Implementing of Bologna Process - Financial

instruments and policiesEstonian experience

Heli AruSenior Policy Adviser

Estonian Ministry of Education and Research

Main Documents shaping the Main Documents shaping the Higher Education (HE) Policy in Higher Education (HE) Policy in

EstoniaEstonia

Higher Education StrategyHigher Education Strategy 2006-2015 approved by the Parliament (2006);

Higher Education Internationalization Higher Education Internationalization StrategyStrategy for 2015 (2007);

OECD recommendationsOECD recommendations - given within the OECD project “Thematic Review of Tertiary Education” (2007).

Bologna process in Estonia

• Estonia was among the countries signing the Bologna Declaration in 1999

• Bologna process was seen as a continuation of the developments, an opportunity to increase the competitiveness internationally (comparable degree structure) and broadening the students´ choices (national and international mobility)

Implementation of the process• The so-called “National Bologna Group” was

established in 2000 - representatives: Ministry of Education, Rectors’ Councils, Accredition Centre, Student Union and Estonian ENIC/NARIC

• On 2001, the Government approved the reform plan

• Major legislative changes were implemented during 2002 and 2003

• Expert seminars as a working method focusing on different topics

• Some financial support from the Ministry

The stages of the process

• Pre-Bologna– Credit-point system based on student workload– Introduction of the accreditation system– Ratification of the Lisbon Convention

• After the Ministerial meetings in Bologna and Prague (1999-2002)– New degree structure– Dipploma Supplement

• After the Berlin Ministerial meeting (2003)– Government Decree on designation of degrees– Governement Decree on correspondence of qualifications awarded before

and after August 20, 1991 – Quality Agreement of Universities– State support schemes for mobility

• After the Bergen Ministerial meeting (2005)– Strategy document for the internationalization of HE– Government Decree on joint programs and diplomas– Regulation of the use of ECTS– Qualification framework and APEL

The Basic Data on FundingThe Basic Data on Funding• The total fundingtotal funding for higher education (public

combined with private resources) was 1.37%1.37% of GDP in 2005.

• The private sector counts for about 1/3 of overall educational expenditure in tertiary education.

• Public expenditure on tertiary education was 0.86% GDP (2007), OECD countries’ mean 1.1% (2002);

• Total expenditure per student (public + private sector) in 20042004 was 29 138 Estonian kroons, which counts for 28% of GDP per capita. OECD countries’ mean 42.6% (2002);

• State subsidised study places in first cycle are guaranteed to 50% of gymnasium graduates and 10% VET school graduates. This is appr 6300 places.

Two funding schemes

• Until 2001 funding was based on students’ intake per curricula, decided by MoER;

• Since 2002/03 MoER “commissions” from institutions graduates per study field– decision regarding the allocation of places per curricula is

done on institutional level.

• There is a Special Advisory CommitteeSpecial Advisory Committee where decisions regarding no of graduates per study field are taken.- The Committee is composed of the representatives of

social partners and different ministries and chaired by the Minister of Education and Research.

Major Characteristics that contribute to the HE Policy

• Large autonomy of public universities– freely use their budgets with a view to fulfilling their statutory

objectives, – employ staff and release them from work, determine the wage

level of employees, – decide upon the total number of students admitted, – specify the rate of tuition fees for fee-based study places,– possess assets and buildings, – contract a loan.

• The Quality Assurance Agreement establishes requirements for curricula, academic posts and academic degrees. It is voluntary initiative of 8 universities;– includes an obligation to assess every year the performance of

the agreement in the previous academic year.

State Commission is concentrated to the Priority

Fields• Since 2002/03 fields like science and engineering

and health are treated in funging decisions as priorities . – The number of graduates in science and engineering has

increased steadily – 2005/06 Estonia has reached the level of 11.2 graduates (ISCED 5-6) in mathematics, science and technology per 1000 of population aged 20-29

– The increase is from the level of 5.7 (1999/00).

• State commission to areas like social science and humanities is limited. In those fields fee-based students are strong majority.

Funding of Institutions

State Commission (1)• Finance from the public budget is provided

primarily in the form of a block grant that covers the state-commission for graduates (since 2002/03).

• Both public and private institutions are eligible to receive funding through the state commission.

• Separate funding is for capital investment and for other expenditure which is of a limited nature.

State Commission (2)• Funding is allocated to institutions based on the

number of graduates on– Professional higher education; – Master, and– PhD level.

