Экономические науки/3.Финансовые отношения

PhD (Economics), Ass. Prof. Konstantiuk N.I.

PhD (Pedagogicsics), Ass. Prof. Babiak J.V.

Ternopil Ivan Pul’uj National Technical University, Ukraine

Analysis of Models for University Funding

The problem of higher education funding has been of interest for scientists and experts for a long time, both Ukrainian and foreign higher educational institutions being under discussion. Universities faced such problems as sufficient budget limits of financial resources, lack of their own budget, demographic crises, population aging and the decrease of the level of enrollment. These problems make the competition between the higher educational institutions for applicants and consequently for their funding more sufficient to provide their successful activity.

But there are winners in this struggle between universities, which use different funding models in their activity. The objective of our paper is to study and analyse different models of university funding and their possible application in the activity of Ukraine universities.

The carried out analysis makes possible to conclude:

1. University funding in the EU countries is mainly by government, its portion being from 50% till 90%, the rest – are private funds.

2. Universities of the USA are funded by public funds – 40%, and private funds – 60%.

3. Ukraine universities are funded by government – 50% and by private funds – 50%.

Taking into account global reduction of financial resources the most popular model of funding is performance-based funding.

Performance-based funding has some subtypes, the most popular being performance contract and formula funding. Competitive funding is also quite often associated with performance-based funding.

A majority of systems consider their funding allocation mechanisms at least partially performance-based for teaching (via graduate-related criteria), and partially or mainly performance-based for research, where indicators related to publications and external research funding are normally taken into account.

Performance contracts, whereby certain goals are agreed between the funder and universities are also associated with performance-based funding, although they do not always have a direct impact on funding.

Higher education funding became increasingly based on mixed sources with students being required to pay a greater share of the costs of their education. But mechanisms to make cost sharing increasingly equitable have been refined. At the same time, the determination of actual costs per institution, per course programme, and even per course has become increasingly accurate, and funding is increasingly taking into account the verdict of performance indicators of various kinds. The funding of research is being increasingly differentiated from funding for teaching/learning. Across the board, higher education institutions have had to do more for less.

Many governments use competitive elements in the process of allocating public funds to institutions of higher education. Examples include the implementation of performance measures through “formula funding”, or resource allocation on the basis of evaluated project proposals. Corresponding forms of performance-based resource allocation can be found within most higher education institutions.

Very often in university funding Needs-Based model is used, which is based on course type, level of enrollment, missions and various other components. This funding model is the characteristic of the Ukraine higher educational institutions, which are funded from the budget on the basis of preliminary adopted costs. Basing on this model the funds are defined per institution

In the financial activity of European universities there is a great variety of financial models, but they still differ depending on the type of activity, teaching or research for example. The most popular funding models are as follows:

Grant funding: financial grants meant to cover several categories of expenditure such as teaching, ongoing operational costs and/or research. Universities are responsible for dividing and distributing such funding internally according to their needs (the flexibility may be curtailed by minor restrictions).

Co-funding: funding for which the main funder requires the beneficiary institution to raise a proportional amount of the full cost of the activity or project being funded, from its own budget or another public or private source.

Competitive funding: funds allocated to institutions through competitions following applications (proposals) submitted to a competitive selection process. These funds are usually attached to a project or are targeted towards the achievement of specific objectives or priorities defined by the funder.

Philanthropic funding: funding obtained from foundations, corporate donors, or individuals acting independently from government and for the public benefit by supporting the university activities through grants or non-financial means (donation of land, buildings…) or by operating their own programmes.

Project-based funding: universities apply for funds and the application is estimated on the basis of meeting the set of criteria and/or on the basis of competition between other institutions.

Targeted funding: funding earmarked for the achievement of specific goals set by the public authorities. It may be allocated through competition or directly attributed to the university.

Basing on the carried out investigations we can make a conclusion that Ukraine institutions are worth using more flexible models for university funding. This flexibility is treated as the search for optimal funding model for the different type of activity or service. Besides, it is worth being targeted funded to meet specific goals and to obtain certain results, as it will result in raising the responsibility of all members of educational process and will make possible to spend effectively limited financial resources.

References:

1. Markina I. Models of funding higher education development in foreign countries / I. Markina, O. Dragan // Digest of the Kyiv National University named after Taras Shevchenko: Edition “Economics”. 107-108/2009. – p.17-19.

2. Higher Education: Ways of development and providing quality // State higher educational institution “Kyiv National Economic University named after Vadym Getman” – 2010. – 159p.

3. Designing strategies for efficient funding of higher education in Europe by Thomas Estermann, Enora Bennetot Pruvot and Anna-Lena Claeys-Kulik: EUA. – 2013. – 20p.