A roadmap to sustainable public university funding

Kenya’s higher education sector has experienced rapid growth since 2012 to remain in tandem with the increase in student numbers following the rollout of the free primary education programme.

More universities have been opened and a higher number of government-sponsored students are being catered for, a clear indication the government recognises university education’s economic and social value to its citizenry.

Households have also shown their willingness to invest in higher education by enrolling students in private universities.

Provision, production and financing of higher education at the moment is done entirely by the State, by market forces, or by a combination of the two.

The government has enabled access to higher education by highly subsidising the cost of undergraduate programmes in public universities.

This has been implemented through the sponsorship of students who have scored C+ and above in undergraduate programmes and the 100 percent transition policy that has afforded needy students greater access to education.

While accessibility continues to increase, the resources remain quite limited. Additionally, public universities are operating high budgets, exceeding the funding from the government, donors and partners.

As a result, public universities have accumulated huge amounts of debt, forcing them to default on their statutory deductions and payments to suppliers. If quick and immediate action is not taken the state of university education will continue to deteriorate.

Debt by public universities has been accumulating since 2013, even before the introduction of the differentiated unit cost (DUC). It hit over Sh60 billion at the end of the 2020/2021 financial year.

Factors blamed for the spike in university debt and need to be tackled include: High operating budgets; increasing student numbers without corresponding increment in funding and reduced internally generated income.

Universities have increased their lecture halls and reduced the amount of individual interaction between lecturers and students as well as provided more learning equipment for students.

To ensure sustainable financing of universities the Universities Fund (UF) was established by Section 53 of the Universities Act, 2012.

UF’s mandate is to develop the detailed institutional funding criteria, apportion and disburse government funding. It also monitors utilisation and impact of the funds on the universities.

The Fund also has the mandate of resource mobilisation, developing public-private partnership frameworks for university education, and negotiating tax waivers to attract corporate’s support to university education.

In the wake of the Curriculum-Based Curriculum, which will increase the number of students in universities, innovative measures are needed.

One of the measures is the introduction of targeted free tuition to shift the burden of higher education funding from needy and bright students.

This proposal will not adversely affect access to university education as students from less advantaged financial backgrounds will not be denied access to universities.

Expenditure on staff salaries accounts for over 80 percent of overall expenditure by the universities.

The high expenditure on salaries has hindered the universities from meeting their statutory obligations. Audited reports for the financial year 2019/20 indicate that public universities were in tax arrears of Sh16, 094,983,296.

Additionally, the ratio of teaching to non-teaching staff is high and above the international best practices threshold. The ratio of teaching to staff on the contract is even higher.

Universities should consider staff rationalisation and restructure management to ensure coherence in the performance of various functions.

Every unit has a cost element attached to it that includes personnel and operational costs, which need to be rationalised.

From a monitoring and evaluation exercise conducted by the UF, different universities have unique needs.

Older universities are well established with a huge staff complement, infrastructure that requires refurbishment and outdated that cannot effectively train students while their younger counterparts lack the adequate infrastructure or academic staff to run their programmes.

Different universities cannot be treated the same and reforms should address such differences.

UF has developed a framework that introduces performance-based funding for universities. This framework rewards universities for efficiency in teaching, research and community service and encourages competition among universities which will stimulate the evolution of centers of excellence.

It makes funding allocation more transparent and more competitive through redistributive funding formulae mainly based on performance.

The Fund will also help unlock the entrepreneurial potential of universities by developing various resource mobilisation strategies that include engaging development partners, donors, alumni and creating endowment funds.

Working with the private sector to develop the infrastructure required at the universities will be a key milestone especially if it is anchored through the Universities Fund which will guarantee the implementation of projects and payments through viable PPP’s.

The strategies include involving universities in government projects. At least 30 percent of international consultancies should be done in collaboration with local universities to promote local content and participation.

Open and distance learning will help universities meet the growing demand for university education while cutting down costs on infrastructure and staff costs and increasing admission of foreign students to help universities.

Commercialisation of research will be supported through the development of innovation centres.

Monari is the CEO of the Universities Fund