Right kids, it’s time for a quick recap. So far in Salient’s amazing awesome super epic series about tertiary education funding in New Zealand we’ve looked at how tertiary education used to be funded and how it changed over the 1990s, what reforms the Labour government implemented and what we can expect in terms of tertiary education funding from the current National government. Where to from here?
New Zealand’s universities are potentially facing difficult times. Enrolments are on the rise as a result of the global financial crisis (GFC), but the National government indicated that there will be no significant commitment to increased spending on tertiary education. This week we’ll look at the attitudes of universities towards the current funding structures, and what the consequences may be for students if the government fails to commit to increasing funding for tertiary education.
How New Zealand stacks up
The 2008 Organisation for Economic Co-operation and Development (OECD) Education at a Glance survey showed that New Zealand’s public expenditure on tertiary education as a percentage of GDP was above the OECD average, based on 2005 figures. The figures, cited in the New Zealand Vice Chancellors Committee’s (NZVCC) November 2008 ‘Briefing for the Incoming Government’, showed that New Zealand’s public expenditure on tertiary education was 1.5 percent of GDP, with the OECD average being 1.3 percent. New Zealand’s public spending on tertiary education was higher than that of Australia, the UK and the US.
While this paints the New Zealand government’s contribution to tertiary education in a positive light in comparison with other countries, the OECD figures highlight one trend where New Zealand doesn’t follow the international norm. In New Zealand, 58.5 percent of government spending on tertiary education is devoted to funding the tertiary education institutions themselves, while the remaining 41.5 percent of spending funds student financial aid. The NZVCC’s briefing stated that “New Zealand now has an unusual profile internationally with respect to government expenditure on institutions and expenditure on student financial aid.” The briefing explained that the “average pattern in the OECD is for 82.4 [percent] of government funding to be devoted to institutions and 17.6 [percent] to student financial support.”
Compared with other OECD countries, it seems that students in New Zealand are getting a pretty sweet deal in terms of the amount of government spending that is devoted to their financial support. This is not to mention the fact that OECD figures also show that the annual average tutition fees charged by New Zealand universities are considerably lower than the average fees charged in Australia, the US and the UK. All these factors point to tertiary education in New Zealand being more afforable, and ultimately easier to access for those who wish to do so. So why are universities concerned about current funding levels? Is quality of education being compromised by too greater focus on making tertiary education affordable?
Show me the money
The NZVCC has frequently called for increased public investment in universities. The NZVCC argued in its briefing that “although New Zealand’s overall level of public investment in tertiary education compares well internationally, New Zealand under-invests in its universities.”
The NZVCC stated that there is “no point in reducing the cost of university study to students if the quality of the universities themselves declines.”
Despite the efforts of universities to make investment in institutions a high priority for the government, this year’s budget offered no joy for tertiary institutions, with National backing down on Labour’s previous commitments to increase tertiary education funding.
“There is no doubt that the Government should be spending more on tertiary education institutions as a proportion of the overall tertiary education budget,” an NZVCC spokesperson told Salient.
Victoria University’s Vice Chancellor, Professor Pat Walsh said that “successive governments have failed to deliver the appropriate levels of investment which would maximise universities’ economic and social contribution.” He added that “governments have consistently under-funded universities to the point where they are now unable to keep up with costs.”
The GFC should give the government further impetus to devote more funding to tertiary institutions. “[The] government can contribute to a more highly-skilled workforce by ensuring universities are funded at a level which allows them to respond to the growing enrolment pressures resulting from the economic downturn, by providing people with a university education instead of unemployment,” the NZVCC spokesperson said.
The NZVCC stated in its briefing to the incoming government that the “sustained increase in university student numbers” had “put pressure on government funding and on students’ contribution to the costs of their study.”
The NZVCC spokesperson also told Salient that “continued restraints on per student funding, particularly the lack of real indexation for increasing costs, and constraints on tuition fees may lead to the quality of university education being comprised in the future.”
Limited funding availiability plus increased student numbers must have consequences somewhere down the line. Universities may be forced to take drastic measures to ensure that they can continue to deliver quality education within the constraints of government funding. This will have implications for students.
“Universities may have to restrict entry into courses where demand exceeds negotiated public funding. Implications for students could involve exclusion from their chosen programme, or a requirement to achieve at stipulated levels for a particular course if they are to progress to the next level of study,” the NZVCC spokesperson said. “The continual decline in public funding per student means universities face corresponding, mounting pressure to maintain the quality of the education they provide to students.”
The uni, the government and me
The government remains to be the majority source of revenue for New Zealand’s eight universities. I got my Salient office minion to do some quick calculations with the figures from Victoria’s 2008 financial statement. It turns out that about 45 percent of this university’s revenue comes from the government, while a comparatively measely 20 percent comes from domestic students’ fees.
Government funding is allocated to universities by the Tertiary Education Commission (TEC), based on an each university’s individual investment plan. Over the course of the last Labour government’s term in office, the share of the funding pie allocated on the basis of enrolments steadily decreased, in favour of increased funding based on research output and quality. The government is committed to funding a certain number of students, under the Student Achievement Component of the funding system. PBRF was introduced to assess the research output of New Zealand’s tertiary institutions and allocate funding accordingly.
Universities faced with increasing enrolments have few options open to them to gain additional funding from the government to cope with the cost of higher student numbers. A fee maxima is currently in place to limit the amount by which students’ fees can be increased each year. Universities are required to bear the cost of increased enrolments, potentially without any additional support from the government, and without the authority to increase fees. “If the Government encourages enrolment at universities to exceed the current funding cap but refuses to fund those students, universities will carry increasing numbers of unfunded students over the next few years at a cost of millions of dollars,” the NZVCC spokesperson said.
How does Vic shape up?
Ah the GFC. Neither Vic nor Professor Walsh can escape its clutches. “Like all households, businesses and organisations, the university is looking at the best way to manage its resources in difficult financial times,” Professor Walsh said. “For the 2009 budget, the universities have received a modest increase in budget, which is only just enough to cover inflation.”
Based on current enrolments, Vic is within the three percent “tolerance band” for student enrolments allowed by the TEC. However, Professor Walsh said “until we have a better idea of what enrolments are like for Trimester Two, we are not sure what the extent of unfunded students are likely to be for 2009.” In the event that Vic does exceed the three percent tolerance band, the University may be able to enter into discussions with the TEC for increased funding for 2010, Professor Walsh said. “This very much depends upon what is happening across the whole of the sector and the amount allocated in the Budget for tertiary education, which needs to be evaluated in detail,” he said. However, he added that “the TEC expects the University to manage its enrolments within agreed targets.”
Vic remains committed to providing “the best possible education to its students,” despite the budget pressures it faces in the current economic climate.
“While funding levels from government mean that we are obliged to look for efficiencies in the way we teach, a high priority continues to be placed on the variety of ways of organising the opportunity for students to interact with staff, including tutorials, discussion forums on Blackboard, small study groups, discussions within lectures based on out-of-class tasks, and informal interaction,” Professor Walsh said.
So students shouldn’t be losing out, despite the reluctance of the government to increase tertiary funding in the GFC? The official line from the University suggests not. But if the government doesn’t cough up some extra cash sometime in the foreseeable future, don’t be surprised if New Zealand’s universities start calling for the extra cost of tertiary education to be funded out of students’ pockets.