Trends in Governance and Financing Reforms Jamil Salmi Strategic Development of Thailand’s Higher Education June 11 – 12, 2007 Bangkok, Thailand

key governance questions role and responsibilities of the State buffer bodies autonomy / accountability university boards appointment of university president/rector/VC

key financing questions resource mobilization resource allocation resource utilization equity in resource distribution

outline of the presentation governance reforms financing reforms

role of the State from central control to steering at a distance [

buffer bodies Country B C D E F G H I J Strategic Planning Policy analysis/ problem resolution HEI mission definition Academic program review Budget development/ funding advice/allocation Program administration Monitoring/ Accountability Quality assurance/ standards review Deciding the total number of student admissions [

advantages of buffer bodies relieves Ministry from operational activities protects Ministry from accusations of political interference protects sector from partisan interests facilitates institutional autonomy [

drawbacks of buffer bodies mixed composition can prevent smooth operation too much independence resented by Ministry and/or institutions [

how to define autonomy? total freedom is not realistic academic freedom is not negotiable freedom to deliver whatever programs one wants and research whatever one wants? freedom to spend as one wants within a lump sum? autonomy has to operate alongside accountability

university autonomy in OECD countries Country Own public buildings Borrow funds Spend budgets to achieve objectives Set academic structure and courses Employ and dismiss staff Set staff salaries Decide size of student enrolment Mexico Y Netherlands Poland Australia Ireland UK Denmark Sweden Norway Finland Austria Romania [

accountability in return for increased autonomy, governments expect accountability in following areas: * adherence to national goals and policies * maintaining academic quality * financial honesty and value for money * good management and governance

international trends general move to granting greater autonomy (Japan, Thailand, Germany) MOEs are surrendering some functions to buffer bodies or intermediate agencies growth in scale and intrusiveness of monitoring and reporting by governments increase in number of monitoring agencies (eg: quality assurance)

appointment of university leader mode of appointment democratic election (faculty, administration, students, alumni) government appointment competitive appointment (Board, government, electorate) duration of appointment one or more mandate 4 years to 4 ever

governance in the autonomous university (USA and UK) functions of the Board: appoint the President and monitor his/her performance approve the mission and strategic plan, budget and performance indicators assess performance against the strategy and plan establish and monitor control and risk management systems Link salary to ranking (Arizona)

principles of good governance… powers of the key internal stakeholders are understood and accepted by all Board, President and Academic Bodies work together and respect each other academic community accepts that the decisions of senior executives are in the University’s best interests channels in place by which ideas and information can flow both ways (up and down) not too many committees, but enough to provide for participation in key policy decisions

outline of the presentation governance reforms financing reforms

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)

resource allocation how should public resources be allocated?

resource utilization how efficiently are available resources utilized?

benefits incidence who gets what share of public resources?

funding sources (macro) from public funding to cost sharing

fees for everybody / dual track undergraduate / postgraduate national policy / individual institutions special category students (repeaters, mature, part-time, continuing ed, foreign, out of state) one fee or program-linked? ceiling / freedom to set

optimal fees policy universal reasonable level (10 to 30%) associated with student aid adjusted to cost of living index

political economy consultation and consensus building decentralization / autonomy

funding sources (institutional level) from dependence on public funding to diversified funding

allocation mechanisms from untied funding to performance-based funding

student aid options from mortgage loans for students to income-contingent loans for graduates

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

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

allocation mechanisms from direct funding to indirect funding

indirect funding grants and scholarships student loans vouchers

vouchers: the Dream Policy the economists’ ultimate solution on demand power to the consumer transparency value of the voucher eligibility criteria on supply choice drives competition contains costs drives up quality ultimate form of accountability: the markets rules

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

Colorado experience: from theory to reality insufficient funding overall $2,400 not enough to influence either demand or supply complementary financial aid did not materialize lack of political support champions “expiring”

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

elusive equity Mexico (2005) only 1% of 15-24 year old from poorest quintile attend tertiary education 32% from richest quintile USA: probability to access Ivy League university is 8.3% for lowest quintile 50% for richest quintile France: probability to access Grande Ecole 6% for lowest quintile 15% for middle quintile In particular universalizing basic education and adapting to the knowledge economy We are not as involved with clients as we should Our capacity to respond to new challenges has been severely eroded for clients to deal with new knowledge or within the institution in moving towards programmatic lending Uncoordinated series of responses WBI,IFC, infodev

Chile

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

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 mechanisms 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

competing in the learning society...

competing in the learning society...

competing in the learning society...

competing in the learning society...

what is your vision? DESPITE THE SUSTAINED EFFORTS OF COUNTRIES TO INVEST IN THE DEVELOPMENT OF THEIR tertiary EDUCATION SYSTEM, THERE REMAIN MANY DAUNTING CHALLENGES AHEAD.

www.worldbank.org/education/tertiary