Models of Financing Higher Education in Europe

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A Background Paper Commissioned by the Nordic Council of. Ministers for the Conference on Financing Higher Education. Held in Reykjav k 3 4 April 2000,Table of contents. 1 Introduction 5,2 Denmark 7,2 1 System characteristics 7. 2 2 The budget of the institutions 7,2 3 Funding mechanism 9. 2 4 University income from other activities 13,2 5 Issues indirectly related to funding 13. 3 Flanders 16,3 1 System characteristics 16,3 2 The budget of the institutions 17.
3 3 Funding mechanism 18,3 4 Issues indirectly related to funding 21. 4 France 24,4 1 System characteristics 24,4 2 The budget of the institutions 25. 4 3 Funding mechanism 26,4 4 University income from other activities 29. 4 5 Issues indirectly related to funding 31,5 Germany 34. 5 1 System characteristics 34,5 2 The budget of the institutions 35.
5 3 Funding mechanism 37,5 4 University income from other activities 40. 5 5 Issues indirectly related to funding 41,6 The Netherlands 45. 6 1 System characteristics 45,6 2 The budget of the institutions 46. 6 3 Funding mechanism 47,6 4 University income from other activities 52. 6 5 Issues indirectly related to funding 52,7 Sweden 56.
7 1 System characteristics 56,7 2 The budget of the institutions 56. 7 3 Funding mechanism 57,7 4 University income from other activities 61. 7 5 Issues indirectly related to funding 61,8 United Kingdom 64. 8 1 System characteristics 64,8 2 The budget of the institutions 64. 8 3 Funding mechanism 65,8 4 University income from other activities 70.
8 5 Issues indirectly related to funding 72,9 Comparative overview 74. 9 1 Funding of the universities 74,9 2 University income from other activities 79. 9 3 Staff issues 80,9 4 Student related issues 81,9 5 Quality assessment 82. References 83,1 Introduction, In this report an overview is given of a number of aspects related to the public funding of higher education in. Europe1 From the perspective of government budgets the funding of higher education is a matter of ongoing. concern This concern can be interpreted in the framework of five overarching themes Johnstone 1998. 1 Expansion and diversification of enrolments participation rates and number and types of institutions. 2 Fiscal pressure as measured in low and declining per student expenditures and as seen in the overcrowding of. the higher education facilities in low paid faculty lack of innovation or even maintenance in academic. infrastructure incl libraries and deteriorating physical plants. 3 Markets i e the rise of market orientations and solutions and the search for non governmental income. 4 The demand for greater accountability on the part of the institutions and the academic staff and on behalf of. students employers and those who pay, 5 The demand for greater quality and efficiency more rigour more relevance and more learning.
Also in Europe the massification of higher education over the last two to three decades has resulted in substantial. increases in the level of public funds directed to higher education institutions In particular during the 1980s and. early 1990s governments have looked for ways to make higher education more efficient2 in order to put an end to. the continuous growth of the higher education budget In many countries this has led to a growing interest of higher. education institutions in non public sources of income In other countries the foundation of the funding mechanism. changed from input based to output oriented As a consequence of these developments and also encouraged by the. growing Europeanisation and globalisation of higher education much interest has emerged in looking abroad for. new perspectives on the organisation and funding of higher education and for understanding how other European. countries have dealt with their budgetary problems concerning higher education. Accordingly this report presents general descriptions of the funding structure and the specific funding formulae. currently being used for the funding of higher education in a number of European countries The report was. commissioned by the Nordic Council of Ministers It provides the basis for a presentation during the Theme. Conference on Financing of Higher Education organised by the Nordic Council of Ministers on 3 and 4 April 2000. in Reykjavik Iceland The analysis of higher education funding in Europe presented in the report is focused on. seven countries Belgium Flanders Denmark France Germany the Netherlands Sweden and the United. Kingdom The aim of the report is to provide detailed insights into the funding structure of universities and some. related aspects in these seven countries For a valid interpretation of the comparative information on the funding of. universities some insight is needed into the nature and structure of the higher education systems of the countries. included Therefore for each country first a brief description of the general characteristics of the national higher. education system will be given Aspects addressed are the types of institutions programmes degrees conferred. and enrolment Next information about the public budget available for university education and the budget of the. institutions will be discussed as far as the information is available After that per chapter the core of the report is. presented i e the funding mechanisms for allocating public funds to the universities For each of the countries. included in the report the allocation methods employed by the respective authorities government authorities. funding councils and research councils will be described in detail Among other things the following aspects will. In this report Europe refers to the member states of the EU Norway Iceland and Switzerland. In practice this efficiency drive implied in simple terms either expecting higher education to do more for the. same amount of public money or to do the same for less public money. be addressed the possible separate allocation of teaching funds and research funds the funding formula used and. the orientation of the funding method The latter refers to whether the method is incremental in nature or based on. negotiations as well as whether it is input oriented throughput oriented or output performance oriented Other. aspects relate to funds allocated for specific purposes such as investments or research e g funds administered by. research councils Particular attention will be paid to the issue whether differences between disciplines i e. academic subject groups are translated into different levels of grants allocated to the institutions e g by using. different tariffs per student across disciplines, In addition to the description of the public funding for universities a number of aspects related to funding will be. discussed such as sources of institutional income staff and student related issues and quality assessment. procedures, The information is presented on a country by country basis This means that the seven countries included are. discussed separately in chapters 2 through 8 For each country information will be presented on the items. mentioned above in as far as the information needed was made available At the end of the report in chapter 9 a. short comparative overview of the information will be presented. 2 1 System characteristics, Denmark has around 110 higher education institutions ranging from comprehensive universities to smaller. professional schools The universities offer five year master s programmes kandidat postgraduate training and. three year bachelor programmes since 1988 The non university sector consists of colleges and vocational. schools The latter offer programmes in technical subjects teacher training social work and physiotherapy etc. Only the university sector has a task in research and post graduate education the latter leading to either the licentiat. or the PhD degree, All in all there are three types of undergraduate education short cycle medium cycle and long cycle Short cycle. programmes 1 2 years are primarily offered by the vocational schools Medium cycle programmes 3 4 years by. universities and colleges and long cycle programmes 4 6 years only by the universities Combining medium and. long cycle programmes the total number of students is about 157 000 1998 The number of students in long cycle. programmes is about 90 000 Most of them 80 study full time In the medium cycle programmes more than. 90 of the students study full time, Denmark still has entrance limits numerus clausus Since 1977 the government operates a central system of.