• Institutions are expected to provide 1.5 places in Bachelor programmes for each place in a Master programme (stipulated in the Law).

• Final funding per institution is determined by the multiplication of a base funding rate per study place by the funding factor applying to the category of student.

• There is no system for the automatic adjustment of grants to reflect changes in the prices faced by higher education institutions.

Fee-based enrollment• Excess demand has been absorbed by allowing

institutions to enrol students outside the ‘Commission’ on a fee-paying basis;

• Cost sharing principleCost sharing principle between the public budget and students 2005/06 academic year 46%46% of students studied on state

subsidized study places, the majority of students paid tuition fees.

• Institutions have the authority to decide the size of the intake. Public institutions may charge tuition fees to students who do not gain access to state-commissioned places;

• Institutions are free to set the level of fees. One of the few restrictions that applies is the limit to increase fees by more than 10% between academic years.

Students’ Finance

Grants’ System• The basic allowance – for covering expenses related to the

acquisition of education;• The supplementary allowance is a targeted allowance to help

a student with expenses related to housing and transport.• Allowances are distributed by institutions. • With the exception of a small proportion (5%) intended to be

distributed on the basis of financial need, they are allocated on the basis of academic performance. All students (including fee-paying students) are eligible for state allowances.

• The budget available for student allowances is tight. In 2006, some 15% of students received the basic allowance and some 17% received the supplementary allowance.

• Percentage share of student grants in total public expenditure on teritary education (ISCED 5-6) - 6.4% (2007), 7.8% (expected in 2008 budget). EU-27 average – 10.6% (2003).

Students’ Loan System (1)• Student loans are provided by private financial

institutions. Loans are available for all students who are – studying full-time or – who are working as teachers and undertaking a teacher

training programme on a part-time basis.

• Students can access a loan for a period equivalent to the nominal study time for a course and can borrow up to a maximum amount in a year (the upper limit is 25 000 EEK in 2006/07).

• Repayment commences 12 months after a student has completed (or otherwise terminated) his or her studies.

Students’ Loan System (2)• The government guarantees a minimum interest

rate to the lending institutions and also guarantees lending institutions against default by the student.

• To gain a loan a student must provide security in the form of two guarantors, a mortgage on property or a call on other assets.

• The interest rate applying on loans is a commercial rate determined by legislation but cannot fall below 5%. However, the rate of interest paid by students is set at 5%. If the interest rate is in excess of this percentage, the government pays the difference.

• Repayments are suspended in certain circumstances – e.g. for a parent with children under three years of age and during compulsory military service.

OECD recommendationson Students’ Finance

• Reform student support– consider introduction of an income-contingent student

loan facility;– over the longer-term, increase the coverage and value

of grants for living costs.– Introduce principle that all students should pay

something for their studies and receive public subsidies. Arrangements whereby all students pay approx 50% of the cost of their studies.

• Estonian response– Working group for changing Study Allowances and Study

Loans Act (June 2007) =>agreement on establishment on central agency

Strengths of the current funding Strengths of the current funding modelmodel Many aspects of current system embody “good good

practicepractice” AutonomyAutonomy for institutionsBlock grantsgrants for operatingoperating funds ContractualContractual relationshiprelationship between government

and institutions SteeringSteering rather than control

PrivatePrivate institutions operate and receive some publicpublic funding

Excess demand has been absorbed by allowingallowing institutions to enroll students outside the state subsidized education on a fee-payingfee-paying basis

Student loansloans available

OECD Policy Suggestions in the area

of Funding • Allocate public funding on the basis of actual enrolments rather than the purchase of a limited number of places in specific disciplines- contracts with institutions should focus on broad objectives

• Simplification of funding allocations- investment funds in operating grants- review funding coefficients to reduce number- increase funding certainty

Support for Bologna related activities• Programmes supported by the

European Social Fund– For advancement of internationalization and third cycle

studies;– For advancement of modernization of curriculum,

teaching methods, career guidance, etc.– For strengthening the collaboration between HEI’s and

business sector;

• Different approaches, but very often supporting bottom-up initiatives.

Future developments... As agreed in the Higher Education Strategy (2006);• Adoption of three-year performance contracts

– mission and developmental tasks as part of a contract

– no separate contracts for multiple activities – more comprehensive scheme for assessment of

performance (base funding, graduate numbers, serving the community/LLL, developmental projects)

• level of funding (public and private) per student that is comparable to the average of OECD countries (1,3% GDP);

• OECD policy suggestions are under public discussion.

Thank you!Thank you!