Transcript Slide 1
Appendix A(ii)
Governing in a Downturn
The political context as seen from a funding council’s perspective
and what questions we would like to see governors addressing
Alison Johns
Head of Leadership, Governance and Managment
London
30 September 2010
Context (1)
_______________________________________________________________________________________________________________________
The Independent Review of Higher
Education and Student Finance
The coalition Government’s first
spending review
Context (2)
_______________________________________________________________________________________________________________________
increasing student demand
international competition
cost pressures
the shift to a new business model
technological advances
Public concerns
_______________________________________________________________________________________________________________________
Unmet demand
Graduate unemployment
High personal debts
The World
as we know it
Financial flows chart
_______________________________________________________________________________________________________________________
Sources of income for universities and colleges, 2008-09
Department for Business
Innovation and Skills
SLC/LEA
fees
£1,909M
(9.1%)
HEFCE, TDA &
LSC funding
£7,097M (33.8%)
Other
government
UK Research councils
Research grants &
contracts
£1,240M (5.9%)
Postgraduate
fees
£91M (0.4%)
Research
£800M
(3.8%)
Non-research
£1,360M
(6.5%)
Universities and
colleges
Total income £21,015M
Other research
income
£545M (2.6%)
UK charities
£748M
(3.6%)
Overseas student
fees
£1,885M (9.0%)
Residences and
catering
£1,178M (5.6%)
Other income
£4,161M
(19.8%)
Source: HESA finance record 2008-09, HEFCE-funded HEIs
Note 1: This income includes a share of income in joint venture(s) of £97M
Note 2: We do not have precise data on postgraduate fees paid by UK research councils. Fulltime postgraduate research fees from 'other' sources is used to estimate this. ('Other' sources are
those other than the SLC and DH).
Note 3: 2008-09 refers to the academic year ending 31 July 2009
Other fee income £1,708M
Income for non-research services £967M
Endowments £295M
Other operating income £1,191M
HE Business models – from HE
workforce framework
Six main income streams for English HE:
o
o
o
o
o
o
Publicly-funded research
Privately-funded research
Publicly-funded teaching
Privately-funded teaching
Academic enterprise
Other services
Illustrative examples of institutional strategic
profiles based on income
Type A
Type C
Type B
Type D
Imagine
a world….
Key propositions in Sunday Times
article – 26 Sept 2010
•
•
•
•
•
Fees up to £10k pa
Public funding for teaching reduced by 2/3rds
A cut of £3bn or 64% of £4.7bn T funding
With effect from2012
Degrees paid for by students mainly paid by
them from their future earnings
• Overall reduction in state funding for HEIs
circa 37% (incl £1bn off £6bn for research)
• Subsidies on student loans gone > 2% rise
Stronger market dynamic
_______________________________________________________________________________________________________________________
Improved information for students
Greater student choice
Continuous quality improvement
Supply side reform? Lowering of
entry barriers for private providers?
Students numbers?
HEI pressures
_______________________________________________________________________________________________________________________
Decreasing public spending
International competition in
teaching and research
Increasing requirements for
quality improvement
HEI pressures
_______________________________________________________________________________________________________________________
Discussion
What are the pressures you are facing in the
current and future political and fiscal
environment?
What are the risks you should be thinking about
and discussing at your GB?
What can we glean from USA?
Regulation
• Increased oversight and compliance
arrangements
• Greater transparency for students and
parents
• Growing need to improve and demonstrate
quality
• Governance to show a moral compass: ‘doing
the right thing’
• Efficiency and greater use of IT internet
tuition
Key issues
_______________________________________________________________________________________________________________________
changes in multiple income streams
a new balance of public, student, employer funding
new business models at institutional level
ensuring clear lines of accountability, effective governance
of financial control at a time of change
maintaining market confidence through orderly transition
Market confidence at a time
of change
_______________________________________________________________________________________________________________________
“Press reports discuss the UK university
system as facing profound changes.
Whether the change evolves smoothly
or not may depend on the consistent
and historically effective regulatory
framework provided by HEFCE, the
regulator and main funding vehicle for
the sector and on the ability of
universities to forecast and plan for
change. HEFCE’s tight regulation and
oversight of the sector, as well as a
historical record of strong extraordinary
support for distressed institutions, offer
the promise that change will be orderly”.
Opportunities
_______________________________________________________________________________________________________________________
Imperative to differentiate
Get the price right
o what will the market bear?
o cover costs and reinvestment?
o what if price wrong?
o net price : gross price – what is your offer?
• bursaries and freebies
Others?
Questions governors should be
asking?
_______________________________________________________________________________________________________________________
Does our strategy…
o focus on strengths?
o widen the funding base?
o articulate the brand?
o focus on appropriate risks?
...and seek to where appropriate…
o disinvest?
o develop strategic partnerships
Questions governors should be
asking?
_______________________________________________________________________________________________________________________
To what extent are our resource strategies fit for
purpose?
Where do we need to build capacity and capability?
o change management?
o human resources?
o estates
o finance?
o other?
Questions governors should be
asking?
_______________________________________________________________________________________________________________________
How efficient are we?
o new business models?
o cost management?
o culture change?
o short and medium term plans?
Strategic issues
_______________________________________________________________________________________________________________________
Direction
Alignment
Efficiency
Role of Governing Bodies
Set Strategy
Monitor
Performance
Stakeholder
Confidence
Protect
Autonomy
Public Confidence (FM)
•
•
•
•
•
•
Risk management, control and corporate
governance
Information systems
Financial sustainability
No surprises – material adverse change
requirement
Regularity, propriety, value for money
Audit systems
Institutional Autonomy
•
•
•
Self-regulation
Risk-based intervention
Respected governance
HEFCE Support
•
•
•
•
Communications
Training via LFHE
Benchmarking
Good Practice (via CUC)
Communications
•
•
•
•
•
Risk letter
Grant letter
E-mail alert Annual meeting - 26 November 2010
Institutional visits
HEFCE Governance Alert
• http://www.hefce.ac.uk/lgm/governance/
• https://www.jiscmail.ac.uk/cgibin/webadmin?SUBED1=governance-hefce&A=1
• [email protected]
Thank you for listening
[email protected]