entrance regulation limiting the number of student places Nowadays student places are only set after negotiations. with the government for institutions as a whole not by discipline Programmes in medical science and teacher. training are exceptions to this rule Although the number of places in higher education has increased during the last. decade there is annually a number of applicants who are refused admission for capacity reasons The option for. students to leave the university upon receiving after three years of study their Bachelor s degree is still not very. popular Most students continue their study, Traditionally Danish higher education was regulated strongly by the state Since the 1980s the government has. increased the institutions autonomy in areas of academic programme development financial affairs and access. policy This development went along with a strengthening of institutional management. 2 2 The budget of the institutions, Higher education is primarily funded by the state 3 The state guarantees funding through the Ministry of Education. MoE and the Ministry of Research and Information Technology MoRIT MoE has the overall responsibility for. educational matters whereas MoRIT has the political responsibility for research universities information. technology and telecommunications MoRIT was established as an independent ministry in January 1993 with the. task of coordinating Denmark s efforts in the field of research In 1994 and 1998 the portfolio of the Ministry was. extended so that at present it includes research and university policies as as IT and telecommunications policy. In 1980 a formula based budgeting system was introduced with separate funding of teaching and research Funding. of teaching was based on active students and student teacher ratios Research administration other activities and. There are some private self governing institutions that are recognised by the state for example engineering. colleges teknika some schools of occupational therapy and physiotherapy schools of hospital laboratory work. and business schools All of these types of institutions receive almost all of their funding from the state but have. varying degrees of independence and autonomy see Eurydice Information on Denmark 1992. capital costs were still budgeted in an incremental way The old pre 1980 funding system was regarded as non. transparent and based on too much poorly organised information Furthermore information on productivity was. not taken into account, As a supplement to the basic research funding a substantial portion of public funds for research is allocated through. the Research Councils The basic research funding constitutes approximately 56 of the total research funds The. rest comes from the research councils and from private donations. The formula funding system gave the universities a very detailed budget and it worked in practice as a prescription. for the internal allocation process of the universities In 1993 the Danish Parliament passed new legislation for. higher education and research The new University Act gave the universities more financial autonomy According. to the new legislation all university income may be treated as a lump sum which the universities freely can decide. upon themselves Only decisions on large investments remain in the field of the competence of the Ministry. Additionally the new law prescribes that grants for teaching must be allocated according to the taximeter principle. While the total funding increased in the ten year period 1984 to 1994 it did not keep up with the expansion in the. number of students in the same period This has caused financial problems for a lot of institutions in recent years. One result of this has been a sharp increase in the student teacher ratio in a number of fields and this has raised. questions regarding the quality of the teaching Another consequence has been that some of the smaller institutes. have not been able to cope with the decreasing budgets and have merged with other institutions. For the Danish higher education sector as a whole the government seeks to achieve a more or less balanced. composition of the budget that looks like this between brackets the figures for the universities are shown. 62 for undergraduate education Ordinaere uddannelser 40 of the university budget. 3 for continuing education adult education Aben uddanelse. 23 for basic research 33 of the university budget, 12 for targeted research 23 of the university budget. The public budget for the universities consists of the following elements. 1 a basic grant, 2 a taximeter grant for teaching see section 2 3 1.
3 a research grant basic research see section 2 3 2. 4 targeted research allocated by Research Councils see section 2 3 2. 5 a grant for other activities museums libraries etc. 6 a grant for capital expenses, For the fiscal year 1995 the figures in Danish crowns DKK for universities and for all types of higher education. Models of Financing Higher Education in Europe Dr Peter Maassen With the support of Hans Vossensteyn Ben Jongbloed Jos Koelman Center for Higher Education Policy Studies CHEPS University of Twente March 2000 2 A Background Paper Commissioned by the Nordic Council of Ministers for the Conference on Financing Higher Education Held in Reykjav k 3 4 April 2000 3 Table of contents 1

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