Public varsities grapple with Sh38bn in employee arrears

Maseno University first-year students take a selfie with Vice Chancellor Julius Nyabundi during the freshers’ orientation day on September 22, 2022. PHOTO | TONNY OMONDI | NMG

The cash flow crisis in public universities has deepened with unpaid salaries, wages, retirement benefits and medical cover climbing to Sh38.46 billion in the last financial year ending June 2022.

The Sh6.54 billion growth in arrears to current and former employees as well as entitled social benefits presents a major financial headache to administrators of institutions of higher learning in the wake of record candidates attaining minimum university entry grades.

The 42 public universities and colleges have for years been struggling to pay bills, forcing some of them to temporarily shut operations because of industrial actions called largely by representatives of teaching staff.

The unpaid compensation to the university employees swelled to Sh27.87 billion last June from Sh22.08 billion a year earlier and Sh18.37 billion in June 2020, data from State Department for Higher Education and Research shows.

Accrued social benefits not remitted to statutory bodies such as National Social Security Fund and National Hospital Insurance Fund, in the meantime, increased to Sh10.59 billion last fiscal year from Sh9.83 billion (June 2021) and Sh7.94 billion (June 2020).

The biting cash crunch in public universities has been linked to reducing per capita budgetary allocation despite the growing enrollment of government-sponsored students.

The rising enrollment follows a policy shift by the previous regime of President Uhuru Kenyatta to partly sponsor all students who meet the minimum entry grade C-plus in Kenya Certificate of Secondary Education (KCSE) examinations.

For instance, the universities needed an estimated Sh32.6 billion to support the 2022 freshers cohort of 145,145, but allocation fell short at Sh12.5 billion or just above a third of funding needs.

The university enrollment is expected to grow with candidates who met minimum university entry in last year’s KCSE, who will form the 2023 fresher cohort, increasing to 173,345 — a growth of 18.9 percent year-on-year.

State funding to universities is based on the differentiated unit cost model under which institutions get allocations based on the number of undergraduate students registered on the regular programme and the kinds of courses they take.

Under the model, the government is expected to cater to 80 percent of the unit cost while the remaining 20 percent is borne by students and institutions.

At 80 percent sponsorship, the government should, for example, pay Sh720,000 for a clinical medicine degree compared to Sh240,000 for the social sciences.

But the funding ratio has been dropping steadily in recent years, punching a 45 percent funding gap.

Overall, total pending bills, including other day-to-day operation costs, in public universities hit Sh54.66 billion last fiscal year ended June 2022 from Sh48.62 billion the year before and Sh39.79 billion in June 2020.

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