Performance-based funding of higher education Dead Sea, 11 February 2007

key financing questions resource mobilization how much should be spent on tertiary education? (macro-level) income generation at institutional level who should pay, and what share? when and how? is it affordable? (student aid)

key financing questions resource utilization how should public resources be allocated? how efficient and effective are institutions?

outline of the presentation typology of performance-based allocation mechanisms which mechanism is more effective? preliminary lessons from international experiences

outline of the presentation typology of performance-based allocation mechanisms

allocation mechanisms from untied funding to performance-based funding

performance-based funding output-based formula funding competitive funds performance contracts

formula funding formula linking amount of financing and some measures of outputs number of graduates research productivity (publications, patents, licences, spinoffs) unit costs per level of studies / discipline (actual, average, normative costs)

competitive funds set objectives competition on the basis of projects transparent rules & criteria peer review and selection independent monitoring committee

performance contracts institutional agreement to achieve certain objectives additional funding based on meeting agreed objectives examples: France, Denmark, Austria, Finland, Colorado & Virginia in US

allocation of research funding targeting additional resources to programs/institutions with potential of achieving world-class status preferably on competitive basis project-funding demonstrated institutional capacity (RAE) centers of excellence Reinforcing their capacity accordingly

allocation mechanisms from direct funding to indirect funding

indirect funding grants and scholarships student loans vouchers

Colorado funding model Old Model Direct Government Funding Tuition New Model Indirect Gov’t Funding via Stipends Tuition & Stipends

Colorado experience voucher for an undergraduate education at eligible universities; no cash in students’ hands $2,400 per year at public institutions $1,200 per year for low-income students attending private institutions degree-seeking, non-degree, and teacher licensure undergraduate students eligible age, income and financial aid eligibility are irrelevant to qualify

Kazakhstan experience 20% best qualified secondary school graduates choose university $1,200 for public university up to $4,000 for private university must maintain top academic grades

Brazil ProUni State purchases seats in private universities offered to top students from low-income families who don’t get a seat in a public university no actual payment to the university, but tax exemption

Colombia (Antioquia) “access with equity” partnership among local government, private firms and private universities low-income students who don’t get a seat in a public university get financial aid to enter a private university 75% scholarship and 25% subsidized loan

outline of the presentation typology of allocation mechanisms which mechanism is more effective?

Alice in Wonderland Lewis Carroll Alice Would you please tell me which way I ought to go from here? Cheshire Cat That depends on where you want to get to.

policy objectives pursued improving access and equity improving quality and external efficiency improving internal efficiency and sustainability

improving external efficiency improving quality competitive funds merit-based scholarships increasing relevance formula with differential weights for high priority fields grants and scholarships in priority fields student loans in priority fields loan forgiveness for students in public service jobs

outline of the presentation typology of allocation mechanisms which mechanism is more effective preliminary lessons from international experience

principles of an appropriate allocation instrument linked to performance / policy objectives transparent (objective criteria, openness) compatibility Expansion, efficiency, quality, relevance, equity? Strengthening the strong or stimulating the weak? combination

country context local circumstances (culture, history) reform for what? dilemma: rewarding the strong or equalizing the field? time dimension (flexibility) combination

link to quality assurance pro: powerful incentive con: punitive, rewards stronger institutions link at the margin? Argentina: voluntary accreditation gives eligibility for competitive fund Madagascar (INSCAE): best student in each course gets his fees reimbursed

political economy dimensions move to performance-based can be controversial dealing with the politics (winners and losers) not an excuse to avoid reforms Nicaragua Minister of Education Think of your own situation: in Jordan, dual fee track leads to mediocrity for the majority

remember Hemingway… Nicaragua Minister of Education Think of your own situation: in Jordan, dual fee track leads to mediocrity for the majority