and 0% (Norway) of total university budget. Often differentiated fees according to cohort, degree level and course. Potential of contracts, services, and philantropy Efficiency is another aspect of a sustainable funding system 19

20 Shift from public to additional sources possible? Unequal starting points also due to economic crisis! 20

21 Public funding in 2012 compared with 2008, corrected for inflation 30% 20% 10% 0% -10% -20% -30% -40% -50% Figures corrected for inflation 10 Raw figures

22 Greek funding situation in comparison From : -43 % (Only Latvia cut more) From 2012/2013 highest cuts in Europe High inflation in 2008, 2010 and 2011 Outlook? 22

23 How do other countries deal with it? Institutions apply cuts themselves Precondition staffing autonomy and financial autonomy Impact on cicil servant status Salary reductions, less holiday, longer working hours, etc. Incentives to attract other funding sources Development of differentiated tuiton fees Efficency measures Public private partnerships, shared services, etc. 23

24 Challenge: Challenges and opportunities Keep or improve quality devlop long term vision and reform investment in future when ressources are scarce staff development Opportunities Restructuring of system Pressure for reform Develop benchmark with other countries Reform processes need to take long term view even if financial pressures are current 24

25 What can authorities do? Incentives in public funding to increase private funding Funding formula Targeted funding Performance contracts Support the development of full costing and financial management in universities Universities need to have a professional financial management to raise cost awareness Implement smart funding incentives: Matched funding schemes including capacity building Tax incentives for philantropic funding Other tax incentives for universities 25

26 What can authorities do - II Support Leadership development - Key success factor to: lead change in institution reinforce strategic approach implement successful income generation Human Resource development and professionalisation to develop: new skills management capacity new staff profiles Support for development of young generation to leadership 26

27 What can authorities do - III Support efficiency measures: Through targeted funding (like Innovation funds UK, IE) Cooperation through sharing services, equipment, facilities, ICT Process improvement (improvement through ICT) Public private partnerships Outsourcing and shared services Public procurement Data and benchmarking (to drive improvements in efficiency) 27

28 What can universities do? 1. Integrate income diversification in the overall strategy 2. Identify the strengths & specificities of the university to develop a branding strategy 3. Analyse perspectives for income generation of activities 4. Invest in people, leadership and management 5. Communicate (internally and externally) 6. Change structures and organisation 7. Provide internal incentives 28

29 Key aspects of implementation Dialogue among stakeholders Leadership commitment Universities Coordinated approach Other stakeholders (employers, students, society at large) Relevant public authorities Funding bodies/ governl Continuous communication 29

30 Current EUA s activities on funding DEFINE project ( ) Designing strategies for efficient funding of higher education in Europe Financially Sustainable Universities series 2013: European mapping study 2014: University managers focus groups AUTUMN 2014 Further Information: Contact: thomas.estermann@eua.be 30