A new funding formula for public universities, which will see colleges with more graduates who get jobs get more money is expected to be rolled out from July next year.
University Funding Board (UFB) chief executive Geoffrey Monari told the Business Daily that the Treasury is currently reviewing the formula for approval before tabling it in Parliament for adoption.
The model that also factors in the number of female students enrolled for science, technology, engineering and mathematics courses will replace the Differentiated Unit Cost (DUC) formula that is based on students’ enrolment numbers and the courses they take.
“The process is ongoing. We intend to use the new formula in the financial year 2023/24,” said Mr Monari on Tuesday.
He said an increase in budgetary allocations is key to delivering the success of the new formula.
The Treasury has over the years cut cash transfers to public universities for student capitation as the country grapples with fast-maturing debts and the need to squeeze money for development projects.
The new formula will see universities with the highest number of graduates who secure jobs within a year get more funding, an incentive aimed at stemming the high incidence of unemployment among the youth.
Kenya is currently grappling with a large number of jobless graduates in an economy that is struggling to create new jobs.
The new funding formula is key to easing the financing crunch bedevilling public universities that are currently trapped in debts. The DUC formula has partly been blamed for reduced capitation per student in large universities in the last four years, pushing the institutions into financial woes.
The gap in student capitation for public universities stood at Sh68.35 billion as at end of June last year while the gap for private varsities was Sh24.38 billion.
Public universities have, in turn, defaulted on statutory deductions like pension, pay-as-you-earn, National Hospital Insurance Fund and National Social Security Fund, highlighting the extent of the woes.
Cash flow challenges for universities have been made worse by the sharp decline in students enrolling in the self-sponsored degree programmes that in the past generated billions of shillings for the institutions.
The UFB said the DUC formula is silent on the funding needs of students from disadvantaged families and communities — learners who need more cash to help them realise the dream of that university degree.
The agency — which guides the allocation of State funds to public universities — said the new formula is borrowed from global best practices.