Public-private Partnerships in Higher Educationin Higher Education

Transforming Tertiary Education for InnovationTransforming Tertiary Education for Innovation and Competitiveness

World Bank InstituteJune 6-9, 2011Bali, Indonesia

Norman LaRocqueS i Ed ti S i li tSenior Education SpecialistAsian Development Bank

AgendaAgendaAgendaAgenda

Changing context of higher education

Public private partnerships (PPPs) defined Public-private partnerships (PPPs) defined

Potential benefits of PPPs

Classifying PPPs in higher education

Examples of PPPs in higher education

Conclusion

Higher Education: Changing ContextHigher Education: Changing Contextg g gg g g

• Higher Education increasingly seen as important contributor to i th d d l t k l deconomic growth and development - knowledge economy

• Increased diversification of higher education provision: – Specialized institutes universities of technology virtualSpecialized institutes, universities of technology, virtual

universities

– For-profit higher education, public-private hybrid institutions, f hifranchises

– Fee-paying public universities, corporate universities, foreign HEIs

• Private sector is an important part of higher education canvasPrivate sector is an important part of higher education canvas – significant in many Asian and Latin American countries

• Considerable growth in private higher education – developing countries and emerging markets

Private Sector Share of Higher Education Private Sector Share of Higher Education Enrollments, Various CountriesEnrollments, Various Countries

78 7780

90

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PublicPublic--Private Partnerships (PPPs):Private Partnerships (PPPs):PublicPublic Private Partnerships (PPPs): Private Partnerships (PPPs): DefinedDefined

• No fixed definition of PPPs• No fixed definition of PPPs• Definitions differ in terms of scope and formality of

arrangements.arrangements. • Various definitions:

– “risk sharing relationship based upon an agreed aspiration between the bl d b b d d bl lpublic and private sectors to bring about a desired public policy

outcome.”– Commission on UK PPPs

– “cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards.”

– Canadian Council for PPPs

Why PPPs: Financing vs. Provision

Provision Financing Private PublicFinancing Private Public

Pri ate

Tuition fees, philanthropy, industry

contracts student loans endowmentPrivate contracts, student loans, endowment income

Public Scholarships/ subsidies/voucher type funding

Free public universities

6

Potential Benefits of PPPs in Higher Potential Benefits of PPPs in Higher EducationEducationEducationEducation

• Bring together strengths of public and private sectors

• Potential benefits from PPPs in education including:– Increased financial resources committed to HE

I d ti i ti i HE– Increased participation in HE

– Overcome public service operating restrictions such as obsolete salary scales, restrictive civil service work rules

– Increased relevance of HE programs and research

– Secure new skills that may not exist in the HE sector

– Sustainability of outcomes

• Benefits not guaranteed – need well-designed policy framework and institutional governance to implementframework and institutional governance to implement effectively

Classifying PPPs in Higher EducationClassifying PPPs in Higher EducationClassifying PPPs in Higher EducationClassifying PPPs in Higher Education

• PPPs widely used around the world with a range of• PPPs widely used around the world, with a range of objectives – efficiency, relevance, etc

• PPPs in higher education cover a range of activities –finance/philanthropy, delivery and management

• Many ways of classifying higher education PPPs. One classification is as follows:classification is as follows: – University-industry linkages– Infrastructure PPPs– Financing initiatives– Higher education support services– Service delivery PPPs

Classifying PPPs in Higher Education (Cont’d)Classifying PPPs in Higher Education (Cont’d)

University-Industry Linkages

Infrastructure PPPs Financing Initiatives Higher Education Support Services

• Curriculum/program • Private infrastructure • Public or private • Private quality development

• Student/ ob placements• Staff exchanges• R&D – contract research,

consultancies

initiatives - teaching and research facilities, residences, IT laboratories, etc

• Private leasing of bli hi h

scholarships/vouchers• Student loans• Tuition fees• Private sector incentives:

free land or soft loans

assurance systems• Private sector

university rankings• Private information

and testing servicesconsultancies• Private representation on

governing/advisory boards• Hybrid R&D institutions/

Centers of Excellence

public higher education institutions

• Equipping and maintenance of IT laboratories

free land, or soft loans, operational and research subsidies, tax/customs duty exemptions

• Philanthropy

and testing services• International and

national research network development

• Innovation/commercializa-tion initiatives

• Franchising and affiliations with public universities• Contracting out course/program delivery to private sectorContracting out course/program delivery to private sector• Contracting out non-core services to private sector – eg.

security, parking, hostels• Private management of public universities

Service Delivery PPPs

University-Industry LinkagesUniversity Industry Linkages

• Many ways to strengthen university-industry linkages: Consultancies– Consultancies

