OECD Thematic Review of Tertiary Education

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• OECD Thematic Review of Tertiary Education
• www.oecd.org/edu/tertiary/review

Education and Training Policy Division Directorate
for Education
Korkeakoulujen rakenteellisen kehittämisen
yhteistyöseminaari Lappeenranta,
Suuomi 21-22.8.2006
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Tertiary Review Country Participation

• Country Visit (13 countries)
• China Croatia Czech Republic Estonia
  Finland Iceland Japan Korea Mexico the
  Netherlands New Zealand Norway Poland
• Analytical Review (11 countries)
• Australia Belgium (Flemish Com.) Chile
  France Greece Portugal Russian Federation
  Spain Sweden Switzerland United Kingdom
• Some key issues examined include
• Financing--Sustainability, adequacy, and equity
• Steeringhow countries ensure wider public
  objectives are met while providing institutions
  with the autonomy needed to perform effectively
• System structure--How much diversification, of
  what sort, do countries use to accomplish
  national policy goals?

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Why create diversified tertiary education systems?

• Effectiveness
• Can one institution (or type) perform at a high
  standard in meeting social obligations of
  tertiary educationpromoting social inclusion,
  producing world-class frontier research,
  providing high-quality professional education,
  and working closely with small and medium
  enterprises, among others?
• Efficiency
• A traditional Humboltian university with
  strenuous career requirements and long courses of
  study may be too expensive for one-half of an age
  cohort.

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Countries vary in how much and what kinds of
diversification they view as suitable to their
national circumstances. 

• Low diversification
• Czech Republic
• Limited and fixed diversification
• Netherlands (limitedtwo types of institutions
  fixedinstitutions are not permitted to change
  mission/profile)
• Extensive and fixed diversification
• Japan
• Extensive and flexible diversification
• UK ended binary system in 90s. The result not
  a unitary system rather, marked by extensive and
  flexible diversification.
• Extensive -- 4 or 5 kinds of higher education
  institutions that differ across a number of key
  dimensions, and institutional groupings formed
  around these
• FlexibleInstitutions make strategic choices to
  manage/change mission/profile

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How do governments create and manage diversity
that is both extensive and flexible?

• The tools available include
• a. Price
• b. Student Selection
• c. Degrees awarded
• d. Programmes Offered (Programme Approval)
• e. Research Funding
• f. Funding Methodologies for Operating Budgets
• Capital Funding
• Performance contracts
• UK price differentiation is just authorised, and
  resident tuition fees have a low cap, so almost
  no variation now exists. Differentiation chiefly
  the result of other factorsB. and E.

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Preliminary observations

• Institutional drift doesnt exist. Rational
  institutions act within policy frameworks set out
  by government. Wrong actions? Govt. hasnt
  created right mix of incentives.
• Extensive and flexible diversification may
  provide countries with a wider capacity to
  address varied national needs than a system of
  limited and fixed diversification. 
• Applied research relevant to regional economies
  undersupplied in a binary system in which some
  institutions have strong incentives to engage in
  frontier research and the others have little or
  no research capacities/resources?
• Extensive and flexible diversification permits
  (requires?) a sort of resourcefulness and
  strategic approach to leadership that is less
  frequently found in systems with fixed and
  limited diversification.

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Seen in this light, might the appropriate
question may be

• How much diversification, of what sort, in which
  regions of the country, is best-suited to meeting
  the needs of students and the wider society?
• John Davies, who served as rapporteur of our
  review team, will share some thoughts about this,
  based upon his wide international experience.

