Getting more value for money
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Transcript of Getting more value for money
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Getting more value for money
Wellington Group Meeting,54th SHEEO Annual Meeting
Chicago, July 18 2007
Don ThornhillIreland
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Why are we concerned with VFM?
Financial constraints/revenue limits
Opportunity costs Accountability to
stakeholders – especially for public funds
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Potential gains and risks
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Some potential gains
Clarity of purpose among all actors in the HE space
Greater effectiveness and more VFM
Diffusion of good practice
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Some potential risks
Focus on inputs
Focus on the measurable and overlooking the important
Race to the bottom?
Disincentives to experiment and innovation
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Focus on productivity -1
Yes … but be wary of the limitations!
Origins in statistical analysis of homogeneous economic sectors – agriculture and traditional manufacturing
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Focus on productivity -2
Not so robust when dealing with product and process differentiation, quality differences and heterogeneity ….and with multiple outcomes and objectives
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But worth the struggle!
Has the merit of getting us to focus on added value
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In a cost focused and revenue constrained environment do we need to remind ourselves and others why higher education is a concern for public policy?
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HE a desirable good
Economic Social Individual
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Economic
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Economic
HE driver of economic performance Critical to competitiveness and
comparative advantage Human capitalKnowledge capital Innovation capacity?
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Policy Response
Development of comparative advantage in economic activities requiring high levels of SkillsCognitive ability (including
organisational capacity, flexibility, creativity, new learning)
Knowledge capital Innovation
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Higher education - our systems, institutions and personnel - the key agents for delivery
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Challenge for system design
Relating inputs to outcomes
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Challenge of relating inputs to outcomes
Unquantifiable, difficult to quantify or indirect but important outcomes
And, for example, even where we can measure ….substantial international differences in outcome/expenditure relationships
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As well as measuring (ideally before we do) we need to pay attention to purpose, to form (structures and implementation mechanisms) and to measurement
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But key agents have different purposes!
Implementation agents (higher education institutions and faculty/ academics) have different (and essential) priorities and concerns
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Purpose – the challenge
System design for optimum outcomes in conditions of multiple objectives, funding constraints, uncertainty about the future and multiple stakeholders with different interests?
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What can the market teach us?
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”
- Adam Smith
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Features of a market approach
• Choice • Competition between providers• Price signals• Product differentiation • Incentives (positive and negative) for
performance • Responsiveness to market signals• User pays • …………..• …………..
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Inference?
• Use market where possible – and reasonable
• Make maximum use of “proxy market” instruments
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Proxy market approach
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Performance related “core”
funding
Bedrock funding
DirectState funding for
HEIsCompetitive funding new
initiatives
Experimental funding Research
funding
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1. Bedrock funding for undergraduate education and learning
capitation based
rates and criteria, rational, transparent, straightforward
equitable as between institutions
reflect cost differences
subject disciplinesstudent categories
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2. Performance related element in core funding
focused on very limited number of public policy objectives
ideally, benchmarked
not destabilising from year to year
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3. Major new initiatives
competitive funding
open and transparent process
expert assessment final
external membership
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4. Experimental and innovative programmes
discretionary funding
allow for experimentation
review
abandon or mainstream
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5. Research funding
non-competitive “foundation funding”
competitive performance-based institutional funding
competitive funding for research projects and grants (fellowships etc.)
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In each case
1. Monitor, measure, review and appraise
2.Use fit for purpose metrics
3.Try to relate inputs to outcomes where possible
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Response: Investing in a plan
Stakeholders advise on priorities:Government (TES), learners,
employers, iwi, ITOs, etc
TEO works with regional and national stakeholders (business, communities) to identify need,
and with other TEOs
TEC monitors outcomes
TEC and TEO agree outcomes for the approved plan, areasfor capability building, etc, and TEC decides funding
Quality assurance andmonitoring of
provision and TEO
TEC engages with TEO in relation to
contribution to network of
provision, shifts, performance of
TEO to date, etc
TEO develops plan to meet needs as basis for iterative
discussions with TEC
TEC establishes investment approach (IG, EBs)
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Some guidelines?
Reflect on • Purpose• Conceptual underpinning of
system• Form – structures and delivery
mechanisms• Measurement/ comparison/
benchmarking
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Otherwise
Risk of rewarding A when we want B!