– Industry involvement in teaching and in curriculum development

– Staff exchanges– Corporate training

Student work programs and apprenticeships– Student work programs and apprenticeships– R&D activities – contract research, cooperative and

sponsored research, commercialization of university research, business development assistance

– Industry representation on governing boards, academic representation on industry boardsp y

– Joint publications, conferences and seminars

UniversityUniversity--Industry Linkages: Industry Linkages: University of MoratuwaUniversity of MoratuwaUniversity of MoratuwaUniversity of Moratuwa

• University of Moratuwa (UoM) established University Industry Interaction Cell (UIIC) as vehicle for fosteringIndustry Interaction Cell (UIIC) as vehicle for fostering linkages with industry: – Self-financing entity within the Faculty of Engineering

and later expanded across eh entire university– Established with assistance of ADB

• Key objectives of UIIC:• Key objectives of UIIC:– Identify public and private sector organizations willing

to establish links with UoM– Move successful research projects/expertise to industry

through joint R&D, consultancy and technology transferf f– Identify and meet continuous PD needs of the industry

• Staff have set up Uni-Consultancy Services

Affiliation and FranchisingAffiliation and Franchising

• Several countries allow/require private institutions to ffili t ith bli i tit tiaffiliate with public institutions

• Private institutions deliver the education, while public i tit ti id lit t l i linstitutions provide quality control, curriculum assistance and award degrees

Middle road between full ‘public’ and full ‘private’• Middle road between full ‘public’ and full ‘private’ provision and a measure of security/quality assurance in the early years of private educationy y p

• Combines strengths of public and non-state sectors:– Private sector – innovation, efficiency, flexible delivery– Public sector – academic reputation, capacity, staff

Franchising Program Delivery at the Franchising Program Delivery at the University of Moratuwa (Sri Lanka)University of Moratuwa (Sri Lanka)

• University of Moratuwa (UM) uses public• University of Moratuwa (UM) uses public and private providers to deliver 3 year Bachelor of Information Technology (BIT) under franchise agreementunder franchise agreement

• Private providers pay UM a franchisefee in exchange for the BIT program curriculum and program QA

• Franchisees deliver UM BIT program and provide student managementprovide student management

• Managed by CODL• Students graduate with UM degree • Lower tuition fees than similar programs• Providers = ESOFT, Sri Lanka Telecom

Incentives for Private Higher Education Institutions: ThailandInstitutions: Thailand

• Individuals and organizations which establish a school or ginstitution can deduct 30% percent of profits from the operation on a tax free basist b t d ti id d f t ib ti• tax rebates and exemptions are provided for contributions from non-profit organizations

• Revolving Fund for Developing Private Higher EducationRevolving Fund for Developing Private Higher Education Institutions in place since 1999 to provide loans to private institutions for building construction and purchase of education materialseducation materials

• Revolving Fund for Staff Development in Private Higher Education Institutions in place since 1997 to promote staff p pdevelopment in private institutions

Regulating for QualityRegulating for Qualityg g Q yg g Q y

• Government accreditation schemes are an important form of QA – Indonesia, New Zealand, Pakistan, Ghana, etcQ do a, a a d, a a , G a a,

• Private sector also plays important role in regulating quality: – Private accreditation (Philippines, Seventh Day Adventists)– Corporate accreditation (Microsoft)– Foreign HEI affiliations (Pakistan, Sri Lanka)– International accreditation/International standards (businessInternational accreditation/International standards (business

schools, maritime education)– Affiliation requirements (Oman)

ll ( h k )– University college status (Ghana, Pakistan)– Reputation– Chains/networks of private HEIs (AMA Colleges, Laureate)Chains/networks of private HEIs (AMA Colleges, Laureate)– ISO 9000

PrivatePrivate Accreditation in the PhilippinesAccreditation in the PhilippinesPrivate Private Accreditation in the PhilippinesAccreditation in the Philippines

• Philippines operates private voluntary accreditation system i d ti K l tin education. Key elements: – Program-based accreditation

Four levels of accreditation– Four levels of accreditation – Managed and overseen by private accreditation

associations, which are linked to private school associations

– Government recognizes accreditation associations1 523 dit d t did t t t i 240• 1,523 programs accredited or at candidate status in 240 private institutions in 2009/10 (15 percent of institutions)

• Different accreditation levels confer benefits on institutionsDifferent accreditation levels confer benefits on institutions (operational freedom, government assistance)

Private Private Quality Assurance in OmanQuality Assurance in OmanQ yQ y

• Until mid-2000s, private colleges wishing to establish in , p g gOman had to affiliate with an existing foreign institution as a means of assuring quality

• The foreign institution assisted the Omani private college• The foreign institution assisted the Omani private collegein all technical and educational areas, including:– Curriculum developmentp– Follow-up and evaluation of all colleges– Academic performance– Awarding of diplomas or certificates

• Private colleges were affiliated to UK, Australian,American and Jordanian universitiesAmerican and Jordanian universities

• Later replaced by Oman Accreditation Council.

