STANDING COMMITTEE ON APPROPRIATIONS FUNDING IMPLICATIONS: NO FEE INCREASES CHE Perspective 4 November 2015 Presenter: Prof. Narend Baijnath CEO

ACKNOWLEDGMENTS Contributions by the following members of the CHE to this presentation are acknowledged: -Prof Themba Mosia – Chairperson – CHE -Dr Marianne Engelbrecht – CEO Office -Dr Denyse Webbstock – Director: M and E -Dr Genevieve Simpson – Manager – M and E -Prof Diane Grayson – Director IA -Prof Monie Naidoo

INTRODUCTION  CHE supports all the efforts galvanised to address the issue of student fees and the imperative of minimising the burden on poor students, and universities  No fee increases for 2016 will have ongoing implications - the nett effect yet to be fully computed, and implications calculated  Immediate resolution does not solve the longer term challenges of funding the poor. Conditions that have triggered the protests will prevail in the next financial year and for years to come due to legacy effects and ongoing inequality

KEY PREMISES  Free Higher education is not a long term solution in our view: those who can afford should pay  Central to our dilemma is the clash of competing developmental demands in HE:  To increase access and achieve greater success  To improve quality and advance growth/expansion  To reduce fees while costs burgeon exponentially  No principled basis for funding of universities above other competing priorities in the PSET sector – e.g. vocational education, colleges, adult education  Developmental goals need to be tempered by fiscal prudence

Figure 154: Proportional disaggregation of institutional funding per source from 2008/09 to 2013/14 (VitalStats,2013) SOURCES OF UNIVERSITY FUNDING

COST OF TUITION vs FULL COST Average full cost of study showing the percentage cost of tuition from 2008 to 2013 (VitalStats,2013) *  Main reason for increase not necessarily tuition fees  Increase in other costs eg. student facilities and services, accommodation, meals and books. * NSFAS full cost of study report

PROGNOSIS FOR NEXT DECADE  Material conditions for the next decade don’t look promising – strain on individuals may lead to more resistance to cost burden being passed onto individuals  Slow economic growth will mean static, or decreased resources available for government spending  Possible shortfall in grants to universities a real possibility in bleak economic outlook  Mounting infrastructural backlog will add new pressures on the fiscus in coming years  Developmental challenges remain – PSET goals in particular will mean ongoing requirement for investment in expansion of the sector and increased numbers of poor students requiring funding support

STATE LEVEL INTERVENTIONS TO FUND NO FEE INCREASES  Reprioritising state level initiatives to appropriate resources for universities  Look at departments that have underspent budgets to liberate funds to meet the funding shortfall  Re-examine SETA funds – portion of surpluses can be earmarked to meet shortfall  Give attention to NSFAS loan and debt recovery rates  Improved efficiencies, fiscal prudence and elimination of wastage and losses  Graduate Tax

INSTITUTIONAL INTERVENTIONS TO MINIMISE IMPACT OF NO FEE INCREASES  Universities to cut costs related to functions, catering/travel – align with national treasury directives  Universities to share infrastructure, services and resources where practical to manage costs  Streamline bloated administrations and cap executive pay and bonuses  Improve internal efficiencies, eliminate waste and losses, look more closely at what might be spending on prestige projects  Mindful that universities are not at the same level in terms balance sheet strength – where possible, those that can should absorb a part of the shortfall

CONCLUSIONS  Imperative to bring university funding into line with requirements for long term sustainability  Those students who can afford it must pay  Tie increased expansion rates to funding availability and resource allocation with PSET priorities  Austerity measures at universities should be aimed at optimal use of resources and efficiency

CONCLUSIONS  Universities to reprioritise their budgetary allocations without sacrificing core business imperatives – e.g. rankings  Partnerships and increased collaboration between stakeholders – greater emphasis on sharing resources, facilities, and achieving economies of scale  Greater transparency and accountability over funds allocated for higher education from the pubic purse and how these are utilised