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

3. 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)

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

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

6. outline of the presentation
typology of performance-based allocation mechanisms

7. allocation mechanisms
from untied funding to
performance-based funding

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

9. 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)

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

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

12. 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

13. allocation mechanisms
from direct funding to
indirect funding

14. indirect funding
grants and scholarships
student loans
vouchers

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

16. 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

17. 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

18. 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

19. 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

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

21. 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.

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

23. 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

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

25. 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

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

27. 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

28. 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

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