1 Briefing by the Reference Group and Technical Team on the development of the Funding Framework...

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Briefing by the Reference Group and Technical Team on the development of the Funding Framework following the

Ministerial Report on University Funding

Portfolio Committee on Higher Education and Training

25 February 2015

INTRODUCTION

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Reference Group and Technical Team appointed to: consider all recommendations in Funding Review Report do further modelling for Minister’s consideration, and draft a revised funding framework for public comment and

further sector engagement, before final Ministerial approval and publishing in the Government Gazette for implementation.

Reference Group and Technical Team – chaired by Acting Deputy Director General: University Education (UE); comprising Chief Directors and other officials in UE Branch; Department of Higher Education and Training’s (DHET) Chief Financial Officer; 2 Higher Education South Africa (HESA) representatives, one sector representative; and two technical experts.

INTRODUCTION

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Technical Team – 3 experts (Dr Sheppard; Dr Steyn; Dr

Cilliers)

Recommendations already finalised for implementation

by Minister in 2015/16:

HDI development grant;

Foundation Provision funding grid; and

Acceptable variation in enrolment targets set.

HISTORICALLY DISADVANTAGED INSTITUTIONS (HDI) DEVELOPMENT GRANT

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New Historically Disadvantaged Institutions (HDIs)

Development Grant prioritised Report of the Ministerial Committee for the Review of the

Funding of Universities, October 2013, identified 7 contact

universities as HDIs: The universities of: Fort Hare; Limpopo; Venda; Walter

Sisulu; Western Cape and Zululand; and Mangosuthu

University of Technology Sefako Makgatho Health Science University, which

incorporated the Medunsa Campus of the University of

Limpopo, is also recognised as a HDI institution


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Additional funding from the fiscus secured No adverse impact on budgets of other universities Development funds allocated for a 5-year period: 2015/16

to 2019/20 R 410,734 million for 2015/16 and an indicative amount of

R 433,532 million in 2016/17 Purpose:

Put in place systems to develop and sustain financial

health at these universities; Strengthen academic enterprise; and Realise potential.


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Earmarked grant based on approved plans

Continuation on basis of detailed progress report and

satisfactory audit reporting of the use of the funds

At end of 5 years (2019/20) Minister will determine:

Need to continue HDI Development Grant;

If continued, which institutions should continue to be

supported; and

How phasing out of the grant should be implemented

from 2020/21 onwards.


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Business plans should address financial sustainability by

the following measures: Systems to ensure financial sustainability; Improve the debt/liability situation; Improve second stream income (student fees); Increase third stream income; Reduce overheads; and Reduce total personnel costs as a percentage of total

expenditure.


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Plans should also strengthen & streamline academic,

management and administrative systems, through the

following measures:

Reduce student over-enrolment;

Improve the student experience, especially at first

year level; and

Develop niche academic and research areas.

Historically Disadvantaged Universities – Improvement in Infrastructure Allocations

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For the period 2012 – 2015 infrastructure allocations to HDIs amount to more than R2.5 billion of the available R6 billion. This represents 42% of the total funds whilst

the HDIs only represented 15% of the actual teaching input units in 2013.

For the period 2012 – 2015 infrastructure allocations to HDIs amount to more than R2.5 billion of the available R6 billion. This represents 42% of the total funds whilst

the HDIs only represented 15% of the actual teaching input units in 2013.

Total percentage increase in the block grant for the HDIs over the period 2004/05 to 2014/15

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All the HDIs have received much higher increases in their block grants compared to the average for all universities over the period 2004/05 to

2014/15 as a result of the introduction of the current funding framework

All the HDIs have received much higher increases in their block grants compared to the average for all universities over the period 2004/05 to

2014/15 as a result of the introduction of the current funding framework

Differentiation in the Higher Education System

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Modelling suggests that the funding framework caters adequately for differentiation in the higher education system and that there is no need for different funding frameworks for different university types. The mandate and goals of each university is negotiated with the Ministry as part of the enrolment planning process and the annual performance plans of universities.

Each and every university will participate in research albeit at different levels and universities should develop niche areas appropriate for the context and community within which they operate.


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Group 1: High per capita Research Outputs

Cape TownFort HarePretoriaRhodesStellenboschWestern CapeWitwatersrand

Group 2: Medium

Research Outputs

Free StateJohannesburgKwaZulu-NatalNelson MandelaNorth West

Group 2: Medium

Research Outputs

Free StateJohannesburgKwaZulu-NatalNelson MandelaNorth West

Group 3: Low Research Outputs

Cape Peninsula UTCentral UTDurban UTLimpopoMangosuthu UTSouth AfricaTshwane UTVaal UTVendaWalter SisuluZululand

Group 3: Low Research Outputs

Cape Peninsula UTCentral UTDurban UTLimpopoMangosuthu UTSouth AfricaTshwane UTVaal UTVendaWalter SisuluZululand

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It is evident from the graph that the universities with low

research outputs have increased their share

(performance) with regard to teaching outputs (45% to

50%) as well as research outputs (13% to 16%). There is

thus huge improvements made in terms of their outputs

and therefore no further differentiation in funding is

needed.

