EUA report reveals higher education funding pressures

The latest edition of the European University Association’s Public Funding Observatory has revealed pressures faced by many countries in funding higher education institutions, specifically regarding the impact of inflation and changes in student numbers.

“While no system has been left completely unaffected by the crisis, there is still a risk of a widening gap in terms of university funding between different parts of Europe,” says the EUA, which released the report with a new interactive online tool for 23 European systems.

Considering year-on-year changes, the picture for 2012-13 was quite mixed: out of 17 systems for which data for both years was available, nine showed a positive trend (funding increase) and eight showed a negative one (funding cut).

“Many countries in eastern and southern Europe still appear to be more affected by the crisis than many countries in northern and western Europe although there are notable exceptions,” the EUA says.

Between 2012 and 2013, funding for Portugal, England and Wales, for example, was down by between 5% and 10%, while Greece and Hungary were walloped by decreases of more than 10%. (The figures are not inflation-adjusted as inflation data for 2013 are not available.)

Croatia still faces a cut of more than 3% in 2013. Two countries face very severe cuts: at least -25% in Greece and more than -19% in Hungary. This is all the more critical as both countries face a general downward trend over the period 2009-13, with the difference (not adjusted for inflation) between those years amounting to about -46% in Greece and about -31% in Hungary. These are the worst situations recorded by the Public Funding Observatory.

Austria and Iceland, on the other hand, received a 10% and more rise in funding.

Monitoring the financial crisis

The EUA, which has been monitoring the impact of the financial crisis and economic downturn on higher education institutions in Europe since 2008 – in cooperation with its collective members, the national rectors’ conferences – said inflation had seriously affected the financial situation of universities and should be considered when assessing the financial health of the sector as a whole.

It warned that the situation was unsustainable. Feedback from various sources and current EUA projects has also fed into regular updates of the situation, which clearly highlights the evolving nature of the impact of the crisis on institutions in Europe.

Reduced investment weakened countries’ research capacities and knowledge base, the report says, and negatively affected the development of their knowledge economies. Such divergent trends also decreased the potential for cross-border academic and scientific cooperation and put the completion of the European higher education and research areas at risk.

Staff and infrastructure affected

In systems that reported cuts, staff and infrastructure were the two areas most affected.

Funding for maintaining and developing infrastructure was reduced in Croatia, Greece and Ireland, and for England and Wales capital investment from public sources was actually reduced by about 50% over the period 2010-14.

An exception was Sweden, which reported a funding increase for that area.

In countries where research funding had been reduced, universities hoped for more European Union (EU) funding to maintain research activities and infrastructure development. The report underlined that EU funds were not supposed to provide substitutes for national funding schemes, which needed to remain strong to uphold Europe’s competiveness.

When adjusting the public funding figures for 2008-12 for inflation, for many countries a more serious picture was revealed. Inflation worsened the effect of funding cuts and mitigated the effects of a funding increase.

When looking at inflation-adjusted public funding figures, only seven systems out of 20 showed a better funding situation in 2012 than in 2008: Austria, Belgian French-speaking community, France, Germany, Norway, Sweden and The Netherlands.

Meanwhile, 13 systems had a lower funding level in 2012 than in 2008: Croatia, Czech Republic, England and Wales, Greece, Hungary, Iceland, Ireland, Italy, Lithuania, Poland, Portugal, Slovakia and Spain.

Ireland and Italy reported that research was particularly hit by funding cuts. Teaching (funding per student) was also an issue in Ireland as well as in England and Wales, where the transition from grant funding to increased student contributions still had an impact on funding figures in 2013.

In systems where there were funding increases, research always benefited more than teaching, where increases were partly offset by rising student numbers.

Cutbacks on salaries and benefits were reported in Croatia, Greece, Ireland, Italy and The Netherlands. The two exceptions regarding staff were France and Poland, where extra financial means had recently been made available to universities: 1,000 new positions in France were to be created in 2013, while in Poland an average increase of 9% on salaries was expected after years of stagnation.

Funding for maintaining and developing infrastructure was reduced in Croatia, Greece and Ireland, and for England and Wales.

The EUA report said that across Europe, and regardless of how much public funding was reduced, a common feature was that expenses linked to infrastructure maintenance and development were the first to be cut, whether directly by public authorities or as a result of universities’ own decisions.

While this issue could be partly tackled in some regions through support from structural funds, it remained a worrying development.

Campuses should be seen as strategic assets, added the EUA. Ageing facilities and equipment would trigger increasing costs for institutions and deteriorating teaching and research environments. In the long run, challenges linked to the need for continued investment in existing infrastructure would have to be considered.

The efficiency of funding in terms of the capacity to meet certain policy goals in a cost-effective way was becoming increasingly important, and it was vital to rethink higher education funding policy and enhance funding efficiency in the sector.

The report reaffirmed that European governments should not view funding for higher education institutions as expenditure but rather as an investment in Europe's future, and that increased investment in higher education and research was a way to help European countries out of the economic crisis.