Report: How varsities can overcome their financial woes

Kisii Univerity graduands. High fees charged by various Government Agencies are unnecessary burdens and should be reviewed. [File, Standard]

There is still hope that public universities can get out of the financial hole despite the challenges in student funding.

The Universities Fund (UF) and the Higher Education Loans Board (Helb) have proposed a raft of measures that they project if adopted, can stabilise universities and get them out of the financial pit.

The two agencies, in their report to the Presidential Working Party on Education Reforms, argue that the proposed reforms through the merger of the funding bodies are huge steps towards the right direction and urge the full realisation of the planned changes.

The UF in its report says that it is crucial to develop a funding framework to ensure that there is effective and efficient funding for both universities and TVET institutions.

Currently, Geoffrey Monari is UF’s, Chief Executive Officer. 

The fund recommends that in the proposed merger, the issues can be addressed through proposed legislation that will address the management of grants, student sponsorship, disbursement of loans, recovery of loans, resource mobilization and data management.

Specifically, UF proposes a deliberate policy shift that will address how Collective Bargaining Agreements (CBA) are negotiated, funding of research, and postgraduate and also encouraging universities to commercialise their innovations.

Other factors are staff rationalisation, streamlining the issuance of loans and bursaries, review of fees and also strict data management.

In its finer details explanation, UF for instance proposes that the bloated university staff be streamlined.

The report says that staff costs in universities are high and surpass the funds provided by the Government. UF says that this accounts for over 80 per cent of overall expenditure by the universities.

“Growth in expenditure above revenue presents a challenge to the sustainability of public universities if it is not properly managed. Furthermore, universities are incurring salary expenditure that is above their revenue,” reads the report.

UF also argues that the ratio of teaching to non-teaching staff is high and above the international best practice threshold.

“The high wage bill is certainly the result of a skewed recruitment pattern of the past, and it is clear that a ratio of 1:1 is more realistic,” the report says.

On CBA, the Fund argues that the present negotiations process distorts recurrent grants allocated to universities as it is not provided for separately.

The report further says that there is a need for the development of a policy to foster the commercialization of university innovations.

“Universities are not able to commercialize their innovations, therefore, limiting their resource pool and discouraging innovation efforts.”

Also, there is a need for a policy consideration for funding post-graduate programmes to target national priority areas and enhance equity.

Presently, the report says that there is no funding thought for post-graduate programmes.

UF also says that university data is poorly managed hence opening avenues of pilferage.

“…and this negatively affects funding from Government which is based on data provided,” reads report.

The report also observes that the high fees charged by various Government Agencies are unnecessary burdens and should be reviewed.

The UF also says that the issuance of loans, bursaries and scholarships is not in tandem with grants issued to universities.

“The cost-sharing model envisions funding from Government is complemented by funding from households. University funding should inform the issuance of loans, bursaries and scholarships,” reads report.

The UF notes that research funding for universities is not structured and is inadequate.

There is a need for universities to be capacity built to source for research grants. There is also a need for policy direction to govern how universities benefit from grants issued to individual academic staff, departments, faculty and university.”

Presently, the Government has not defined how it will fund research in higher education institutions.

UF observes that the National Research Fund (NRF) offers grants to the public and this leaves higher education institutions to compete for limited resources with individuals and other institutions.

It says that it is important for research to be financially supported by the Government as it is the foundation for innovation and growth of the economy.

“The newly established body should set aside two per cent of funding towards research. This ensures that projects, dissertations and theses are aspects of research and functions of every faculty member.”

UF also explains that resource mobilization is a key driver towards the attainment of sustainable financing of tertiary education in Kenya.

This UF says, can be achieved by attracting more funding from government, national, regional, and international strategic development partners.

Overall, the UF observes that the real challenge in the sector is the funding of the universities which have accumulated huge deficits and are technically insolvent as stated by the Auditor General reports.

Data presented to the education reforms team by UF shows that the mean allocation per student has not been consistent since 2017/2018 financial year.

During the 2017/2018, each of the 263, 106 students at that time was allocated about Sh126, 615.

In 2018/2019, the mean allocation per student was Sh163, 560 for each of the 133, 218 students.

And in 2019/2020 each of the 241, 015 students received an average allocation of Sh170, 861 while in 2020/2021, some Sh154, 385 was allocated for each of the 271, 446 students.

During 2021/2022, the mean allocation for each of the 324, 182 students was Sh135, 244; in 2022/2023, each of the 356, 188 students received an average of Sh123, 597.

And UF now argues that these allocations are not adequate as students’ numbers have also continued to grow.

“It can be seen that the optimal mean funding that will ensure students are well funded is Sh230,000. This amount then gradually increases by Sh1,000 every financial year.

Due to the inadequate funding, by June 2022, the public universities’ deficit stood at a whooping Sh56.1 billion. The UF now argues that a semi-autonomous funding agency would ensure a unified resolution of the challenges by establishing strategies for enhancing higher education funding in Kenya.

The Fund pitches that it is imperative to develop a funding framework to ensure that there is effective and efficient funding of both universities and TVET institutions.

And this it says can be reinforced through the management of grants, student sponsorship, disbursement of loans, recovery of loans, resource mobilization and data management.

“Currently, funding issues are spread in various policies and planning papers, not always in agreement with each other. This agency would organize and streamline higher education budgets and redistribution, study levels and programs,” reads the UF report.

Under resource mobilisation, for instance, UF proposes the creation of an endowment fund where resources will be solicited from corporate bodies, foundations, philanthropists, faith-based organizations, donations, and gifts from individuals.

“This will not only support universities and TVETs in running their operations but will also provide individuals and well-wishers a channel to give back,” reads the report.

It also proposes the introduction and implementation of an education tax to be implemented to support the rising number of students being admitted.

“This can be done against profits amassed from commercial businesses in Kenya, as it is expected the same industry benefits from graduates trained by the government.”

UF also proposes the implementation of tax incentives to encourage local and international philanthropy in resource mobilization and the use of idle assets to generate funds for the universities and TVET colleges.

“The vast lands can be leased out to farmers or converted to commercial ventures to supplement government funding.”

In addition, UF argues that an independent funding agency would be more flexible in responding effectively to any necessary changes in higher education policy demanded by the economy. “It is observed that a semi-autonomous funding agency would also engage faster and better with institutions of higher learning, minimize significantly the bureaucracy expected of a gigantic body,” reads the report.

But most importantly, UF argues that this semi-autonomous body provides a more targeted approach to the regulation of funding with greater autonomy for higher education institutions.

And this UF says guarantees better accountability for public investment in education, especially in identifying and investing in high-priority courses, setting and enforcing minimum quality levels in the high-education sector and guaranteeing equity of access to funding

“It is proposed that all funding for higher education be brought under one statute. Legislation for higher education funding is accommodated under one statute for ease of administration,” reads the UF report.


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