Enterprise and Lifelong Learning Research Programme
of Tertiary Education Within Selected OECD Nations
Research on Approaches to Public Funding and Development
Professor Michael Osborne, Centre for Research in Lifelong Learning
Professor David Bell, Scotecon
University of Stirling
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This research project investigated the structure and organisation of tertiary education in each of ten OECD countries.
It focussed on:
- The processes by which public funds (including support for research) were distributed to the tertiary sector
- The statutory duties and powers of the public bodies responsible for structure, delivery and quality assurance in the tertiary sector
- The non-statutory roles of these bodies, including their role in analysing national skills needs, governance and management, strategic change, promotion of centres of excellence, maintenance of research infrastructure and exploitation of research.
The countries studied were Australia, Canada, Finland, France, Germany, Netherlands, New Zealand, Norway, Sweden, USA.
Our research found great diversity in the tertiary education sectors of the countries that we studied. For example, wide differences were observed in:
(a) the structure of the tertiary sector,
(b) the legal instruments used to define the organisation and practices of tertiary education
(c) the funding mechanisms used to support the sector both for teaching and research
(d) the quality assurance processes
(e) the approach to developing research excellence
(f) responsiveness to national skills audits
Among the countries studied, Australia and New Zealand perhaps provide the closest parallels to Scotland in respect of both the structure of the sector and funding mechanisms.
One key distinction between Scotland and New Zealand is that it is quality assurance rather than status that determines financial support for teaching in New Zealand. Colleges can award a Master's degree so long as they are recognised by the Ministry of Education. Further, the credit transfer system between non-university and university programmes is quite straightforward.
STRUCTURES AND FUNDING
The greater the complexity of government, the more complex are likely to be the arrangements for funding tertiary education. With multi-level government, there tends to be overlap in funding, with higher education more likely to be funded at the federal level, while other forms of tertiary education receive support at regional or local level. Typically, the larger the country the more complex the arrangements: the USA not only has the largest private involvement in funding tertiary education, it also has the most complex and disparate funding arrangements.
In smaller countries structures are simpler and fewer non-departmental public bodies (NDPBs) intercede between the Ministry of Education (or its equivalent) and providers.
Irrespective of size, some countries have maintained a binary divide between institutions providing higher education and those supplying other forms of tertiary education. Recently some countries have sought to remove this distinction. But the integration between sectors can take place at a number of levels, including:
- systems of governance
- funding arrangements for teaching
- funding arrangements for research
- credit transfer between institutions
- quality assurance mechanisms
- compliance with skills audits
Almost uniquely, Australia has created a number of "dual-sector" institutions, where a single institution tries to provide the full spectrum of tertiary education. But these have not been wholly successful because of the difference in cultures and mutual suspicions between the two types of institution. From a regional development perspective, the dual-sector institution may also be perceived as lacking a clear focus.
Many countries have adopted new legal frameworks to support structural changes in the tertiary sector. Their purposes and scale have again been diverse. In France a decree was introduced in 1999 with the simple purpose of introducing vocational degrees, Licences professionelles.
In contrast the 2003 Higher Education Support Act in Australia implied a much more far-reaching reform of the sector. Its objects were to:
- to support a higher education system that is
- characterised by quality, diversity and equity of access; and
- contributes to the development of cultural and intellectual life in Australia; and
- is appropriate to meet Australia's social and economic needs for a highly educated and skilled population; and
- to support the distinctive purposes of universities, which are:
- the education of persons, enabling them to take a leadership role in the intellectual, cultural, economic and social development of their communities; and
- the creation and advancement of knowledge; and
- the application of knowledge and discoveries to the betterment of communities in Australia and internationally;
An even more comprehensive reform was implemented in New Zealand in 2003. The Tertiary Education Commission (TEC) was established by the Tertiary Education Reform Bill. Its objective is to oversee the implementation of the Tertiary Education Strategy and it has responsibility both for allocating funding to public and private providers of tertiary education and training and for building the capability and capacity of tertiary education and training to contribute to national economic and social goals. The Commission was given a new set of instruments, in the form of charters and profiles, that would enable it to encourage connections with external stakeholders, and encourage cooperation and collaboration between providers so as to develop 'a more focused and strategically-relevant sector'. A charter is a high-level governance document that provides a broad description of an education provider or ITO's mission and role in the tertiary system. A profile describes in much greater detail how the high-level goals in an organisation's charter will be implemented. Profiles are updated annually.