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General Context of a Finnish H.E. System of
Evolving Maturity

• Shift away from Humboldtian model of a
  university growing confidence of polytechnic
  sector
• diversification of funding
• a system of accountability/autonomy based on
  trust and mutual respect
• recognition that a more entrepreneurial model of
  institutions may become increasingly appropriate
  for Finland within a transparent framework
• some evolution in the conceptualisation of the
  relationship between a planned and market system
• evolution from international benchmarking to HEI
  becoming serious international players in
  education and RD
• willingness to experiment and encourage devolved/
  decentralised/differentiated solutions at
  institutional and regional levels

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The Shape And Configuration Of The Tertiary System

• there remains the general commitment by most
  parties to the HE system that duality should be
  preserved
• But, the Ministry is clearly intent on some
  institutional concentration and rationalisation
• There is some ambivalence and ambiguity about
• the degree of connectedness of effort across HEI
  student mobility between sectors human
  resource utilisation cooperative RD
  multi-disciplinarity
• the ability of Bachelors and Masters students
  in polytechnics to move to Masters and doctoral
  programmes in universities
• the role of polytechnics in respects of Masters
  degrees and research
• the nature of competition as an instrument for
  increasing quality within a system which is
  essentially differentiated and collaborative.

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The review team nonetheless detected some
convergence between the two sectors along two
dimensions

• In terms of respective profiles
• the professional academic differentiation is
  conceptually blurred
• Mode 2 knowledge production and utilisation
  increasingly transcends both sectors
• polytechnics are accredited for Masters degrees,
  and may wish to be for professional doctorates
  also
• the Bologna academic architecture could well,
  over time, even out the different credit
  structures
• each sector is clearly well into Third mission
  (community oriented) activity and regional
  engagement
• employment destinations of students from the two
  sectors were by no means as differentiated as the
  rhetoric would suggest

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In terms of institutional self interest,
particularly on a regional level/or city level

• the sustainability of units in the wake of shaky
  enrolments and demographics
• the desirability of achieving critical mass in
  key areas
• ensuring good comprehensive geographical
  provision of subjects and locations
• student marketing especially internationally
• effective resource utilisation.

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We suggest models of engagement which are not
simply university to university, or polytechnic
to polytechnic.

• Dimensions of Cooperation between Universities
  and Polytechnics (Examples)
• ACADEMIC e.g.
• Joint Courses Normal Adult Edn.
• Credit Transfer/Recognition
• Student Mobility
• IT Based Joint Delivery
• Joint International Recruitment
• RESEARCH/RD e.g.
• Joint Projects
• Joint (Spin-Off) Companies
• Joint Science/Business Parks
• Cooperative Consultancy Services
• Cooperative Inward Investment

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Dimension of cooperation, continued

• SUPPORT SERVICES e.g.
• Cooperative Housing
• Linked Student Support
• Library Provision
• ADMINISTRATIVE e.g.
• Joint Office for QA
• Joint International Office
• Joint Continuing Education Office

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Paradigms of Institutional Relationships within a
Regional Setting

• A variety of different arrangements/paradigms are
  possible to govern relationships
• Loose
• Competition
• Regulation
• Voluntary Cooperation Arrangements
• Consortium
• Federation
• Full Merger
• Tight
• Critical Factors in determining positions
• Scale
• Breadth and Diversity
• Quality
• Distribution
• Economic Efficiency
• and Political forces/preferences/authority of
  actors at various levels

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Paradigm 1 Competition Model

• Limited amount of business and money
• Students Research Continuing Education etc.
• Competition for Market Share
• Quality and Quantity
• Price
• Niches
• Delivery
• Customer Care
• Marketing
• Self-Interested Strategic Alliances Cartels
• Inside Region
• Outside Region (e.g. Distance Learning)
• To give market advantage

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Paradigm 2 Regulation

• Typical of Mature State Systems
• Precise definition of Institute Role and
  Positioning
• Functions HEI Licensed to deliver
• Conditions under which HEI operate
• Mechanisms for Quality/Accreditation
• Hierarchy of Institutions
• Resource allocation mechanisms
• Related to HEI profile
• Definition of areas not covered by regulation
• Regional machinery may be surrogate for market
  forces in terms of
• Estimating demand and supply
• Interpreting trends
• Buying services

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Paradigm 3 Voluntary Co-Operation

• Arrangements freely made by one or more HEI to
  satisfy mutual interests in a variety of fields,
  e.g.
• Joint Research
• Joint Teaching Programme
• Joint Marketing
• Joint Use of Others Resources/Expertise
• Arising from
• Govt. Encouragement
• Basic Unit Initiatives
• Belief in Synergy
• Better Resource Utilisation
• Self Interest
• No fundamental surrender of autonomy, no
  specific organisational structure, lateral cash
  flows
• May involve management by contract
• Franchises
• Buying into Higher Status HEI
• Institutional Development

