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Danish University funding model

Danish University funding model. Aarhus University – an Example. Au. AARHUS UNIVERSITY. What is full costing?. Are expenditures at universities that run budget surpluses fully financed? Or is economic autonomy being eroded?. University ReformS in Denmark.

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Danish University funding model

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  1. Danish University funding model Aarhus University – an Example Au AARHUS UNIVERSITY

  2. What is full costing? • Are expenditures at universities that run budget surpluses fully financed? • Or is economic autonomy being eroded?

  3. University ReformS in Denmark • Globalization Council under the leadership of the prime minister recommended reforms of: • University Governance – higher thrust by introducing external boards and appointed rectors (Accountability) • Institutional Structure – fewer institutions by mergers and a new university landscape (Efficiency) • University Financing – increased investments in higher education and research for competitiveness (Effectiveness)

  4. Financing reform • Committed to the Lisbon and Barcelona targets and raise public investments in research to 1 percent of GDP in 2010 • University core-funding is based on performance indicators (45% graduation, 10% Ph.D.program efficiency, “%% bibliometry, 20% external funding) • Study programs are taximeter funded (automatic and follows accumulated completed ECTS) • 50-60% of research funding through competitive mechanisms e.g. research councils (includes a flat overhead of 44%) Mill. €(2008 prices)

  5. COMPETITIVE FUNDING at DANISH UNIVERSITIES

  6. AARHUS UNIVERSITY – INCOME STRUCTURE Budget 2011 (800 million EUR, about 70% state funded)

  7. FINANCING DEGREE PROGRAMMES A 2009 report by McKinsey showed that: Degree programme expenditures exceeds taximeter income: • Substantial variation on number of student-teacher hours between and within taximeter groups – humanities and social science tend to have fewer lessons, tutorials and lab. hours

  8. Board Board Administration Rector’s Office Research Foundation Administration Research Foundation’s Real Estate Ltd. Auriga Industries Ltd. Østjysk Innovation Ltd., INCUBA Ltd., etc. INCUBA Science Park Ltd. AARHUS UNIVERSITY and AURF Aarhus University Aarhus University: • Turnover: EUR 800 million • Liquidity: EUR 180 million • Grant funds: EUR 500 million • Equity: EUR 100 million Aarhus University Research Foundation: • Balance EUR1100 million • Equity: EUR 400 million • Grant budget 2010: EUR 10 million Aarhus University Research Foundation Aarhus Faculty of Arts Aarhus Faculty of Science and Technology Aarhus School of Business and Social Sciences Aarhus Faculty of Health Sciences

  9. UNIVERSITIES IN TRANSITION Talent Development Research Education Knowledge Exchange The HumboltianUniversity Triple-helix University Research Education Education Research Knowledge Exchange Quadruple helix - the Modern University

  10. AU ORGANISATION

  11. Talent Development Research Education Knowledge Exchange AARHUS UNIVERSITY – Expenditures AU Budget 2011 (EUR 800 million) The Modern University Ph.d.s Postdocs Students Profes sors Research projects Study program-mes Research Program-mes LifeLong Learning Contracts

  12. Infrastructure Prerequisites – from a governments point of view: • Acquisition of buildings must begovernmentcost neutral • Large equipmentacquiredthroughcompetitivemechanisms • Effectivefinancial management (by the university) • Competentbuilding administration Possibilities – from a university point of view: • Greaterautonomy • Faster, simpler administrative procedures • Potentiallygreatersolvency (dependingon terms of acquisition) • Borrowingcapability (dependingonrealization of solvency potential) • Strategic, longtermuniversity decisions require a 15% equity (PwC)

  13. Is a full costing scheme implemented yet? • McKinsey (2009): Degree programme expenditures exceeds taximeter income and are not full cost financed • Result at AU internal cross-subsidy of education from research budget at about 3-6%

  14. What is next for AU? • Change of academic culture • Autonomy and accountability (once again) • Reorganisation and reduction of internal structures. Fewer and larger academic entities (faculties and departments) • Financial and strategic management system, (decentralised budgets, income generations drives activities, all cost will be “project” based, time allocation and/or time registering) • 4 year rolling budgets (semi independent of budget law), and strategic economic room 3.5 per year

  15. Au Lauritz B. Holm-Nielsen Rector, Aarhus University rector@au.dk

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