These mechanisms implicitly describe a tertiary sector in New Zealand where the binary divide no longer exists and where the system of profiles permits the TEC to direct activities across the sector.
In contrast, Norwegian legislation in 2001 reinforced divisions between categories of institution. It divided accredited institutions of higher education into three categories, with different rights to offer new programmes at different degree levels without a formal process of accreditation.
Sweden's approach focuses more on direct control of the resources available to institutions. Each state run institution is given a contract and the general outline is presented to Parliament in the Budget Bill. These Educational Task Contracts might include: the minimum number of degrees to be awarded during a three-year period and the minimum number of science and technology students to be enrolled. Each institution is then given a block grant for the fiscal year. These grants are preliminary, as the final grant cannot be computed until the end of the fiscal year. Its value depends on numbers of students and their results.
Vocational education poses another set of funding problems, perhaps because the monetary benefits to students and employers are seen as more direct than in other forms of tertiary education. Also there is a widespread acceptance that vocational training should mainly be aimed at satisfying the local demand for skills. Thus some countries, such as Finland, support vocational training through local authorities and municipal federations. In contrast, some large industrial countries use the tax system to provide general support for vocational education. For example, France levies a payroll tax of 1.5 per cent to finance training expenditure. The Scottish Parliament could only support vocational education in this way by constructing a voluntary levy scheme, which might not be workable. A compulsory scheme would be interpreted as a tax and would be ruled out under the Scotland Act.
Vocational education also tends to have strong, country specific, historical roots. For example, the "dual-system" in Germany has a long history and is not perceived as somehow distinctive from other forms of education. There is a general acceptance of the need to support vocational training through the tax system.
The USA, aware that it was lagging behind the best practice of European countries, has tried to establish an institutional structure to raise skill standards. The National Skills Standards Board (NSSB) was established in 1994 to establish a voluntary national system of skill standards. It endorses skill standards systems developed by industry-labour-education partnerships. But this system is less embedded among key stakeholders than is the case of vocational training in Germany.
The mechanisms for the distribution of research funding also vary substantially by country. Whereas most countries now view research as essential to maintaining international competitiveness and living standards, the methods selected for supporting this activity are diverse. The US is the most successful nation in producing advances in basic research and its financial support for this research dwarfs the provision in other countries. The main academic agency is the National Science Foundation, but government departments have substantial involvement in public and private universities, helping maintain the infrastructure as well as providing direct grants. Federal research funding appears to be increasingly selective: its support to private universities has grown much more rapidly than research support to public institutions in recent years. There is no direct equivalent to the RAE system and therefore no non-contingent support for research.
The research model in New Zealand shares many characteristics with what is expected of the 2008 RAE in the UK. The Australian model is also very close to our RAE system, but its weights lean more heavily towards research income generation and research students.
Yet another model is provided by the Netherlands. It specifically identifies and funds "research-intensive" universities and since 1991 university research schools have provided a focus for the centralisation of research activities. Quality assessment of research is normally carried out by a panel of international experts in the research areas.
Quality assurance mechanisms vary widely. There is no pan-Canadian or pan-US accrediting body to evaluate the quality of degree programs. Most North American institutions have tended to rely on quality defined primarily in terms of inputs such as faculty credentials or library resources. In recent times more emphasis has been given to defining quality defined in terms of outcomes and performance as defined by multiple clients (students/learners, employers, government). In Canada in the absence of a national accrediting body, university membership in the Association of Universities and Colleges of Canada (AUCC) is generally taken as evidence that an institution is providing university-level programs of acceptable standards. Degree programs at university colleges, colleges, and institutes are subject to internal quality assurance processes similar to processes used for university programs.
For example, in Australia the Institution Assessment Framework (IAF) is founded on the responsibilities of the Commonwealth to ensure that the institutions it funds are sustainable and deliver the outputs for which they are funded, that their outcomes are of a high quality and that they comply with their legal obligations. In a number of countries clearly defined contractual relationships are established. For example in Finland, the Ministry of Education engages in a three_year cycle of 'results negotiations' with HEIs in order to set goals. In Sweden, an Educational Task Contract is given to every university and university college stating the objectives for a given 3-year period.