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Paradigm 4 Consortia

• Formal Organisations which exist apart from, but
  because of HEI which constitute their membership,
  tend to be
• Separately Incorporated
• Have Identify
• Have Assets/Budget
• Management Structure Participatory
• Usually Limited in Scope and Functions
• Provide Integrated Services
• Likely services
• Programme
• Library
• Credit Transfer
• RD Company
• Membership voluntary exit possible
• Consortium relies heavily on members

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Paradigm 5 Federation

• A formal organisation of HEI where jurisdiction
  is distributed between two levels federal and
  institutional
• Each participating institution is relatively
  autonomous
• Own Assets
• Admissions
• Appointments/Employment
• Resource Management
• Marketing
• Support Services (Academic/Non Academic)
• Membership provides
• Institution-wide Degree
• Expansion of Academic Diversity at Low Cost
• Student/Staff Mobility
• Access to HEI Resources (Library)
• Status

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Federation, continued

• Membership involves some surrender of authority
• Degree Awarding Rights
• Consistency in Scholarly Credentials
• Academic Accountability
• Financial Flows from Govt.
• Some Federal Regulation
• Tensions
• Role of Principal Members
• Academic Freedom
• Supporting Minimum Standards (Finance)
• Redistribution
• Fee Harmonisation
• Federation Unlikely to Offer Cost Reductions
• Size of Central Organs Decision Culture

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Federation, continued

• May generate wholly owned subsidiary ancillary
  operations e.g.
• Commercial Units (presses, residences, RD)
• Museums, Art Galleries
• Conservatories
• Issues of
• Institutional Expertise of Specialist Units
• Debt and Subsidy
• Joint Sponsors/Guarantors
• Privatisation/Outsourcing
• May generate closures of Units, Programmes in
  former HEI absorbed, or outsourcing of services
• Which Paradigms may best suit different Finnish
  regional settings?

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Paradigm 6 Full Merger

• An Organisation with one legal identify
• Unitary Management/Govt. structure
• Unitary Budget
• Common Academic Mission and Policy and
  Procedures
• Common Personnel Arrangements
• Control of All Assets
• Justifications/Genesis
• Economies of Scale
• Academic Synergy Critical Mass
• Increased Diversity
• Asset Stripping
• Increased Number of Delivery Points
• Enhanced Status, Positioning and Influence
• Involves loss of autonomy for 1 members but
  depending on size, subsequent decentralisation
  possible, to confer authority on former
  autonomous parts or newly configured second tier
  units A merger which behaves like a federation

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Full Merger, continued

• Characterised by
• De Factor Semi Autonomy, especially in
  Geographically Dispersed HEI
• Responsibility Centre Budgeting
• Full Allocation of Costs/Revenues
• Incentives
• Abandonment of Line-Item Budget
• Freedom to Spend within Limits
• Central/Overhead/Tax
• Link of Unit Plan and Budget

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Ministry facilitation of the process

• The Ministry has provided basis for creative
  dialogue at institutional and regional levels,
  but still wider scope for incentives, such as
• adjusting mechanisms for bids to TEKES and the
  Academy, and for other Ministry initiatives in
  order to encourage and reward joint submissions
  from HEI, especially across the binary line.
• stimulating inter-disciplinary degrees,
  consistent with Mode 2.
• encouraging multi-institutional Graduate Schools
  (not necessarily regional, of course).
• devising new mechanisms for quota allocations,
  funding formulae, cost sharing,
  interdisciplinarity, related to performance
  agreements for entities rather than single HEI.
• incorporating in the next appropriate round of
  performance agreements, the obligation for HEI to
  produce concrete proposals.

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Ministry facilitation

• encouraging HEI to intensify cooperation at
  regional level, in parallel with the
  re-configuration process, in terms of e.g.
• cooperative strategic planning and performance
  agreements
• resource utilisation
• student mobility and credit recognition,
  especially on a trans-binary basis
• joint marketing.

