Efficiency key to HE funding in Europe today – Report

An interim report from the European University Association, or EUA, on the pattern of public funding for universities has highlighted how the character of higher education funding is changing – largely but not entirely as a result of economic pressures facing governments.

The key to getting adequate funds these days is efficiency, says the report.

Public providers of funds for higher education are increasingly looking for performance-related returns and are turning to large-scale restructuring through mergers or the creation of excellence initiatives, says the analysis based on data from 24 European countries.

The report is an interim snapshot of work by DEFINE – Designing Strategies for Efficient Funding of Higher Education in Europe – a two-and-a-half year project lasting until spring 2015 and being run by the EUA in collaboration with higher education bodies in Portugal, the United Kingdom, Finland, Germany and Denmark.

The project is co-funded by the European Commission under the Lifelong Learning Programme, and the report’s authors are Thomas Estermann, Enora Bennetot Pruvot and Anna-Lena Claeys-Kulik.

Main findings

Among the main findings of the report is that the vast majority of higher education systems now use some type of performance-based elements in their funding. These include funding formulae and-or so-called performance contracts.

“For example, over 50% of the universities’ overall public funding comes from formula-based block grants in at least eight European higher education systems,” says DEFINE.

The report considers the different indicators used, such as numbers of students and those focusing on outputs such as the number of graduates, while noting that teaching and research activities are often funded differently.

“While input indicators such as the numbers of bachelor and master students are the most important criteria for funding teaching activities, research activities tend to be funded mainly on the basis of output indicators such as doctoral degrees or the amount of external funding,” says the report.

Meanwhile, performance contracts, where certain goals are agreed between public authorities and universities, are a common feature – found in 15 of the higher education systems considered in the study.

On the restructuring aspects, the study finds that “in almost all countries studied, authorities and universities are either considering or taking steps towards merger processes, with a view – along with other objectives – to rationalise funding allocation”.

These processes vary, with the deepest restructuring taking place in Denmark, Estonia, Finland and Latvia.

However, mergers are only one of the many different concentration and collaboration phenomena occurring in higher education – other forms include the creation of university consortia and strategic partnerships.

“Public authorities encourage these processes by setting up specific funding schemes, often with a focus on excellence,” says DEFINE. Large-scale initiatives, such as in Germany and France where additional funding has been made available to universities, “remain an exception but have an important impact on the system as a whole”.

While universities are actively seeking to improve efficiency both internally and by creating synergies within the sector, “regulatory frameworks strongly determine the capacity to implement different measures”, it says.

The interim DEFINE report concludes that “universities have an important role to play in the funding efficiency area, and should be proactive in addressing this challenge to contribute to shaping this agenda”.

The EUA said it would take the work forward with three focus groups in the spring of 2014 using small groups of higher education experts from across Europe to analyse the institutional impact of the three groups of efficiency measures – performance-based funding, excellence schemes, and concentration measures – in more detail.