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October 6, 2008 | by  | in Features | [ssba]

How is VUW Funded?

In their 2007 Annual Report, the New Zealand Vice-Chancellors’ Committee state that the year demonstrated “the difficulty of grafting capped funding on the back of a largely open entry system for students.” The new funding regime, targeted at rewarding research quality over enrolment numbers, has been slowly implemented by Labour since late in their second term. In 2006 then-Tertiary Education Minister Michael Cullen articulated the focus as an attempt to break “a culture of chasing enrolments as a means of securing revenue” and instead focus on each university’s strengths, as indicated by the Performance Based Research Fund (PBRF). The PBRF scheme tallies an index of journal citations of all the researchers in each university department in the country, and dishes out $250 million based on these ratings each year – though this is still just a fraction of the total “$1.1 billion operating and $747.3 million capital” tertiary education funding Dr Cullen outlined in his budget speech this year.

In a 2006 speech to the University Chancellors of New Zealand at Wellington’s Intercontinental Hotel, Dr Cullen outlined his history of a Hegelian dialectic in tertiary education funding. The thesis of elitist funding was found in the 1980s to be holding back innovation, with low participation rates compared to the OECD average. The antithesis of reform replaced the “highly stratified funding system” with the Equivalent Full-Time Student (EFTS) system, under which funding is apportioned to enrolment numbers. The Education Amendment Act 1990 disestablished the University Grants Committee and the Department of Education, devolving responsibility for financial management to the schools themselves. This forced universities to take responsibility for balancing their own budgets, making them commercially-minded entities.

But Cullen argues this new system resulted in a glut of “middling degrees in law, business and communications” rather than the trained engineers and scientists our economy needed. Dr Cullen presented Labour’s new strategy of multi-year education planes as a synthesis of students’ market choices and the needs of the country as a whole for quality research and targeted training. Thus the Government have been gradually decreasing the level of EFTS funding (which is still the largest slice of the pie), and increasing the level handed out via PBRF ratings.

The Association of University Staff (AUS) have been consistently critical of the way PBRF functions, even as they have welcomed a focus upon rewarding quality research. AUS’ National President, Associate Professor Maureen Montgomery, has criticised “the improper use of individual PBRF ratings in staff performance appraisals,” which “creates anger and disillusionment among academic staff.” More broadly, the Vice-Chancellors argue that the current Tertiary Education Strategy’s “emphasis on goals and outcomes rather than the broader social, economic and environmental context” combined with a lack of university consultation and Parliamentary scrutiny, “has the potential to narrow the educational focus of universities.” Cuts to the Humanities programme at Canterbury and Education here at Victoria are indicative of this narrowing.

While the Vice-Chancellors’ Committee notes the many concerns with both the Tertiary Education Strategy and the PBRF evaluations, they argue that the basic problem with current tertiary education funding is still one of size: there simply isn’t enough state funding to cover the cost of educating students, given the capped increases to their fees. The Vice-Chancellors argue that polytechnics are getting too large a slice of the funding pie relative to their value to society (ouch). AUS also argues that since only 11 per cent of applicants to the Marsden Fund for research grants are successful, the fund must be increased. Dr Cullen’s budget this year informs us that the Government are “making significant additional investment in tertiary education – more than $900 million over four years, including student support, to contribute to New Zealand’s transformation to a high-income, knowledge-based economy.” But due to a number of factors, from the increasing complexity and expense of research equipment to the continuing flux of student numbers, the state’s investments will not alleviate the financial pressure on our teachers in the foreseeable future.

Victoria’s Vice-Chancellor Pat Walsh argued in a 3 September Dominion Post opinion piece that Labour’s tentative election promise to roll forward a universal student allowance is the wrong way to go forward with tertiary funding. The Government has costed the scheme at $728 million over four years, and while Walsh writes “we understand the financial pressures our students face and are well aware that many baby boomers remember the benefits they received” from free education, he argues that “students are already getting a far bigger slice of the tertiary education funding pie than the institutions that educate them.” He adds that the nation’s universities are collectively “$230 million a year worse off in real terms than they would be if government funding had been maintained at the level of the early 1990s.” Walsh goes on to note that the we spend 42 per cent of tertiary funding directly on students, whereas the OECD average is 18 per cent, meaning we are sacrificing quality for affordability. At the end of last year, the Tertiary Education Commission denied Victoria’s request to raise fees by the maximum 5 per cent, but before you join in those angry “fuck VUW management” protests, you might want to think about whether affordability is really more important than quality. Personally, I have to side with Walsh on this one.

So how does the University receive its funding, and how well does this meet its expenditure? As shown in the table below, VUW had a total revenue of $289.3 million in 2007: 44 per cent from the state, 19 per cent from domestic student fees, 11 per cent from international students fees, almost 10 per cent via research grants, and the rest through commerce and donations. Expenditure of $272.6 million (58 per cent of which went towards staff wages) left a surplus on $16.7 million, so unlike Wellington’s major hospital, her major university is able to balance its budget. The question is, does this balancing act damage the quality of Victoria’s services? To answer this, we need to look at evidence much wider than the numbers laid out in a budget – we need to look at the feelings of our staff and students, as explored over the following pages.

Victoria University of Wellington’s COnsolidated Statement of Financial Performance for the year ended 31 December 2007

Government Grants                            $126,756,000
Domestic Tuition Fees                        $56,216,000
International Tuition Fees                   $31,254,000
Research Support                                $27,795,000
Commercial                                        $19,367,000
Student and Family                             $11,007,000
Other Revenue                                    $12,883,000
Earnings from Trusts and Surpluses     $4,119,000
Total                                                 $289,397,000

People                                               $157,933,000
Occupancy                                          $19,787,000
Equipment                                             $1,779,000
Information Technology                        $8,597,000
Operating                                             $57,281,000
Depreciation and amortisation             $27,292,000
Total                                                  $272,669,000

2007 Surplus                           $16,728,000


About the Author ()

Tristan Egarr edited in 2008. He threw a chair once.

Comments (3)

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  1. dave says:

    Well done Tristan, that’s a good quality piece. Its one of the best things I’ve seen in Salient for a while. You should be very pleased with that. But could you cut out your name in the middle of the text in the second to last paragraph?

  2. roshan says:


  3. dang uploading typos…. :p

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