EUROPE: Universities face looming funding crisis: EUA

The rise in Europe's student population and public funding cuts across the continent are combining to produce an unprecedented higher education crisis which can only be met by much greater diversifying of income sources, experts heard in Brussels on Tuesday at the launch of a major European Universities Association survey of 27 countries.

"European Union universities are seriously underfunded and are falling behind their major competitors elsewhere," Maria Carvalho, a former Portugal higher education minister and member of the European Parliament, told the gathering of more than 100 experts.

"The diversification of funding sources is fundamental to the future of EU universities but it requires three things: more autonomy for them, the simplification of procedures and the reform of internal organisation," she added.

The report, Financially Sustainable Universities II: European Universities Diversifying Income Sources, is the outcome of a two-year EUA study of how higher education is currently financed and what its expectations are. More than 150 institutions in the 27 European countries were surveyed. It also analyses the many different barriers that prevent universities from seeking additional income sources.

Delegates and speakers expressed serious concern about public funding for teaching. The report said 53% of EU universities expect this to fall while only 30% believe it will remain stable.

There was also concern for the public funding of research. Some 41% of universities believe it will remain stable while nearly a third (30%) expect state funding for research to fall. Nearly half of the universities surveyed expect additional sources of funding - non-public funding - to grow.

And this money is sorely needed. The EU's target is to make 40% of the population graduates by the end of the next 10 years.

Despite the diversity of Europe, all its higher education systems face the acute challenge of designing sustainable funding models, the audience heard.

While the level of public funding, which accounts for three-quarters of all funding, is changing in many countries, so too is the nature and form in which it is provided - making it subject to more conditions and growing accountability requirements, the report states.

Those universities that have adopted a broader approach to income diversification have accompanied this with structural change within the institution, including the creation of specific teams to deal with it.

This was necessary, Thomas Estermann, the report's co-author said, because of the complexity of financial management: "Some universities have over 100 funding sources run according to different rules."

He warned: "The increase in co-funding is a massive problem and a very challenging aspect of the situation universities face. Some 86% of universities admitted that co-funding applied to at least part of programmes financed by public funds."

Estermann said that universities would have to draw on core public funding to manage these complex funds. He said the existing high percentage of co-funding showed that public financing for universities was already insufficient and that "the risk of financial sustainability of Europe's higher education is underestimated both by funders and public authorities and needs to be tackled urgently."

He commended matched fund schemes whereby public cash comes to match money raised by the university from the private sector. "These schemes are or have been used in Canada, the US and New Zealand but remain the exception in Europe, although universities seem to regard them as a desirable incentive."

However, the EUA report stressed that internal barriers to diversification were as "problematic" as external ones. It listed the most frequent impediments: the lack of information among staff (80%), the lack of a suitable internal structure (68%), negative attitudes to the whole idea (67%) and lack of managerial expertise (67%).

Some 31% of the survey's respondents said they had no dedicated structure for fundraising while a further 38% had only five or fewer staff dedicated to the task.

There was a consensus at the meeting that additional funding cannot replace existing public funding systems but diversifying income sources was essential as a way of spreading risk in the context of the economic crisis.

The majority of institutions now generate more than 10% from additional funding streams (excluding tuition fees.)

The way forward, Carvalho said was through block grants, competitive funding that obliges universities to support research capabilities, and targeted funding that gives money for specific objectives - for example, stem cell R&D.

Click here to download the report