PPPs for InfrastructurePPPs for Infrastructure

• Increasingly common form of infrastructure procurement in the education sectoreducation sector

• Key characteristics: – Private sector finances, designs, constructs and maintains

educational infrastructure– Government retains responsibility for delivering teaching

and researchand research– Government/private sector arrangements governed by long-

term contracts (25-30 years)C if h i h i h– Contracts specify the services the private sector has to deliver and standards to be met

– Government pays private sector for servicesp y p– Payments are contingent upon the private operator

delivering services to an agreed performance standard

Swinburne University of TechnologySwinburne University of Technology

• Swinburne University of Technology (SUT) PPP involves:(SUT) PPP involves:– accommodation for 300 students– school of Information Technology– redevelopment of the northern

part of the campus• SUT located in the State of Victoria. • First infrastructure PPP by an

Australian university• Development financed by Rothschild p y

on university-owned land. • Rothschild assumed ownership and

development risk and receives a prental payment in return

National Maritime College, IrelandNational Maritime College, Ireland

• National Maritime College, County Cork:Cork: – €58 Million capital value– designed, built, financed and

operated by Focus Educationoperated by Focus Education– 25 year contract– facilities for 750 full-time

equivalent studentsequivalent students• Infrastructure includes classroom,

laboratory and workshop facilities and specialised simulationand specialised simulation equipment

• Operational from 2003Thi d d i j i l d d i• Third education project included in Irish government’s PPP pilot project

Reform of Private Higher Education: Reform of Private Higher Education: PakistanPakistanPakistanPakistan

• Broad reform program since early 2000s has included f t i t hi h d ti li f kreforms to private higher education policy framework: – Unified QA system for public and private HEIs– Scholarships for students and staff of private HEIs– Scholarships for students and staff of private HEIs– Incentives for private HEIs: free land and grants,

matching grants for digital library access and hiring foreign faculty, financial assistance for researchers

– Information to students –rankings, advertising, etcP i t t i l d d i li di i– Private sector included in policy discussions

• Private HEIs must be high quality, not-for-profit and meet infrastructure, staffing and other requirementsmeet infrastructure, staffing and other requirements

Guidelines for RegulatorsGuidelines for Regulators

Provide a Sound Policy Provide a Sound Policy Framework for the Framework for the O ti f th P i tO ti f th P i t

Promote and Facilitate Promote and Facilitate Foreign Direct Investment Foreign Direct Investment in the Education Sectorin the Education Sector

Operation of the Private Operation of the Private Education SectorEducation Sector

Introduce Clear, Objective Introduce Clear, Objective

Incentives Incentives and Support for and Support for the Private Sectorthe Private Sector

ProvideProvide Parents andParents andjj

and Streamlined Criteria and Streamlined Criteria and Processes for and Processes for Establishing and Regulating Establishing and Regulating

Provide Provide Parents and Parents and Students with Information Students with Information to Help Them Select to Help Them Select Q lit P i t Ed tiQ lit P i t Ed ti

g g gg g gPrivate Education Private Education InstitutionsInstitutions

Allow ForAllow For--Profit Schools andProfit Schools and

Quality Private EducationQuality Private Education Establish Quality Establish Quality

Assurance/ Monitoring Assurance/ Monitoring Allow ForAllow For Profit Schools and Profit Schools and

HEIs to OperateHEIs to Operate Allow Private Schools and Allow Private Schools and

HEI t S t Th i OHEI t S t Th i O

ProcessesProcesses Develop Government Develop Government

Regulatory and OversightRegulatory and OversightHEIs to Set Their Own HEIs to Set Their Own Tuition FeesTuition Fees

Regulatory and Oversight Regulatory and Oversight CapacityCapacity

C C iti i f PPPC C iti i f PPPCommon Criticisms of PPPsCommon Criticisms of PPPs

PPP th i ti ti• PPPs are the same as privatization• By entering into a PPP, the public sector

loses control over service provision• PPPs apply only to infrastructure projectspp y y p j• The main reason for government

entering into PPPs is to avoid debtentering into PPPs is to avoid debt• The quality of service will fall under PPPs

C C iti i f PPP (C t’d)C C iti i f PPP (C t’d)Common Criticisms of PPPs (Cont’d)Common Criticisms of PPPs (Cont’d)

• Public sector employees will lose under PPPs

• The cost of service will increase to pay for the private partner’s profitfor the private partner s profit

• There are only two partners in a PPP

For More InformationFor More Information

nlarocque@adb.org