In vocational training, there is a similar variance in quality assurance procedures. In Australia, the Australian Quality Training Framework was developed by the National Training Quality Council in conjunction with States and Territories, the Commonwealth and industry All VET systems are required to implement nationally endorsed training packages based on competency-based training.
Finnish quality assurance processes are geared to development rather than control. The universities and stakeholders have a say in the selection of areas to be evaluated. although the Finnish HE Evaluation Council makes the final decision. The tone of its action plan springs from the need to support and assist the universities and polytechnics in improving their procedures and activities.
Scotland's quality assurance mechanisms must have regard to the pan-European Bologna process to which the UK is committed. Part of the Bologna declaration supports the need to Promote European cooperation in quality assurance.
Smaller countries, perhaps intimidated by the success of the USA in many areas of research have sought ways to maximise the return from their investment in research. The approach most frequently taken has been to concentrate resources. Thus in Canada the federal government maintains a Networks of Centres of Excellence Program, which links university, industry, and government researchers across the country. Further, the Canadian Foundation for Innovation was established in 1997 by the federal government to provide research infrastructure funds to Canadian institutions on a cost-shared basis with the provinces and other partners.
In Finland, there have been designated centres of excellence in research since 1995. A six-year programme launched by the Academy of Finland in 2000 created 26 such centres and another 16 were planned for establishment between 2002 and 2007.
In Norway, the research council set about identifying key characteristics that would help the newly proposed centres of excellence flourish. These included ensuring that they would receive substantial funding over at least 10 years, that they would involve research with an international dimension, that the research groups involved would be of a reasonable size, that there should be intense competition for centre of excellence status and that they would also train researchers.
In Sweden, the government has recently decided to establish 16 schools of research. Special funds have been allocated to this project and one target for each of these is to examine 25 doctorates each year in each school of research by research degree programmes.
In Australia, much of the work on future skills is associated with the attraction of skilled immigrants. There is also a Skill Matching Database which is regularly updated and distributed to all state and territory governments and a network of regional development authorities. Employers can nominate people from the database to fill vacancies that cannot be filled through the local labour market. However, this is a mechanism for making the labour market work more effectively at present, rather than a planning mechanism to meet skills shortages.
In Canada, skill transferability is limited and there is pressure to construct a nationwide system which would enable labour mobility and aid economic efficiency. But even this mechanism would fall well short of skills planning.
In Finland there is an acknowledgement of the role of education and skills development in providing balanced regional development and in responding to the ageing of the population and the work force. And in relation to Higher Education, the National Strategy sets a target of 70% of each age cohort (under 25 and over 25) to obtain an HE degree. Although this refers to polytechnic as well as university qualifications, this is amongst the highest levels of aspiration in the world. However, such a general objective should be distinguished from detailed future skills planning, which would work much more at the occupational level, than at the general level of qualifications. In contrast, Germany takes a more pragmatic approach, looking at current imbalances between demand and supply of skills.
In the Netherlands, one of the main objectives of education is to improve employability. A national action programme in 1998 emphasised the role of lifelong learning in enhancing employability and various measures were taken to reinforce the Netherlands' learning culture. However, some of the additional expenditure on life long learning involved lowering the age of compulsory education to four. Reflecting much recent research on cognitive as well as non-cognitive skills, this investment is intended to promote positive attitudes to learning in later life as well as "soft skills".
Our evidence suggests that the Future Skills agenda seems to either be approached with broad targeting of tertiary educational standards or with detailed short-term analysis of skills needs. Neither approach seems ideal _ short-term responsiveness will encourage a boom-or-bust approach among providers, while educational targets fail to address the key skills shortages that may arise in the medium to long term. To provide a more fruitful basis for planning by institutional providers, what is required is more detailed medium to long-term analysis of variations in occupational structures brought about by the changes that are taking place in the modern economy.
Our research has shown a great deal of diversity in the way that different countries organise, fund and create incentives for tertiary sector providers. Although many of the solutions are culturally specific and also reflect the history of the sector, some of the approaches taken elsewhere do seem novel from a Scottish perspective. At a time when these issues are being actively considered by the Executive, it may be of benefit to further research some of the particular issues that we have discussed.
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The report, "Research on Approaches to Public Funding and Development of Tertiary Education Within Selected OECD Nations", which is summarised in this research findings is available on the Social Research website at www.scotland.gov.uk/socialresearch
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