Funding and the Broader Tertiary Sector

Peter Noonan and Gerald Burke

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Purpose: review HE and VET funding •Update 2005 analysis•Compare growth and composition •Note differences in funding arrangements•Identify implications for broader tertiary

sector•Identify issues for future CEET work•Note – analysis is preliminary

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BackgroundIssues in 2005 CEET paper on VET funding:

1. Relative decline in VET funding compared to schools and higher education

2. Faster growth of private funds in HE Overseas students fees Domestic fees (including HECS)

3. Growth in Commonwealth funding outside of Commonwealth State Agreement

4. States make independent decisions on VET funding alongside Com/State Agreement

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Revenue for schools and HE continues to increase at a faster rate than VET ($

billion constant prices, public institutions +)

0

5

10

15

20

25

30

35

1999-2000 2001-02 2003-04 2005-06 2007-08

Schools

Univ

VET

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These is a growing gap between HE and VET operating expenditure

Operating expenses $bill, 2007-08 prices

0

2

4

6

8

10

12

14

16

1999-00 2001-02 2003-04 2005-06 2007-08

University education Technical and further education

Linear ( University education ) Linear (Technical and further education )

Large and growing private HE funds

Universities source of operating expenses $ bill constant prices

02468

10121416

1999-00 2001-02 2003-04 2005-06 2007-08

Uni Public Uni Private

6

7

Much smaller--though growing--private revenue in TAFE

TAFE source of operating expenses, $ bill constant prices

0

1

2

3

4

5

6

1999-00 2001-02 2003-04 2005-06 2007-08

TAFE Public TAFE Private

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Changing composition of VET income, $million, constant prices (NCVER data)

  2004 2006 2008Shares in 2004

Shares in 2008

Increase 04-08

Fee-for-service 647 812 978 10% 15% 51%

Student fees/charges 283 271 275 5% 4% -3%

Other 328 306 295 5% 5% -10%

Commonwealth 1,651 1,580 1,699 27% 26% 3%

States 3,281 3,299 3,225 53% 50% -2%

Total 6,191 6,267 6,472 100% 100% 5%

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Not the full picture: expenditure outside of the national VET agreement (not in NCVER VET finance data)

• Examples▫ Employer incentives -- Commonwealth and States▫ Apprenticeship centres and other Commonwealth

programs

• Also▫ Revenue of private RTOs except for public monies

for user choice, Skills Vouchers, PPP▫ Student assistance –Youth Allowance, Abstudy,

Austudy▫ Employer training expenditure that does not go to

public RTOS

Projected Commonwealth VET related $bill (NCVER data shows $1,700 billion 2008)

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2007-08 Expense

2008-09 Expense

2009-10 Budget

2010-11 Estimate

2011-12 Estimate

2012-13 Estimate

DEEWR 2,715 2,449 2,340 1,824 1,854 1,860

TREASURY   707 1,726 1,662 1,743 1,770

TOTAL 2,715 3,156 4,066 3,486 3,598 3,630

Index 100 129 110 114 115

Projected additional Commonwealth funding for HE and Innovation

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Funds per student or per hour

• HE Commonwealth funding per subsidised student in 2008 was about 10 per cent lower in real terms than in 1996

• Future indexation, funds for low SES students, performance funding - may stem HE decline per student

• VET Government recurrent expenditure per hour of publicly funded training fell 8.5% 2003 to 2007 real terms

• Future Commonwealth money for VET is largely for infrastructure and extra students

Differences in funding arrangements between VET and HE (examples p.1)

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Higher Education VET

Public funding Commonwealth States fund providers, Commonwealth provides part of funding to states

Quotas/limits to number of public supported places

Limits at present Demand driven provision to all qualified students by 2012 at least for undergraduate courses

Limits in all states but VictoriaDemand driven in Victoria, progressively from July 2009 -- for qualifications at higher level

National partnerships and infrastructure funding

New research and other programs affecting teaching resourcesIndexation of grants from 2012Education Investment Fund (EIF)

Productivity Places Program… National Partnership on Youth Teaching and Learning Capital Fund and Infrastructure through EIF

Changes in real funding per EFTSL or hour

Funding lower than mid 1990s but some relief through new funds and proposed (nearly) full indexation.

Recurrent funding per hour of publicly funded training may decline if only partial indexation.

Forward commitment

Forward commitment to additional funding to 2012-13

•Commonwealth PPP funding; •Victoria to fund entitlement•No forward commitment other states

Differences in funding arrangements between VET and HE (examples p.2)

Higher Education VET

Gov’t funding to private providers

Funding generally to public providers though particular exceptions

PPP to public and private providersUser choice etc to public and privateExtensions occurring under National Partnerships especially Vic

Fees Specified range for supported placesNo full fees for domestic undergraduate in public universitiesFull fees for most private providers.

Fees vary across states ---lower than HEFull fees in private and possible for public providers depending on state policy.

Loans HECS-HELP available to supported students and FEE-HELP to full fee students including private providers.

FEE-HELP for approved providers of full-fee courses and for supported students in Diplomas/Ad Dip in Victoria.

Equity funding

New support eg for the enrolment of low SES students, funds to reach 4 per cent of teaching and learning grants

University program for low SES includes partnerships with schools, VET providers and adult education

Student Start up Schols

For university students eligible for student assistance -- $2,254 in 2010

Not available to VET students

Summary•Funding gap between VET and HE has

widened

•State funding has fallen in real terms

•Commonwealth funding has increased

•Extra Commonwealth funding to states without requirements for matching state funding

•Commonwealth funding for HE teaching and learning to grow from 2011-12 but static for VET

•State funding for VET uncertain -- and likely variations between states

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Implications for broader tertiary sector

▫Extent to which differences in funding arrangements influence student choice particularly if upfront TAFE fees increase

▫Implications of demand based growth in HE and equity targets: Cooperation or competition with VET? Future of articulation arrangements and higher

level VET qualifications▫Future balance of growth between the sectors:

Potential for major differences to emerge between the states

Future CEET research

•Full analysis of financial data including forward estimates

•Individual state/territory analysis•Impact of differences in funding

arrangements on students and providers•Options for a new funding framework for

VET in the context of broader tertiary sector

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