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Funding and the Broader Tertiary Sector
Peter Noonan and Gerald Burke
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Purpose: review HE and VET funding •Update 2005 analysis•Compare growth and composition •Note differences in funding arrangements•Identify implications for broader tertiary
sector•Identify issues for future CEET work•Note – analysis is preliminary
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BackgroundIssues in 2005 CEET paper on VET funding:
1. Relative decline in VET funding compared to schools and higher education
2. Faster growth of private funds in HE Overseas students fees Domestic fees (including HECS)
3. Growth in Commonwealth funding outside of Commonwealth State Agreement
4. States make independent decisions on VET funding alongside Com/State Agreement
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Revenue for schools and HE continues to increase at a faster rate than VET ($
billion constant prices, public institutions +)
0
5
10
15
20
25
30
35
1999-2000 2001-02 2003-04 2005-06 2007-08
Schools
Univ
VET
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These is a growing gap between HE and VET operating expenditure
Operating expenses $bill, 2007-08 prices
0
2
4
6
8
10
12
14
16
1999-00 2001-02 2003-04 2005-06 2007-08
University education Technical and further education
Linear ( University education ) Linear (Technical and further education )
Large and growing private HE funds
Universities source of operating expenses $ bill constant prices
02468
10121416
1999-00 2001-02 2003-04 2005-06 2007-08
Uni Public Uni Private
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Much smaller--though growing--private revenue in TAFE
TAFE source of operating expenses, $ bill constant prices
0
1
2
3
4
5
6
1999-00 2001-02 2003-04 2005-06 2007-08
TAFE Public TAFE Private
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Changing composition of VET income, $million, constant prices (NCVER data)
2004 2006 2008Shares in 2004
Shares in 2008
Increase 04-08
Fee-for-service 647 812 978 10% 15% 51%
Student fees/charges 283 271 275 5% 4% -3%
Other 328 306 295 5% 5% -10%
Commonwealth 1,651 1,580 1,699 27% 26% 3%
States 3,281 3,299 3,225 53% 50% -2%
Total 6,191 6,267 6,472 100% 100% 5%
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Not the full picture: expenditure outside of the national VET agreement (not in NCVER VET finance data)
• Examples▫ Employer incentives -- Commonwealth and States▫ Apprenticeship centres and other Commonwealth
programs
• Also▫ Revenue of private RTOs except for public monies
for user choice, Skills Vouchers, PPP▫ Student assistance –Youth Allowance, Abstudy,
Austudy▫ Employer training expenditure that does not go to
public RTOS
Projected Commonwealth VET related $bill (NCVER data shows $1,700 billion 2008)
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2007-08 Expense
2008-09 Expense
2009-10 Budget
2010-11 Estimate
2011-12 Estimate
2012-13 Estimate
DEEWR 2,715 2,449 2,340 1,824 1,854 1,860
TREASURY 707 1,726 1,662 1,743 1,770
TOTAL 2,715 3,156 4,066 3,486 3,598 3,630
Index 100 129 110 114 115
Projected additional Commonwealth funding for HE and Innovation
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Funds per student or per hour
• HE Commonwealth funding per subsidised student in 2008 was about 10 per cent lower in real terms than in 1996
• Future indexation, funds for low SES students, performance funding - may stem HE decline per student
• VET Government recurrent expenditure per hour of publicly funded training fell 8.5% 2003 to 2007 real terms
• Future Commonwealth money for VET is largely for infrastructure and extra students
Differences in funding arrangements between VET and HE (examples p.1)
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Higher Education VET
Public funding Commonwealth States fund providers, Commonwealth provides part of funding to states
Quotas/limits to number of public supported places
Limits at present Demand driven provision to all qualified students by 2012 at least for undergraduate courses
Limits in all states but VictoriaDemand driven in Victoria, progressively from July 2009 -- for qualifications at higher level
National partnerships and infrastructure funding
New research and other programs affecting teaching resourcesIndexation of grants from 2012Education Investment Fund (EIF)
Productivity Places Program… National Partnership on Youth Teaching and Learning Capital Fund and Infrastructure through EIF
Changes in real funding per EFTSL or hour
Funding lower than mid 1990s but some relief through new funds and proposed (nearly) full indexation.
Recurrent funding per hour of publicly funded training may decline if only partial indexation.
Forward commitment
Forward commitment to additional funding to 2012-13
•Commonwealth PPP funding; •Victoria to fund entitlement•No forward commitment other states
Differences in funding arrangements between VET and HE (examples p.2)
Higher Education VET
Gov’t funding to private providers
Funding generally to public providers though particular exceptions
PPP to public and private providersUser choice etc to public and privateExtensions occurring under National Partnerships especially Vic
Fees Specified range for supported placesNo full fees for domestic undergraduate in public universitiesFull fees for most private providers.
Fees vary across states ---lower than HEFull fees in private and possible for public providers depending on state policy.
Loans HECS-HELP available to supported students and FEE-HELP to full fee students including private providers.
FEE-HELP for approved providers of full-fee courses and for supported students in Diplomas/Ad Dip in Victoria.
Equity funding
New support eg for the enrolment of low SES students, funds to reach 4 per cent of teaching and learning grants
University program for low SES includes partnerships with schools, VET providers and adult education
Student Start up Schols
For university students eligible for student assistance -- $2,254 in 2010
Not available to VET students
Summary•Funding gap between VET and HE has
widened
•State funding has fallen in real terms
•Commonwealth funding has increased
•Extra Commonwealth funding to states without requirements for matching state funding
•Commonwealth funding for HE teaching and learning to grow from 2011-12 but static for VET
•State funding for VET uncertain -- and likely variations between states
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Implications for broader tertiary sector
▫Extent to which differences in funding arrangements influence student choice particularly if upfront TAFE fees increase
▫Implications of demand based growth in HE and equity targets: Cooperation or competition with VET? Future of articulation arrangements and higher
level VET qualifications▫Future balance of growth between the sectors:
Potential for major differences to emerge between the states
Future CEET research
•Full analysis of financial data including forward estimates
•Individual state/territory analysis•Impact of differences in funding
arrangements on students and providers•Options for a new funding framework for
VET in the context of broader tertiary sector
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