New employment outcomes criteria in university funding

Minister of Higher Education and Science Søren Pind has endorsed a ministry proposal to base 10% of budget allocation on higher education institutions’ graduate employment outcomes, as part of a reform of university funding.

Since 1994 the ministry has allocated the bulk of universities’ funding according to the ‘taximeter principle’, in which it is linked to the number of examinations passed by students.

But the ministry has proposed a shake-up in which the DKK13 billion (US$1.9 billion) budget for the system – which caters for 270,000 students – will be divided up using the taximeter system for 70% of the allocation, while 20% is given as a basic component, and 10% as a ‘quality and results’ component, based on the proportion of candidates that are graduating on time and the degree of transfer to working life the higher education is providing.

“The present system has weaknesses because it does not to a sufficient degree support the quality of education and the transfer to working life for the graduates,” the ministry said in a 10-page press statement.

“This new system is simple, transparent and supports a continuous strategic priority action at higher education institutions,” the ministry said.

The quality support elements in the model are estimated to be approximately DKK200 million per year, and can be increased upon further evaluation later.

The new system will be implemented from 2019. In order to make the transition to the system easier, the government will compensate those institutions where education support will fall by more than 1%.

Parliament will now be invited to discuss the proposal, and several political parties have said they are not positive.

The proposal has been under preparation for several years in the ministry, as reported by University World News.

In March 2017, the think tank Kraka, in a note written by Nicolai Kaarsen and Laurids Leo Münier, drew up several recommendations for a new taximeter model that rewards institutions that are graduating candidates on time and producing graduates who are earning a high salary in a job for which there is strong demand in the workforce.

Mixed reactions

Uniavisen, the University of Copenhagen newspaper, said the proposed changes will give the University of Copenhagen a “whipping”, since only 36% of the university’s bachelor candidates graduate on time and 61% finish their studies after an extra year.

Forskerforum, the Danish scientists’ magazine described the proposal as “raw”.

“Behind the proposal is a national-economic logic that is free from quality and culture. For universities and the students, the model has some in-built components that will lead to a narrowing of academic fields and academic objectives. Again, it is the soft fields of the humanities, with more diffuse opportunities in the workplace, that will be hit hardest,” the magazine said.

Jacob Fuglsang, education editor of the major Danish newspaper Politiken, accused the government of “moving money around without solving the greatest problems of the higher education sector”.

Lars Qvistgaard, chairman of Akademikerne – the Danish Confederation of Professional Associations – said: “The major question is still how you fit quality into an algorithm for distributing funding for higher education without risking creating a ‘Matteus effect’, where those who have shall get more.

“My advice to the politicians is that quality is best achieved through a stable and predictable funding model.”

Jesper Rasmussen, executive director of Copenhagen School of Design and Technology, said the taximeter system is a simple and predictable funding system and it was never even considered as a possibility to include quality as a criterion for funding.

“There is, apparently, no consensus on the concept of quality other than its intrinsic intangible and multidimensional nature, and for this reason quality is not suitable as a funding criterion. The ambition is fine, but it will never work in the real world. I suppose the ministry has realised that this is true since the reform in effect has turned out to be a very moderate revision of the taximeter system.”

The National Union of Students in Denmark said the proposals will mean that some funding of higher education will depend on the time it takes for graduates to be employed after their final exam, but universities have no direct influence over many of the variables that affect employment rate, including national economic trends and the willingness of companies to hire recent graduates.

Sana Mahin Doost, head of the national union of students, Danske Studerendes Fællesråd, said: “The focus should be on the quality of education. That's what makes students employable in the long run.”

Her view is shared by Thomas Estermann, director of governance, funding and public policy development at the European University Association, who said: “We view with caution indicators over which universities may have limited influence, such as graduate employment rates, which largely depend on external factors.”