SOUTH AFRICA: Change is the only constant

The only constant in South Africa is change. Everything is new and entails muddling through, including university funding. But the tensions are the same as the world over: autonomy and the ‘market’ versus state steering as the government tries to influence the rate and cost at which universities produce the skilled graduates the economy needs – and is decreasingly able to do so as top universities garner their money from other sources.

The higher education sector has three primary funding sources: the state provides about half of universities’ income, a quarter is generated from student fees and the rest flows from donations, research, consultancies and other entrepreneurial activities. The government’s allocation this financial year is R13.3 billion, or US$2 billion.

Between institutions, though, the proportions of state versus ‘other’ income fluctuate wildly. Research universities are less dependent on the government than institutions disadvantaged during the apartheid era and-or located in rural areas.

For instance, the University of KwaZulu-Natal, one of four South African universities ranked in the Shanghai Jao Tong top 500, had an operating budget this year of R1.2 billion. On top of that, says pro-vice-chancellor for research, Professor Salim Abdool-Karim, the university received about R500 million (nearly half again) in external research funding.

Leading research institutions and universities of technology are able to charge higher student fees. They also garner more donor and private sector research money, alumni donations and corporate funding than ‘disadvantaged’ institutions – although, after the whole-scale merging of institutions a few years ago, these boundaries are beginning to blur.

There is a twist: the government provides bursaries and loans to more than 100,000 poor students through its successful national student financial aid scheme. Many of the students choose to study at highly rated institutions whose graduates are sought-after in the marketplace, so leading universities also receive high proportions of state funding via fees.

The South African government commits some 2.6% of its total spending on higher education, which compares favourably with other developing country levels.

But for most of two decades there was a real-term decline in public funding, as the state creaked under apartheid and then as the democratic government tightened the fiscal belt to get the economy on to a sound financial footing. At the same time, student numbers grew rapidly and more money was channelled to further education and training.

Sustained economic growth of 5% a year since the new millennium has enabled tertiary funding to be boosted. In the past few years, the government has significantly increased research spending – which will reach 1% of GDP in 2008 – and this year upped its allocations to universities and to student aid.

It also announced a R5.95 billion commitment to universities for infrastructural development – the first major allocation to institutions in 30 years – although universities believed the amount needed would be at least R7 billion.

The ‘physical renaissance’ allocation will be used, among other things, to support merged institutions, construct new buildings and refurbish older ones, improve resources and library facilities, improve graduate outputs and produce more science, engineering and technology graduates.

After long investigation and hot debate, a new national funding framework for public higher education was introduced in 2004-05. It has been phased in over three years and links funding to national policy goals and the performance of universities.

The government believes that higher education cannot be left to the market and uncoordinated institutional decisions. So it has opted to steer the system through instruments such as planning, funding and quality assurance.

The Education Ministry sets national policy goals and objectives, and institutions draw up three-year rolling plans indicating how they intend to meet national goals. Consultation between the ministry and institutions results in approval of plans, which triggers funding.

The new system has two main elements: block grants covering the operational costs of universities based on weighted student numbers and graduate and research outputs; and earmarked grants (about 13% of the allocation) for specific purposes such as student loans, quality assurance and institutional restructuring.

Writing in the Review of Higher Education in South Africa, published by the advisory Council on Higher Education in August, AGW Steyn and AP de Villiers point out that while the national funding framework has retained the best characteristics of older models, other aspects have been criticised.

Among these have been that the framework is simply a mechanism for dividing the pool of funds and undermines the sector’s ability to argue its needs with the Treasury; that development grants to ‘under-performing’ institutions discourage performance improvements that the framework seeks to encourage; and that it dampens enrolments in the expensive science and technology fields that produce the graduates the economy needs.

For their part, universities claim the framework has undermined university autonomy. The Minister of Education might be obliged to consult somewhat but in effect is given “complete freedom to change the values assigned to the NFF’s components”, say Steyn and de Villiers.