Consejo de Administración

Privatisation and demand-driven RAM achieve the same results because they enable the individual to make the decisions, choose the programmes and signal to the HEIs what should be offered. The arguments proffered against privatisation and demand-driven RAM were discussed in chapter 2. The disadvantages suggest that Jamaica should continue supply-side resource allocation to HE. Block grant funding should also be continued because it enhances institutional flexibility. However, these mechanisms should be supported by changes in the production/transparency aspect of the RAM (see RAM debate pendulums, Figure 5.2)

First, the country should adopt formulaic funding and abandon the ad hoc-negotiated-input funding arrangements. This would convey the notion of objectivity in the allocation and provide mechanisms that would better support quality, efficiency and accountability. Fixed formulae funding is not considered appropriate because it does not support quality, efficiency and accountability. The question then is, should the formula be input-driven, output-driven or should it have elements of both input and output? It was argued in chapter 2 that output-driven formulae provided the best basis to judge accountability, efficiency and quality.

Output RAM, however, may result in cash flow difficulties for HEIs and may pose an ethical dilemma. The cash flow problem could arise because payments for outputs are after processing is complete and expenses are incurred. The institutions would require advance funding to undertake its teaching and research and would be required to claim afterwards. If advance funding is not provided then the HEI may be forced out of

operation. If it has to borrow then the cost would increase the cost of education. The ethical dilemma may be caused by the temptation of HEIs to pass students simply for the sake of funding and not be concerned about the quality of the education. These issues have caused some scholars to advocate the use of enrolment formula funding. This type of funding, however, has the problem of inefficiency as countries practising this RAM have identified that under this system throughput and completion rates are poor. The Czech Republic adjusted its enrolment formula to include an output element for this reason.

The Czech Republic and England are two of the countries that have attempted to address the above concerns from different perspectives. The Czech solution is to have a formula with both input and output factors (see equation 6.6).

AHEI = (base * Ci * Nrstu) + (Ng * baseg) (6.6)

Where base = The amount determined per student/graduate per year Ci = Co-efficient of the programme

Nrstu = Number of students in an accredited programme

Ng = Number of graduates

The programmes are grouped into seven clusters according to cost. The study in the humanities for instance has a co-efficient of 1, arts a co-efficient of 5.9 and an English language course, 3. The first element of the formula is input-related as it is based on enrolment while the second element is output-related as it is based on the graduation rate. The result is that partial funding is provided for the student who is enrolled but the balance is not paid until he completes.

A simplified mathematical representation of the English system is the first part of equation 6.6 which forms the basis of the initial remittance to the HEI. To address the issue of completion rate another element is added to the formula to reduce the amount of subsequent grants if “the institutions are unable to recruit or retain the numbers of students for which the previous year’s grant was allocated” (HEFCE 2003 p.13). In the English case therefore the claw-back mechanism results in non-funding of incomplete students. By providing the funds by enrolment the English system, therefore, addresses the cash-flow needs of the institution and the claw-back mechanism transforms the arrangement into an output system. The ethical dilemma is addressed not by the funding formula but by the

QAM which tests the evaluation systems of the HEI. If Jamaica is to adopt the English system then it has to ensure that the RAM is consistent with the QAM (Orr 2005).

Second, the state should de-link subsidies from the apex classification and students’ portion. The ad hoc-input-negotiated RAM is linked to the apex classification system where institutions are pre-classified and funds negotiated according to their position in the structure. This may have been suitable to a system with one HE provider and the other TLIs offering programmes below the HE level. It must, however, be recognised that there are now multiple providers which makes it difficult to justify different financing levels for institutions with the same mandate and function. Linking subsidies to fees suggests that whatever the charge, the balance must be provided by the state. In an atmosphere of resource constraints, however, this is not always possible, thereby forcing the HEI into deficit financing, as was seen from the Jamaican experience (Chapters 4 and 5). It is therefore proposed that funding be allocated to HEIs according to the following factors:

o _{Support level – The number of students the state is willing to support according to} the manpower projections. The planning authority may, for instance, project that in the next ten years 20,000 doctors, 10,000 engineers, 60,000 teachers in specific subject areas and 20,000 business professionals will be needed in the country. Based on age and other factors of those currently in the system, the migration patterns of the country, attrition and other characteristic of the professions, calculations can be done to determine the amount of persons to be trained for the various professions to meet the projected demand for the ten year horizon. The government therefore can determine the support level through this process. State or any kind of funding should not be open-ended but be linked to plans. The purpose of the state in HE as stated before should be to ensure equity of access and protection of the social programmes and this is a mechanism to perform these functions. Support level because of its importance in planning national needs should be a major factor in determining resources to HEI.

o _{Price weighting – The relative price of programmes with each other should be} another factor because all programmes do not cost the same and are charged different prices. To guard against cross subsidisation and to encourage equity then relative pricing should be built in the formula.

o _{Priority factors – The level of importance of the particular profession to the society} is the third factor. This is proposed as a means to protect the social programmes

and to safeguard against the disappearing market. If teachers or social workers are important to the society yet such professionals earn relatively low salaries then high priority coefficients could be placed on those programmes thereby ensuring that more resources are directed to support those programmes.

o _{Resource level – The total amount of funding available for allocation should also} be a factor since resources are limited.

Table 6.1 illustrates how such a system would work in relation to allocation for teaching.

Table 6.1: Illustration of allocating funds for teaching to HEIs Clusters Support Level (D) Price Weights (C) Priority Weighting (p) Relative Numbers (D*C*p) Allocated Amounts Amount per Student A 750 4.5 1 3,375 375,000,000 500,000 B 2,000 2 1 4,000 444,444,444 222,222 C 5,000 1.5 0.75 5,625 625,000,000 125,000 D 10,000 1 0.5 5,000 555,555,556 55,556 17,750 18,000 2,000,000,000

In Table 6.1 it is assumed that the state will fund 17,750 students in HEIs. The support is distributed according to four programme clusters. The prices of the programmes relative to each other are in column 3 showing a relation to cluster D. Column 4 shows the priority weightings where the programmes in clusters A and B are deemed to be most important, hence, they are given a priority weighting of 1 each. The values placed on the other clusters signify their relative priority. It is also assumed that only J$2B are available to the HE sector. The amounts allocated to each cluster (column 6) are calculated as per equation 6.6. (D * C * p) Fund Pool (6.7) Ap = � �� �(D * C * p) Ap is the allocation per programme cluster.

Each institution would be allocated funds based on the number of students it has in each cluster at the rates specified in the table. The total amount of funds available for HE would be determined by the government based of the resources it has at its disposal and the other functions that it must provide to the country. The contribution per student would be calculated as per equation 6.8 and shown in Column 7 of Table 6.1.