OPTIONS FOR HIGHER EDUCATION REFORM by 95ON2H

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									Major Dimensions of
Financing Reforms




 Financing Reforms for Tertiary
   Education in the Knowledge
            Economy
       Seoul, 6-8 April 2005
    outline of the
    presentation...




 key financing questions
 new financing challenges
 reform and innovation
  trends
    outline of the
    presentation...




 key financing questions
     financing questions
   resource mobilization
     how    much should be spent on tertiary
      education? (macro-level)

     income    generation at institutional level

     who    should pay, and what share?

     when    and how?

     is   it affordable? (student aid)

   resource utilization
     how    should public resources be
      allocated?

     how    efficient and effective are
      institutions?
    outline of the
    presentation...




 key financing questions
 new financing challenges
financing challenges for
  developing countries


   long-standing challenges



   emerging challenges
long-standing challenges


   financially sustainable
    expansion
                   enrollment rates
                    by income level
                           (1980-2001)


    70




    60


                                                 High
                                                Income
    50




    40                                       Upper Middle
                                               Income
%
    30
                                                World Total

    20


                                         Lower Middle Income
    10
                                                 Low Income


     0
     1980   1985    1990       1997   1999        2000        2001
                         enrollment rates by region
                                        (1970-2001)



             60
                                                                    Eastern
                                                               Europe/Central Asia
             50
                                                                                      48.6


             40
Enrollment




                                                                     Latin
             30
                                                                America/Caribbean
                                                                                      25.2
             20                                                  22.4
                                                             Middle East        East Asia/Oceania
                                                                                      14.6
             10                                                                       10.7
                                                                            Southern Asia
                                                                   3.6
                                                                         Sub-Saharan Africa
              0
                  1970    1980   1985   1990   1995   1997     1999      2000    2001
                                               Year
                                         Expenditure on tertiary education institutions by enrollment, 2001


                             100


                                                                                      FIN
                                                                                                                          KOR
                              80
    Gross enrollment rate1




                                                                                    SWE                                  USA
                                                                      NOR
                                                              GRC
                                                            GBR          AUS
                                                                                            DNK
                              60                                 ESP BEL
                                                    ISL FRA        NLD                                             CAN
                                                      ITA PRT        IRL
                                                          JPN
                                                         DEU AUT
                                                               HUN
                              40
                                                    CZE
                                                    SVK
                                                            TUR
                              20                          MEX



                               0
                                   0.5               1.0                    1.5               2.0            2.5                3.0
                                                                  Total expenditure as a percentage of GDP
1
 Sum of all tertiary level students enrolled at the start of the academic year, expressed as a percentage of the mid-year
population in the 5 year age group after the official secondary school leaving age.
Source: UNESCO Institute for Statistiscs; OECD
            proportion of private enrollment

      Philippines

           Kor ea

           Japan

       Indonesia

       Colombia

            India

           Br azil

     Bangladesh

      Nicar agua

       Par aguay

          Jor dan

            Per u

         Ecuador

            Chile

           Congo

           Nepal

             USA

      Guat emala

        Thailand

      El Salvador

          Mexico

      Venezuela

       Ar gent ina

       Hondur as

         Rwanda

         Malasia

          Bolivia

Papua New Guinea

           Kenya

       Zimbabwe

         Panama


                     0   10   20   30   40   50   60   70   80   90
long-standing challenges


   financially sustainable
    expansion

   equity in access
         elusive equity
Mexico (2005)
     only1% of 15-24 year old from
      poorest quintile attend tertiary
      education
     32% from richest quintile

   USA: probability to access Ivy
    League university is
     8.3% for lowest quintile
     50% for richest quintile

   France: probability to access
    Grande Ecole is
     6% for lowest quintile
     15% for middle quintile
               tertiary enrollment per
                       quintile
                     45.0
Percenatage of 18-




                     40.0
   24 Year Olds




                     35.0
     Enrolled




                     30.0

                     25.0

                     20.0

                     15.0

                     10.0

                      5.0

                      0.0

                            Spain     Peru        Mexico    Brazil


                       Q1 - Poorest   Q2     Q3        Q4   Q5 - Richest
inequalities in access
   and educational
  resources in USA

     30000
     25000
     20000       20568
 US$ 15000                               Institut.
     10000                               Expend.
                 9423          8274
      5000
                                336      Private
         0
             High Income   Low Income    Cost
              Student in    Student in
             Research U    Community
                             College
                Type of Students &
                   Institutions
long-standing challenges


   financially sustainable
    expansion

   equity in access

   internal efficiency
        internal efficiency

   proportion of enrolled students who never
    finish their studies:
       75% in Argentina

       60% in Morocco

       30% in Australia



   proportion of students who graduate on
    time:
       13% in Italy
long-standing challenges


   financially sustainable
    expansion

   equity in access

   internal efficiency

   quality and relevance
       new challenges


   shrinking student population



   education and training needs



   cost of ICT



   increased competition
          client needs

   knowledge-driven economic growth
    (and aging population) requires
    higher labor productivity, which
    means in turn
     increased   demand for skilled workers

     changing    education and training needs
      (methodological skills and updating of
      knowledge)

     more   diverse clients (lifelong learning
      perspective)
                                    Changes in Job Task-Skill
                                           Demands
                                        (USA, 1960-1998
                    16