The shares in teaching input units for the three groups

have remained more or less the same.

The huge drop in the institutional factor for Group 2 is the

result of the phasing out of the multi-campus grant.

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Teaching Input Grid The recommendations on the Teaching Input Grid in the

Ministerial Committee Report were based on the data of too few universities (5 universities). Therefore further modelling has been done by the Technical Team and considered by the Reference Group.

Modelling was done which showed a high correlation between the annual remuneration of academic staff and the full-time equivalent academic staff per full-time equivalent student. Based on this fmoddeling a normalised average cost was calculated for all Classification of Education Subject Matter (CESMs), and used as a proxy for the differential cost of offering courses in the various CESMs.

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Proposed Teaching Input Grid (based on assumptions):

Teaching Input Grid ….

The Reference Group is in the process of analysing the recommendation from the Technical Team. Further modelling has been requested, specifically linked to professional programmes.

Various permutations of this proposed grid and the subsidy implications for individual universities are therefore being modelled before a final grid is recommended.

It has been recognised that programmes requiring work integrated learning may be more expensive, but funding for this element should be linked to SETA funding.

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Teaching Input Grant, Over and Under enrolment

Teaching Input Grant, Over and Under enrolment

The Teaching Input Grant is linked to the enrolment targets negotiated with universities. The size of the grant to an individual university is linked to calculated Teaching Input Units, based on Full Time Equivalent (FTE) enrolments.

It was recommended that institutions should manage their enrolments with a 2% variation on their targets and that funding would be linked to this. To ensure that institutions take this seriously, funds would be withdrawn in cases where institutions do not lie within this range. The Minister approved that to begin with a 5% deviation is acceptable (moving towards 2% over time).

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Balancing quality, growth and accountability The Technical Team and Reference Group will recommend

to the Minister:

If quality at a university is shown to be poor through monitoring

and evaluation, then the institution should not perpetuate growth

in order to secure more funding through their teaching input

shares. There must be a mechanism to direct an institution to stop

growing (and even shrink its size) and concentrate on quality

improvement, without destabalising its financial sustainability.

In such instances, the DHET would enter into an agreement to

maintain the funding of such a university , for a limited period of

time, from the University Development Grant, to enable the

university to deal with its challenges and move to an acceptable

level of quality before migrating back into a growth path.

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Foundation Programmes

The Technical Team and Reference Group will

recommend:

Existing form of foundation programmes to

continue;

Not to be funded as 4 year degrees or diplomas;

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Funding from 2015/16 on the same grid as the

Teaching Input Grid.

More funding has already been allocated from

2015/16 for foundation programmes

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Accountability

The recommendations to set up additional committees and units in the DHET to improve accountability are not supported.

It will be recommended that the DHET budget an amount annually for sector monitoring and evaluation. This will enable the DHET to expand its capacity in-house as well as to contract in additional capacity for monitoring and evaluation as and when needed. The Minister has already approved this in 2015/16.

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University Development Grant It is recommended that there is only one grant instead of

separate teaching and research development grants. The method of calculation of shares are currently being modelled.

Grant will focus on: implementing the Staffing South Africa’s Universities’

Framework:

The Nurturing Emerging Scholars Programme (NESP); The New Generation of Academics Programme (nGAP); The Existing Academics Capacity Enhancement Programme (EACEP); The Staffing South Africa’s Universities Development Programme (SSAU-DP); The Supplementary Staff Employment Programme (SSEP)

Funding of new initiatives (e.g. new medical school)

Special directives for balancing quality and growth

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Other Strategic Recommendations

African Languages to be developed on a project

basis

Different weighting for research outputs depending

on where the articles are published to enhance

quality

SETA Pivot Grants to fund work integrated learning

Multi-campus grant fully phased out by 2015/16

Establishment of a national digital library (funding

mechanism to be developed)

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Other Strategic Recommendations …

Infrastructure and efficiency grant: Changed methodology recommeded for allocation of grants going forward. National macro infrastructure plan developed on the basis of individuall university integrated planning frameworks (campus master plans/mainainance plans/ disability plans/ Enrolment plans) and national priorities (NDP; New Growth Path etc).

Prioritisation of projects will be based on a balance of national priorities and and institutional needs. The immediate critical needs for the system are deferred maintainance and student housing.

Articulation cannot be specifically funded. However it is recommended that a project be developed requesting funds from the NSF to promote and develop designed articulation routes in the system and to develop university staff to understand how articulation works.

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Timeline for implementation

Draft Revised Framework by end of March 2015

Gazette for comments by June 2015

Final Gazette by March 2016

First reforms implemented in 2015/16 (HDI fund;

enrolment targets; foundation grid)

Full implementaion of new framework by 2017/18

Migration strategies will be applied as necessary

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Thank You

1 Briefing by the Reference Group and Technical Team on the development of the Funding Framework...

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