Governing in a Downturn London 30 September 2010 Alison Johns Head of Leadership, Governance and...
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Governing in a Downturn London 30 September 2010 Alison Johns Head of Leadership, Governance and Managment The political context as seen from a funding council’s perspective and what questions we would like to see governors addressing Appendix A(ii)
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Transcript of Governing in a Downturn London 30 September 2010 Alison Johns Head of Leadership, Governance and...
Governing in a Downturn
London
30 September 2010
Alison JohnsHead of Leadership, Governance and Managment
The political context as seen from a funding council’s perspective and what questions we would like to see governors addressing
Appendix A(ii)
Context (1)_______________________________________________________________________________________________________________________
The Independent Review of Higher Education and Student Finance
The coalition Government’s first spending review
Context (2)_______________________________________________________________________________________________________________________
increasing student demand
international competition
cost pressures
the shift to a new business model
technological advances
Public concerns_______________________________________________________________________________________________________________________
Unmet demand
Graduate unemployment
High personal debts
The World as we know it
Sources of income for universities and colleges, 2008-09
Source: HESA finance record 2008-09, HEFCE-funded HEIsNote 1: This income includes a share of income in joint venture(s) of £97MNote 2: We do not have precise data on postgraduate fees paid by UK research councils. Full-time postgraduate research fees from 'other' sources is used to estimate this. ('Other' sources are those other than the SLC and DH).Note 3: 2008-09 refers to the academic year ending 31 July 2009
Universities and colleges
Total income £21,015M
Research grants & contracts
£1,240M (5.9%)
HEFCE, TDA & LSC funding
£7,097M (33.8%)
SLC/LEA fees
£1,909M (9.1%)
Department for Business Innovation and Skills UK Research councils
Other income£4,161M (19.8%)
UK charities£748M (3.6%)
Overseas student fees
£1,885M (9.0%)
Residences and catering
£1,178M (5.6%)
Other government
Non-research£1,360M (6.5%)
Postgraduate fees
£91M (0.4%)
Research£800M (3.8%)
Other research income
£545M (2.6%)
Other fee income £1,708MIncome for non-research services £967MEndowments £295MOther operating income £1,191M
Financial flows chart_______________________________________________________________________________________________________________________
HE Business models – from HE workforce framework
Six main income streams for English HE:
o Publicly-funded researcho Privately-funded researcho Publicly-funded teachingo Privately-funded teachingo Academic enterpriseo Other services
Illustrative examples of institutional strategic profiles based on income
Type B Type A
Type C Type D
Imagine a world….
Key propositions in Sunday Times article – 26 Sept 2010
• Fees up to £10k pa• Public funding for teaching reduced by 2/3rds• A cut of £3bn or 64% of £4.7bn T funding• With effect from2012• Degrees paid for by students mainly paid by them
from their future earnings• Overall reduction in state funding for HEIs circa
37% (incl £1bn off £6bn for research)• Subsidies on student loans gone > 2% rise
Stronger market dynamic_______________________________________________________________________________________________________________________
Improved information for students
Greater student choice
Continuous quality improvement
Supply side reform? Lowering of entry barriers for private providers?
Students numbers?
HEI pressures_______________________________________________________________________________________________________________________
Decreasing public spending
International competition in teaching and research
Increasing requirements for quality improvement
HEI pressures_______________________________________________________________________________________________________________________
Discussion
What are the pressures you are facing in the current and future political and fiscal environment?
What are the risks you should be thinking about and discussing at your GB?
What can we glean from USA?Regulation
• Increased oversight and compliance arrangements
• Greater transparency for students and parents• Growing need to improve and demonstrate
quality• Governance to show a moral compass: ‘doing
the right thing’• Efficiency and greater use of IT internet tuition
Key issues _______________________________________________________________________________________________________________________
changes in multiple income streams
a new balance of public, student, employer funding
new business models at institutional level
ensuring clear lines of accountability, effective governance of financial control at a time of change
maintaining market confidence through orderly transition
Market confidence at a time of change_______________________________________________________________________________________________________________________
“Press reports discuss the UK university system as facing profound changes. Whether the change evolves smoothly or not may depend on the consistent and historically effective regulatory framework provided by HEFCE, the regulator and main funding vehicle for the sector and on the ability of universities to forecast and plan for change. HEFCE’s tight regulation and oversight of the sector, as well as a historical record of strong extraordinary support for distressed institutions, offer the promise that change will be orderly”.
Opportunities_______________________________________________________________________________________________________________________
Imperative to differentiate
Get the price right
o what will the market bear?
o cover costs and reinvestment?
o what if price wrong?
o net price : gross price – what is your offer?
• bursaries and freebies
Others?
Questions governors should be asking?_______________________________________________________________________________________________________________________
Does our strategy…
o focus on strengths?
o widen the funding base?
o articulate the brand?
o focus on appropriate risks?
...and seek to where appropriate…
o disinvest?
o develop strategic partnerships
Questions governors should be asking?_______________________________________________________________________________________________________________________
To what extent are our resource strategies fit for purpose?
Where do we need to build capacity and capability?
o change management?
o human resources?
o estates
o finance?
o other?
Questions governors should be asking?_______________________________________________________________________________________________________________________
How efficient are we?
o new business models?
o cost management?
o culture change?
o short and medium term plans?
Strategic issues_______________________________________________________________________________________________________________________
Direction
Alignment
Efficiency
Role of Governing Bodies
Set StrategyMonitor
Performance
Protect Autonomy
Stakeholder Confidence
Public Confidence (FM)
• Risk management, control and corporate governance
• Information systems
• Financial sustainability
• No surprises – material adverse change requirement
• Regularity, propriety, value for money
• Audit systems
• Self-regulation
• Risk-based intervention
• Respected governance
Institutional Autonomy
HEFCE Support
• Communications
• Training via LFHE
• Benchmarking
• Good Practice (via CUC)
Communications
• Risk letter
• Grant letter
• E-mail alert -
• Annual meeting - 26 November 2010
• Institutional visits
HEFCE Governance Alert
• http://www.hefce.ac.uk/lgm/governance/
• https://www.jiscmail.ac.uk/cgi-bin/webadmin?SUBED1=governance-hefce&A=1
