More on funding!

I have had quite a bit of feedback about the recent ODT article - all positive at this point, and some genuine enquiry as to what exactly is going on with tertiary funding. Actually, I tell a fib - one lot of feedback wasn't so complementary - that which came from TEC itself!

Now, it is understandable that TEC is sensitive to criticism about the funding of the sector - afterall, government votes the funding and they merely administer it. And they tell me they have set out to administer funding in a fair and transparent way. So, there are two issues for us to think about: is there enough money to fund an effective, high quality tertiary sector? Is the money that has been allocated to the sector wisely distributed?

Let's look at the adequacy question first of all. My view is a resounding "NO" - the sector suffers from systemic underfunding, and cannot even sustain its core business of teaching and learning, let alone meet a host of other objectives which government has set for us. How do I know this? Simply because there is hard (2007) data now available that shows that on average polytechnics lose money on core business - an average loss of nearly 9% in 2007, although I understand that one or two institutions may have managed a very small surplus. Overall, several institutions did return a small surplus in 2007, but this was a result of things like one off grants, interest earned on retained earnings and cafetaria profits! Bring on the polytechnic weekly cake stall! Actually, if every staff member at Otago Polytechnic baked a cake every week and assuming we could sell all of them we would get a surplus of $200,000 for the year!!

But I digress! No institutions in the polytechnic sector in 2007 actually came within a bulls roar of a surplus of 3% -5%, which the wise men in TAMU constantly cite as our target. Now, it is possible that EVERY polytechnic in the country is extremely inefficient, and that is the reason for the deficits. This is, of course, the view which pervades TEC, but it is simply not credible. Most institutions have been reviewing every activity and pruning costs and laying off staff for nearly 5 years now. And every year costs increase at a rate in excess of the inflation adjustments which government reluctantly grants us, enforcing "productivity " gains as a matter of routine management.

So, the evidence speaks for itself, and has done so for several years. Indeed, just over three years ago the then Minister of Tertiary Education ( or was it the Associate Minister of Education - Tertiary) Mallard called together the CEOs and Council Chairs of the sector to acknowledge that the sector was in some considerable difficulty, to urge us not to take precipitate action ( aka laying off staff) and to announce that Government was setting up a significant fund to help polytechnics through problems he recognised as not of our making. These were problems such as low class sizes and the costs of delivery to regional communities. The fund was the now infamous "Quality Reinvestment Fund".

Less than a year later the then CEO of TEC, Janice Shiner, assured the CEOs in the sector that "once we have right sized you, we will fund you properly" - and went on to clarify that "properly" meant being funded for a surplus. Well, we have all been "right sized" - that is what the "investing in a plan" process is all about. But alas, the funding cupboard is bare, the deficits pile up and the polytechnic infrastructure continues to deteriorate.

I think this bit of potted history is important, because it reminds us that our funding problems have been acknowledged in the recent past. It is also inconvenient, because someone forgot to budget the resources to fix the problems. And none of the underlying problems have gone away. Class sizes in polytechnics generally remain below the optimum, and our regional populations have continued to live in the regions! Jolly unreasonable of them don't you think.

But has TEC done a good job in administering the funding system? Actually, no! First of all, TEC has vigorously held to the view that " there is plenty of money in the sector" and all that needed to happen was for this to be redistributed. Those who had too much would get less, and those who were short on funds would get more. This has not proven to be the case at all. What's more TEC has continued to advise government that there was plenty of money overall, thereby undermining the case for improved funding. It is true that TEC did persuade government to increase funding to the sector this year by some $20m - gratefully received, but short of the mark.

Actually, it is not a huge amount of extra funding that is required - about $40m/$50m pa ( an increase of around 7%/8%) will do the trick. Is this reasonable to expect? Yes, in my view, and especially if we consider that Labour was prepared to increase student support funding by $200m pa, and National is on record to increase research funding to universities by over $300m pa.

We should also highlight that TEC has managed to waste a fair bit of precious funding as well. The central bureacracy has increased exponentially, and whilst the basic investment planning/management process is sound, the stakeholder management process is not. There is literally an army of bureacrats roaming the country with a mission to improve the relationships amongst all of the players in the sector. And micro management is alive and well. It is difficult to get an accurate handle on what money could transfer from the TEC bureacracy to direct funding of provision, but $15m pa will not be far off the mark - about a third of what is needed to fix the sector!

Well, this may read like a bit of a whinge - apologies if that is so. However, funding IS the big issue. If we cannot convince our owners - government- to get the funding right we will never realise the enormous potential our sector has. So, join me - lobby a politician or two, and ensure a few concerned citizens understand the situation polytechnics are in!