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
1
INTRODUCTION
 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.
2
INTRODUCTION
 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.
3
HISTORICALLY DISADVANTAGED INSTITUTIONS
(HDI) DEVELOPMENT GRANT
 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
4
HISTORICALLY DISADVANTAGED INSTITUTIONS
(HDI) DEVELOPMENT GRANT
 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.
5
HISTORICALLY DISADVANTAGED INSTITUTIONS
(HDI) DEVELOPMENT GRANT
 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.
6
HISTORICALLY DISADVANTAGED INSTITUTIONS
(HDI) DEVELOPMENT GRANT
 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.
7
HISTORICALLY DISADVANTAGED INSTITUTIONS
(HDI) DEVELOPMENT GRANT
 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.
8
Historically Disadvantaged Universities –
•
Improvement in Infrastructure
Allocations
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.
Percentage of Infrastructure grants for 2012 - 2015
Percentage of actual teaching input units 2013
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
7.4%
6.3%
6.3%
6.2%
5.1%
3.8%
2.8%
1.8%
Fort Hare
1.2%
Limpopo
Mangosuthu
3.5%
1.3%
Sefako
Makgatho
2.8%
3.1% 3.2%
1.9%
Venda
1.9%
Walter Sisulu
Western
Cape
Zululand
9
Total percentage increase in the block grant for
the HDIs over the period 2004/05 to 2014/15
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
Total % Increase
350.0%
300.0%
250.0%
330.2%
310.5%
283.0%
293.0%
269.0%
317.6%
263.2%
244.4%
200.0%
150.0%
100.0%
50.0%
0.0%
10
Differentiation in the Higher Education
System
 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.
11
Differentiation in the Higher Education
System
Group 1: High
per capita
Research
Outputs
Cape Town
Fort Hare
Pretoria
Rhodes
Stellenbosch
Western Cape
Witwatersrand
Group 2:
Medium
Research
Outputs
Free State
Johannesburg
KwaZulu-Natal
Nelson Mandela
North West
Group 3: Low
Research
Outputs
Cape Peninsula
UT
Central UT
Durban UT
Limpopo
Mangosuthu UT
South Africa
Tshwane UT
Vaal UT
Venda
Walter Sisulu
Zululand
12
Differentiation in the Higher Education
System
Group 1
Group 2
Group 3
100%
13%
90%
80%
41%
42%
45%
55%
70%
16%
50%
32%
61%
32%
60%
50%
28%
40%
28%
28%
27%
25%
30%
21%
55%
52%
20%
31%
30%
10%
0%
19%
Teaching
Input Share
2004/05
Teaching
Input Share
2014/15
27%
18%
Institutional Institutional
Factor Share Factor Share
2004/05
2014/15
23%
Teaching
Teaching
Output Share Output Share
2004/05
2014/15
Research
Research
Output Share Output Share
2004/05
2014/15
13
Differentiation in the Higher Education System
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.
14
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.
15
Proposed Teaching Input Grid (based on
assumptions):
Funding
Group
Classification of Education Subject Matter
Normalised
average cost
1
9 – Public Management, 7 – Education, 12 – Law, 4 –
Business, Management and Economic Studies
1.00
2
18 – Psychology, 5 – Communication, Journalism and
Related Studies, 6 – Computer and Information
Sciences, 20 – Social Sciences
1.31
3
8 – Engineering, 2 – Architecture and the Built
Environment, 15 – Mathematics and Statistics, 11 –
Language, Linguistics and Literature, 17 – Philosophy,
Religion and Theology, 1 – Agriculture, Agricultural
Operations and Related Sciences, 15 – Mathematics
and Statistics
1.73
4
13 – Life Sciences, 14 – Physical Sciences, 3 – Visual
and Performing Arts, 9 –Health Professions and
Related Clinical Sciences
2.74
16
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.
17
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).
18
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.
19
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;
and
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
20
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.
21
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
22
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)
23
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.
24
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
25
Thank You
26