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Planning, Governance, and Institutional Management

• Both sectors in the dual system seem to have
  reasonable degrees of autonomy at present, but
  opportunities for wider autonomy to encourage
  entrepreneurialism exist, including
• diversify the economic base of the university
• university share buying
• vary overheads
• spend surpluses in strategic areas
• own property
• increase productivity creatively at a devolved
  level, especially in terms of staff utilisation
• use new salary structures flexibly
• have greater scope for personnel (re)deployment
• direct investments in areas of strategic
  significance to the

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Opportunities for wider autonomy, continued

• switch resources across academic areas in
  relation to patterns of varying demand, decline
  and growth
• charge fees and full-cost pricing at appropriate
  levels for commercial and other services.
• Some of the above call for changes in procedure
  and regulations others for change in legal
  status

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Polytechnics and accountability

• Accountability is split between the Ministry and
  the municipality, and, in some cases, more than
  one municipality, which does complicate the
  autonomy accountability balance.
• The motivation for more autonomy in the
  polytechnic sector springs from the need to
  become entrepreneurial
• the possibilities of creating quite distinctive
  institutional profiles
• the desire for the greater and discretion
  efficiency which should follow from devolution,
  especially speed of decision-making
• the desire to manage property assets properly
• the desire to use surpluses for strategic
  investment.

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Governance and Institutional Status

• Closely related to the above is the question of
  institutional status, which at present is very
  much that of a unit of the Civil Service, with
  all this means in terms of adherence to budget
  legislation, operating freedoms etc.
• Whilst there is emerging consensus that more
  autonomy is desirable, there is concern as to
  whether HEI will be able to manage it
  effectively, and this raises issues
• It seems very appropriate to redefine the HEI
  (both polytechnics and universities) as so-called
  Legal persons, rather than as civil servant
  units. Within this approach, there are
  alternatives for institutions
• As corporations
• As foundations

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Governance and Institutional Status

• However, whichever avenue was followed, the
  assumptions would be that
• ownership of all assets would revert to the
  legal person
• the local authorities would cease to be the
  controlling agency in respect of polytechnics,
  but would need to be intimately involved in any
  governance arrangements. This would apply to
  multiple municipal control and potentially ease a
  currently complex situation
• polytechnics and universities are an important
  tool in regional development hence the
  importance of the involvement of municipalities
  in governance (certainly of polytechnics, but of
  universities too) and their continuing financial
  support of polytechnics.
• By definition, the legal person would assume
  significant devolved responsibility from
  government over a range of domains e.g.
  investment, property, share-buying etc

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Governance and Institutional Status

• In the event of the adoption of the legal
  person principle, it would be necessary to
  establish a governing body or board of trustees
  for each type of HEI accountable to government
• The purpose of such a body would be to operate at
  a strategic level, interacting with stakeholders,
  improving the institutional infrastructure, but
  not interfering in institutional management or
  the academic domain
• To allay concerns regarding the capability of the
  institution to manage autonomy and to realise its
  entrepreneurial/societal potential, it would
  probably be necessary to
• conceptualise the rectorate as a senior
  management group with defined portfolios,
  executive authority

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Governance and Institutional Status

• ensure that Senate and its committees exercise a
  strong strategic and quality assurance role.
• recast deans as executive deans rather than
  collegial deans with minimal authority.
• evolve the institutional culture to one which was
  reasonably entrepreneurial.
• revisit personnel policy in the light of the
  above.
• determine how the institution level strategic
  planning processes should be evolved.
• conceptualise the nature of internal devolution
  to larger basic units and faculties, consistent
  with a more entrepreneurial and creative need.
• The autonomy accountability relationship will
  have shifted somewhat in the light of the above

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Governance and Institutional Status

• Adjustments to performance agreements necessary.
  This, in principle, seems admirably suited to the
  proposed new scenarios and proposed legal
  person status and, moreover functions across
  both sectors, to general satisfaction.
• Monitoring processes and data (KOTA/AMKOTA) are
  the principal means of monitoring system
  effectiveness and efficiency (in addition to the
  data delivered by Statistics Finland), though
  various aspects might be improved.