Financial autonomy of universities in European Union countries and its impact on the diversification of higher education funding - Janusz Kudła and Monika Stachowiak-Kudła

Janusz KudłaUniversity of Warsaw, Poland Monika Stachowiak-KudłaUniversity of Warsaw, Poland

 The purpose of the study is to compare the financial autonomy of European universities in the acts on higher education of European Union member states. We are going to distinguish the similarities in autonomy regulations and identify the most important legal components of financial autonomy. We also strive to measure the impact of the distinguished items on the share of private financing with a Tobit regression.

 Firstly, we identified explicitly formulated in primary legislation acts basic dimensions (factors) affecting financial autonomy of universities, Secondly, we used these dimensions to find the similar provisions existing in other European Union countries, Finally, we applied the dummy variable in Tobit model to estimate the impact on the share of private funding in tertiary education institutions.

 One can expect that the enhancement of financial autonomy should increase the share of private financing at the expense of the public, This statement (if true) confirms indirectly greater diversity of tertiary education funding in systems assuming higher level of legal autonomy, On the operational level, it means positive and significant value of parameters in model, explaining the private financing share, controlling for other variables affecting the structure of higher education funding.

 Property utilization and free disposal of assets, primarily by the sale of owned real estate, commitment and its security; Transfer of unspent public funding for the next year; Pursuit of economic activity, The imposition of public obligation on government to provide funds for fulfilling the basic functions of universities; The lack of control over investments, revenues and costs incurred by one of the bodies inside the university for the sake of appropriate governmental authorities, for example a minister of higher education.

 We use Tobit model for censored data (because the dependent variable - share of private expenditures in total sum of funds spen t on higher education - is limited to 0-1 range), The controlling variables reflect: the cost of higher education, level of research and development expenses and the differences in relative affluence, calculated according to the purchasing power standard provided by Eurostat, The dummy variables represent five dimensions of financial autonomy of universities.

 The key figures for higher education are available at the latest for 2008 and origin from two sources – OECD and Eurostat. The control variables refers mainly to the later source. Variables for non-members of OECD were taken from Eurostat 2005 and rescaled for 2008. Eventually the model was estimated for 22 countries of EU.

 Only five control variables turn out significant: Annual expenditure on public educational institutions per student in euro PPS, Total Public Expenditure on education in millions euro PPS at tertiary level of education, the ratio of students at academic studies to non-academic and the relationship of students in private schools to public, Of the five dummy variables of financial autonomy, only one proved to be not significant at 10% significance level. This variable represents the opportunity to carry forward unspent public funds in a given year (indicator of high public finance?).

 Universities-assets-ownership-variable has negative and significant sign contradicting the previous expectations (the universities’ property can be a substitute for private funding sources?), Pursuing the business activity and lack of inside control of government in universities are about the limits of confidence interval, which may raise some doubts about the sustainability of the identified dependencies (so we repeat the estimation for 12 old EU countries and the last variable turns out to be insignificant).

 Beneficial impact of financial autonomy on the university funding diversity does not determine the direction of the relationship. The study confirms the importance of financial autonomy for the diversification of funding sources for universities, especially for greater utilization of private funds. The diversification should be positively affected by: ensuring the mandatory funding by the state for the university functions, permission for the pursuit of business activity and exemption from control on investments, revenues and costs exercised by special units inside universities.

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Financial autonomy of universities in European Union countries and its impact on the diversification of higher education funding - Janusz Kudła and Monika Stachowiak-Kudła

by OECD Education on Oct 01, 2012

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Financial autonomy of universities in European Union countries and its impact on the diversification of higher education funding - Janusz Kudła and Monika Stachowiak-Kudła Presentation Transcript