Governments look at what vice-chancellors do, rather than listen to what vice-chancellors say. Last December I pointed out that the government is taking the willingness of universities to enrol additional Commonwealth-supported as evidence – contrary to the verbal claims of VCs – that it does not need to increase funding. I repeated the argument in the Higher Education Supplement this morning.
My article was written a couple of weeks ago, but the Higher Education Supplement’s lead story showed that not only will VCs take more students on the same rates as now, they will also take more students on lower rates. Three universities are reported in the story as planning to exceed their enrolment quota caps. When this happens, they get the student contribution amount but not the Commonwealth subsidy. For many disciplines, that is a third or less of the within-quota funding rate.
So these VCs say 100% of the usual funding rate is too little, but they behave as if one-third of the usual funding rate is enough. If you were a cash-strapped government, which would you believe?
What are the possible explanations?
In higher education, there is certainly likely to be a big difference between average and marginal cost. The average cost is taking all the costs – buildings, libraries, academics, administration etc – and dividing it by the number of students. The marginal cost is the cost of adding an additional student. If you already have all the staff and facilities, it’s likely that additional students can be enrolled at way below average cost up to the point where they meet current capacity. If this is so, it could be the case that marginal cost is in fact lower than the marginal benefit of one-third the usual funding rate. This could still be true even if, as VCs claim, the usual funding rate is below the average cost.
But if additional students require major increases in capacity – new buildings for example – it is likely that marginal costs greatly exceed average costs and the marginal revenue per student, whether the full rate or the one-third rate. Surely there has to be a point where marginal costs start exceeding marginal revenues, and taking more students makes no financial sense.
Another possibility is that VCs believe they should offer more student places, due to student and/or government demand, and will do so regardless of price, and patch up their finances the usual way, by taking more full-fee international students. Through a mix of high (international) and low (Australian) revenue students they get to a viable average per student funding rate. Though it seems like a high-risk strategy, to my knowlege only Central Queensland University has gambled and lost.
A third possibility is that claims of under-funding teaching are phoney. That is, if we look at how much it costs to teach and assess students for the six or seven months a year they are actually on campus each year the current funding rates – in all or most disciplines – are adequate. The problem has been that full-time academic staff are paid for the whole year. Through a mix of casualisation and teaching outside the normal periods this problem has been substantially alleviated.
Whatever is the case, VCs do not at this point have a compelling case for more funding. Their actions undermine their words.