One expert does not back claims on low uni funding

The Age‘s sub-editors must have concluded that I am not an ‘expert’ on uni funding. In an article this morning Simon Marginson and Barry McGaw said this week’s OECD report Education at a Glance, which reported declining public funding on tertiary education, was ‘reasonably accurate’. However I was reported as saying that ‘tertiary funding had returned to 1995 levels by 2006’. The headline was not however ‘Experts divided on uni funding claims’ but ‘Experts back claims on low uni funding’.

As it happens, I do think the figure quoted in The Age‘s article of a 4% drop between 1995 and 2004 is ‘reasonably accurate’ (it refers to this Excel table in Education at a Glance). Using the ABS Government Finance Statistics publication, based on Commonwealth spending, I get a 2% drop between 1995-96 and 2004-05; the difference with OECD could be using the financial rather than calendar year (there were subsidy increases for 2005) and/or using a different method of adjusting for price changes.

But by 2005-2006 the ABS clearly shows a surge in spending, so that Commonwealth spending is now well ahead (about $600 million) on 1995 levels, plus approximately $1.2 billion more in HECS revenue (my figure, based on DEST data).

A lot of this increase has been in research spending. It’s actually very hard to get a good number for teaching-only spending, because it’s really only since 2005 that such a sum has been clearly identified. Before that there was a more general ‘operating grant’. My best estimate is that over the period 1995-2005 (in $2005) universities have on average improved their total funding for Commonwealth-supported places by about $1,400. That’s made up of an increase in HECS of $2,100 and a reduction in direct subsidy of $700.

Overall, though, the government is right to think that the broken record on funding could be given a rest – or at least the universities need to stop complaining that they are worse off and start providing serious arguments, not just intellectually near-worthless OECD comparisons or vague assertions about under-funding, as to why they should receive more public funding.

7 thoughts on “One expert does not back claims on low uni funding

  1. I think it will be essentially impossible (and not exceptionally meaningful) to get a single teaching-only figure, since student teaching often gets integrated into research.
    Another thing I think is not very meaningful in this debate is the baseline. Simply wondering whether you got more money than 10 years ago is almost worthless, since it does not take into account increases in wages, costs etc. above inflation.

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  2. Conrad – The Commonwealth Grant Scheme is assumed by universities to fund the research activities of staff who do not have research grants. But unlike other grants, it is directly tied to student numbers. So it is the closest we can get to teaching funding. To create the time series I used so far as I could equivalent pots of money in the past.

    In one of the other posts, I did note that CPI understated the loss of purchasing power because wages are the biggest item in university budgets. But the only plausible alternative index I know of, the education component of the labour price index, only goes back to 1997. It is also open to criticism in the sense that universities aren’t just price takers in this market; they negotiate agreements and can substitute cheaper junior academics for more expensive senior academics.

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  3. Andrew, the CPI argument is a pretty important one. In some work I’m presently doing on school funding, we find that the rise in real spending appears much larger if you use the CPI than if you use a schools/education price index, or an index like the salaries of professionals (to get around the price-taker problem). We’ve constructed a (rough) schools CPI from the 1960s onwards, which I’m happy to share with you in Dec, when we get the green light to release.

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  4. Andrew – Thanks for that. It would be a better index than the CPI. Universities are now, on CPI adjusted terms, about 11% better off per Cth-supported student than in 1996. They have revenue from full-fee students. Yet student:staff ratios remain high. I’m not sure whether this indicates that the ‘real’ cost increases were much higher than the CPI number increases, or whether the money is being diverted into research (which I strongly suspect is the case at G of 8 unis at least).

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  5. ABS publish data on research expenditure by universities by source of funds. Why don’t you subtract this from total university expenditure?

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  6. John – That ABS publication looks at expenditure rather than funding, and doesn’t isolate government funds out of ‘general university funds’ as sources of spending (though it does track competitive grants from government). But it is a good suggestion for helping see whether or not revenue derived from teaching activities, whether from government or fees, is being spent on research.

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