Governance: Systemic Issues, autonomy and oversight John Fielden Director, CHEMS Consulting Strategic Choices. Kuala Lumpur. Dec 2007

Strategic Choices. Kuala Lumpur. Dec 2007 Our agenda What is the proper role of the State? Setting the vision and the strategy What legislation is needed The two models: control vs regulation Models of autonomy Options for funding mechanisms The State and good governance of institutions The key questions Strategic Choices. Kuala Lumpur. Dec 2007

Strategic Choices. Kuala Lumpur. Dec 2007 How common a diagnosis? “Curricula have remained almost unchanged for decades. Assessment places a premium on memory rather than understanding The milieu is caught in a 9.30 to 1.30 syndrome The infrastructure is on the verge of collapse Boundaries between disciplines have become dividing walls that constitute barriers to entry for new disciplines Importance attached to research has eroded steadily over time Structures of governance are not responsive to changing times”. National Knowledge Commission, Report to the Prime Minister. India. Nov 2006 Strategic Choices. Kuala Lumpur. Dec 2007

What is the proper role of the State? Which agency should carry out the following functions? Setting the overall strategy Approving new institutions Planning the sector Allocating recurrent and development resources Assessing quality Monitoring resources and performance Collecting statistics and reporting Strategic Choices. Kuala Lumpur. Dec 2007

Setting the vision and strategy A vision for HE should link in to the national plan Only the MOE can agree the overall strategy for higher education This should cover expansion plans, the size of public/private sectors, life long learning, ODL, foreign providers, quality issues and how funding will be obtained to pay for any expansion needed. Strategic Choices. Kuala Lumpur. Dec 2007

Strategic Choices. Kuala Lumpur. Dec 2007 Some visions Syria - education: “ to prepare and update the population for the economic growth of the nation and particularly for the knowledge economy; to help meet the social needs of the nation, particularly through its contribution to the reduction of poverty and of regional and social inequalities. UK – higher education: “The UK must create a society committed to learning throughout life. Higher education will make a distinctive contribution to the development of a learning society through teaching, scholarship and research” Strategic Choices. Kuala Lumpur. Dec 2007

What legislation is needed An HE Reform Act can clarify the vision, role and powers of MOE, buffer bodies, agencies and tertiary institutions. It is sometimes used to confirm what “academic freedom” means. May also include the establishment of autonomous buffer bodies or agencies for quality assurance etc. If public sector manpower or financial regulations are hindering HE reforms, some amendments may be needed to that legislation. Strategic Choices. Kuala Lumpur. Dec 2007

Strategic Choices. Kuala Lumpur. Dec 2007 Recent HE reforms Pakistan, Japan Korea China South Africa Thailand Strategic Choices. Kuala Lumpur. Dec 2007

The two models: control vs regulation State controlled Universities are agencies of the MOE Senior staff appointed by MOE MOE is involved in management Expenditure is controlled from the Ministry of Finance Public sector rules apply State regulated Universities are autonomous bodies They define their own strategic plans They can appoint their own staff Free to generate and retain income from all sources Reporting on KPIs to MOE Strategic Choices. Kuala Lumpur. Dec 2007

Strategic Choices. Kuala Lumpur. Dec 2007 State of University Autonomy in Select Countries After Undertaking Tertiary Sector Reform Country Own Buildings and Equipment Borrow Funds Spend Budgets to Achieve Objectives Set Academic Structure and Courses Employ and Dismiss Staff Set Salaries Decide Size of Student Enrollment Denmark Indonesia ≡ Japan ↑ ⌂ Pakistan South Africa Tanzania Thailand ↑ Autonomy increased ⌂ Some autonomy predates reform ≡ No change in autonomy Source: World Bank. Strategic Choices. Kuala Lumpur. Dec 2007

The price of greater autonomy Negotiation on overall strategy and student number targets Up to three levels of audit Penalties for under/over achieving Semi-mandatory good practice requirements Extensive reporting on outcomes and performance External QA reviews Strategic Choices. Kuala Lumpur. Dec 2007

Approaches to financial control Detailed budgets agreed with MOE Line item control over budget Surrender of any under-spendings Surrender of any income generated Inability to manage assets or to borrow money externally Autonomy Block grants agreed No detailed controls over sub heads Earnings can be retained Under-spendings retained Freedom to switch or sell assets and borrow funds Accountability for overall budget and performance. Strategic Choices. Kuala Lumpur. Dec 2007

Two kinds of income profile State Controlled MOE grant 95% Fees 3% Other 2% Autonomous MOE grant 40% Tuition fees 25% Research 20% Trading 5% Donations 5% Interest from endowments 5% Strategic Choices. Kuala Lumpur. Dec 2007

Strategic Choices. Kuala Lumpur. Dec 2007 New ways of funding Per capita grants for each student enrolled (using tariffs by subject, level and mode?) Performance related funding – payment by credits achieved or numbers graduated NOT enrolments. Research funding based on peer reviews or research assessment or impact (PBRF) Extra funding for policy-related activity (eg; poor students, e-learning), which may be competitive. Strategic Choices. Kuala Lumpur. Dec 2007

The State and good governance of institutions If universities are autonomous, does the State need to intervene? To appoint VCs or Chairs of the Board To promote codes of practice for good governance and management? To impose policy priorities? To control the use of assets bought with State funds? To monitor or limit bank borrowings? Strategic Choices. Kuala Lumpur. Dec 2007

Strategic Choices. Kuala Lumpur. Dec 2007 Key questions What are the pre-requisites before the State gives universities autonomy? Is it possible for the State to have only a “light touch” in the way it regulates HE? What are the best ways of managing the risks? What policy incentives will encourage creativity, quality and self-sufficiency? Strategic Choices. Kuala Lumpur. Dec 2007