                    14
                                                                                          Expert Thinking
                    12


                    10


                     8
Percentile Change




                     6
                                                                                                  Complex
                                                                                                  Communication
                     4


                     2

                                                                                       Routine Manual
                     0

                          1969            1974         1979          1984          1989           1994        1998
                     -2

                                                                                       Routine Cognitive
                     -4

                                                                 Non-Routine Manual
                     -6


                     -8


                    -10
                                 Source: Autor, Levy, and Murnane (2003) “The Skill Content of Recent Technological
                                 Change: An Empirical Exploration,” Quarterly Journal of Economics.
opportunity to tap
 potential of ICT
    increased competition

   public / private

   new providers
       long distance competition
       franchise universities
       corporate universities
       media companies, libraries, museums &
        secondary schools
       education brokers




   alliances and partnerships
    outline of the
    presentation...




 key financing questions
 new financing challenges
 reform and innovation
  trends
funding sources
   (macro)

      from

  public funding

        to

   cost sharing
  funding sources
(institutional level)

          from

 dependence on public
        funding

           to

   diversified funding
allocation mechanisms
    (public funding)
            from
       direct funding
              to
      indirect funding

              &
            from
       untied funding
              to
 performance-based funding
student aid options


           from

mortgage loans for students

            to

income-contingent loans for
         graduates
funding sources
   (macro)

      from

  public funding

        to

   cost sharing
                                                                   Expenditure on tertiary education institutions, 2001


                                            3.0
 Total expenditure as a percentage of GDP




                                                                                                                               USA         KOR

                                            2.5                                                      CAN



                                            2.0
                                                       DNK
                                                        FIN
                                                                     SWE
                                            1.5                                                             AUS
                                                                         BEL
                                                         NOR           IRL   NLD
                                                            AUT                 ESP
                                                      GRC PRT                 HUN
                                                                       FRA          GBR                              JPN
                                            1.0          TUR DEU                    MEX
                                                             SVK        CZE  ITA
                                                        ISL


                                            0.5
                                                  0           10           20        30         40         50         60         70   80     90
                                                                           All private sources as a percentage of total expenditure
Source: OECD
    who can pay?
 theState
   central / federal
    government
   provincial / state gvt
   municipal gvt


 students   / families

 firms


 society   (taxes)
     rationale for
     cost-sharing

 private   benefits

 needfor additional
 revenues

 equity   concerns

 efficiency   promotion
      cost-sharing


 living expenditures
     dormitories
     food
     transportation

 tuition   fees
              fees
 for   everybody / dual track
 undergraduate    / postgraduate
 national policy / individual
 institutions
 specialcategory students
 (repeaters, mature, part-time,
 continuing ed, foreign, out
 of state)
 one   fee or program-linked?
 ceiling   / freedom to set
 optimal fees policy

 universal


 reasonable   level (10 to
 30%)

 associated   with student aid

 adjusted   to cost of living
 index
  political economy



 consultation   and consensus
 building

 decentralization   /
 autonomy
  funding sources
(institutional level)

          from

 dependence on public
        funding

           to

   diversified funding
allocation mechanisms
    (public funding)
            from
       direct funding
              to
      indirect funding

              &
            from
       untied funding
              to
 performance-based funding
  direct funding to
     institutions


 set   guidelines

 negotiated   budgets
let us make a deal...
    direct funding
 formula funding
   input-based

   output-based



 competitive funding
 benchmarking funding
 performance funding
 matching fund
 charge back
   indirect funding

 vouchers

 scholarships

 tax credits

 matching grants

 student loans

 human capital contracts
                                                           Service
                                                            and
    Allocation                                  Living    Cultural
                         Teaching   Research
    Mechanism                                  Expenses   Activities Investment


Direct Funding

   Negotiated Budget         X          X            X       X           X


   Formula Funding

    Input-based              X          X            X


    Performance-based        X          X



   Competitive Funding       X          X                                X


   Benchmarking Funding      X


   Performance Funding       X          X                    X           X


   Matching Fund                        X                                X


   Charge Back               X



Indirect Funding

   Vouchers                  X


   Scholarships              X                       X


   Tax Credits               X                       X


   Matching Grants           X                       X


   Student Loans             X                       X


  Human Capital Contracts     X                  X
    Allocation              Public    Private
    Mechanism

Direct Funding

   Negotiated Budget           X          X


   Formula Funding

    Input-based                X


    Performance-based          X



   Competitive Funding         X          X


                                  X
   Benchmarking Funding

   Performance Funding         X


   Matching Fund               X


   Charge Back                X


Indirect Funding
                              X
                                          X
   Vouchers

                              X           x
   Scholarships

   Tax Credits                    X
                                              x


   Matching Grants            x


   Student Loans
                              X           X

  Human Capital Contracts     x               x
student aid options


           from

mortgage loans for students

            to

income-contingent loans for
         graduates
conclusion
themes of the forum


           mechanisms at
 allocation
 the national level
 income  generation at the
 institutional level
 student   aid mechanisms
 measuring    performance
 buffer   bodies

								
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