Danish University funding model

TATIONpRÆSEN

February 2011AARHUSUNIVERSITY

DANISH UNIVERSITY FUNDING MODEL AARHUS UNIVERSITY – AN EXAMPLE

AARHUS UNIVERSITYAu

February, 2011AARHUSUNIVERSITY Rector Lauritz B. Holm-Nielsen

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WHAT IS FULL COSTING?

Are expenditures at universities that run budget surpluses fully financed?

Or is economic autonomy being eroded?


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UNIVERSITY REFORMS IN DENMARKGlobalization Council under the leadership of the prime minister recommended reforms of:

University Governance – higher thrust by introducing external boards and appointed rectors (Accountability)

Institutional Structure – fewer institutions by mergers and a new university landscape (Efficiency)

University Financing – increased investments in higher education and research for competitiveness (Effectiveness)


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FINANCING REFORM Committed to the Lisbon and Barcelona targets and raise public investments in research to 1 percent of GDP in 2010

University core-funding is based on performance indicators (45% graduation, 10% Ph.D.program efficiency, “%% bibliometry, 20% external funding)

Study programs are taximeter funded (automatic and follows accumulated completed ECTS)

50-60% of research funding through competitive mechanisms e.g. research councils (includes a flat overhead of 44%)

1.500

1.700

1.900

2.100

2.300

2.500

2.700

2004 2005 2006 2007 2008 2009 2010 2011

Gross Public R&D investment

Mill. €(2008 prices)


COMPETITIVE FUNDING at DANISH UNIVERSITIES

0

20.000

40.000

60.000

80.000

100.000

120.000

140.000

160.000

180.000

200.000

A. Danish public sources B. Danish private sourcesC. EU D. Other foreign sources


Degree pro-

grammes 25%

Core re-search 34%

Competitive research funding.

28%

Govern-ment

contracts 4%

Other. 9%

AARHUS UNIVERSITY – INCOME STRUCTUREBudget 2011 (800 million EUR, about 70% state funded)


FINANCING DEGREE PROGRAMMESA 2009 report by McKinsey showed that:

Degree programme expenditures exceeds taximeter income:

Substantial variation on number of student-teacher hours between and within taximeter groups – humanities and social science tend to have fewer lessons, tutorials and lab. hours

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Taximeter (DKK)

Average costs (DKK)

Difference (%)

Bachelor Kandidat (Master)Tax.group 1 40.400 52.000 29% 34.-90.000 37.-82.000

Tax.group 2 65.600 74.000 13% 45.-107.000 46.-145.000Tax.group 2 96.000 162.000 69% 121.-190.000 142.-222.000

Variation (DKK)


AARHUS UNIVERSITY and AURFAarhus University:

› Turnover: EUR 800 million› Liquidity: EUR 180 million› Grant funds: EUR 500 million› Equity: EUR 100 million

Aarhus University Research Foundation:

› Balance EUR1100 million› Equity: EUR 400 million› Grant budget 2010: EUR 10 million

Board

Rector’s Office

Administration

Aarhus University Research

Foundation

Aarhus University

Board

Research Foundation

Administration

Research Foundation’sReal Estate Ltd.

Auriga Industries Ltd.

Østjysk Innovation Ltd., INCUBA Ltd., etc.

INCUBA Science Park Ltd.

Aarhus Faculty of Arts

Aarhus School of Business and Social Sciences

Aarhus Faculty of Science and Technology

Aarhus Faculty of Health Sciences


UNIVERSITIES IN TRANSITIONThe Humboltian University Triple-helix University

Quadruple helix - the Modern

University

EducationResearch EducationResearch

Knowledge Exchange

EducationResearch

Talent Development

Knowledge Exchange


AU ORGANISATION


AARHUS UNIVERSITY – EXPENDITURESAU Budget 2011 (EUR 800

million) Talent Development

24%

Education31%

Knowledge Exchange12%

Research32%

EducationResearch

Talent Development

Knowledge Exchange

The Modern University

Research Program-

mes

Ph.d.s

Study program-

mes

Postdocs

Students

LifeLong

Learning

Research

projects

Contracts

Professors


InfrastructurePrerequisites – from a governments point of view:• Acquisition of buildings must be government cost neutral• Large equipment acquired through competitive mechanisms• Effective financial management (by the university)• Competent building administration Possibilities – from a university point of view:• Greater autonomy• Faster, simpler administrative procedures• Potentially greater solvency (depending on terms of acquisition)• Borrowing capability (depending on realization of solvency potential)• Strategic, longterm university decisions require a 15% equity (PwC)

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February, 2011AARHUSUNIVERSITY Rector Lauritz B. Holm-NielsenIs a full costing scheme implemented

yet?•McKinsey (2009): Degree programme expenditures exceeds taximeter income and are not full cost financed

• Result at AU internal cross-subsidy of education from research budget at about 3-6%

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Taximeter (DKK)

Average costs (DKK)

Difference (%)

Bachelor Kandidat (Master)Tax.group 1 40.400 52.000 29% 34.-90.000 37.-82.000

Tax.group 2 65.600 74.000 13% 45.-107.000 46.-145.000Tax.group 2 96.000 162.000 69% 121.-190.000 142.-222.000

Variation (DKK)


What is next for AU?• Change of academic culture

• Autonomy and accountability (once again)

• Reorganisation and reduction of internal structures. Fewer and larger academic entities (faculties and departments)

• Financial and strategic management system, (decentralised budgets, income generations drives activities, all cost will be “project” based, time allocation and/or time registering)

• 4 year rolling budgets (semi independent of budget law), and strategic economic room 3.5 per year

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LAURITZ B. HOLM-NIELSENRECTOR, AARHUS UNIVERSITY

[email protected]

Au

Documents

Danish University funding model