 The Australian National University and the University of Melbourne, in conjunction with the Group of Eight hosted a two day symposium on university costs and compacts in July 2008.
Australian and international experts addressed key questions around: identifying the actual costs of teaching and research; and the expectations of government in return for funding the true costs of university activities.
Background reading:
 Collecting Data from European HE Institutions, 2005 |
Changes in University Incomes - Impact on University-based Research & Innovation, 2006 |
| European Universities Association - Funding University - Based
Research & Innovation in Europe, 2005 |
European Commission - Rates of Return & Funding Models in Europe, 2007 |
| OECD- Securing a Sustainable Future for Higher Education, 2007 |
OECD - Funding Systems and Their Effects on HE Systems, 2007 |
| White House Office of Management Budget- Cost Principles for Educational Institutions, 2004 |
Division of Cost Allocation Best Practices 2006, US |
Council on Governmental Relations Faculty & Administration Proposal Review, US |
Rising Above The Gathering Storm: Energizing & Employing America for a Brighter Economic Future |
| Gordon Winston - The Positional Arms Race in Higher Education |
David Longanecker - A Tale of Two Pities |
| National Center for Public Policy and Higher Education - Engaging Higher Education in the Societal Challenges of the 21st Century |
Committee for Economic Development -
Cracks in the Educational Pipeline: A Business Leader’s Guide to Education Reform
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| Squeeze Play: How Parents and the Public Look at Higher Education Today |
Solutions for Our Future (US website which raises awareness of the public benefits of American higher education) |
| Dutch universities and the implementation of a Full Cost System |
European Commission - "Delivering on the Modernisation Agenda for Universities", 2006 |
Presentations on 14 July (more documents will be added shortly) : | Dennis Jones, National Center Higher Education Management Systems, US | Tony Decrappeo,
Council on Governmental Relations, US | Stuart McCutcheon,
The University of Auckland | Jane Wellman,
Delta Project Postsecondary Costs, US | | Weldon Ihrig, The University of Washington | Travis Reindl, Lumina Foundation |
| Ian Creagh, King's College London |
Hutch Ranck, Dupont Australia & New Zealand |
| Jessie Borthwick, Department of Innovation Industry Science & Research |
Steve Egan, Higher Education Funding Council for England |
Presentations on 15 July (more documents will be added shortly) : Universities contribute to national innovation through their teaching, research and outreach services. The effectiveness of their contributions depends on the resources the universities obtain and how well they manage those resources to build strongly performing capabilities.
To increase the capacity of universities to contribute to innovation it is necessary to address shortcomings in the business model for funding the teaching of local students and the business model for funding research. In both cases, costs exceed revenues. Additionally, universities make losses overall from their community service activities. Under these conditions, universities continue to function through surpluses generated from international student fee income, donations from third parties, the rundown of capital assets, and reductions in service quality.
 The problem is most acute for research-intensive universities. The Go8 universities win some 70% of nationally competitive research funding. Competitive research grants are funded on average for only 70% of the direct project costs. Universities receive block funding towards indirect costs through the Research Infrastructure Block Grants Scheme. This scheme provides all universities, irrespective of their different costs structures, with only some 21.6 cents per dollar of competitive grants.
Australian universities cannot sustain quality in teaching, research or community service if the full actual costs of activities are not met. For universities to participate at the frontiers of world knowledge it is necessary that the actual costs of research are known and funded. Similarly, universities need to be properly funded to undertake effective knowledge exchange with industry and the general community.
Recognising the full costs of university activities - the direct costs and the indirect costs of administrative and capital overheads - enables better internal resource allocation, transparency of cross-subsidies, improved asset management and sustainable performance quality. The net result is better value for money for the community.
 Several countries have arrangements in place for recognising and funding research overhead costs. Some also have dedicated funding streams to encourage university-industry and university-community collaborations. In developing an appropriate model for Australia we should draw upon the experience of others, notably England, New Zealand and the United States.
Key questions to be addressed include: | How are actual costs best known? | | What is the range of possible methods for measuring costs inside and outside the university sector? | | What are the pros and cons of different ways of identifying costs for the university sector? | | What are the expectations of government in return for funding the true costs of university activities? | | How can universities gain increased flexibility and reduced administrative and reporting burdens? |
A joint initiative of The Australian National University and The University of Melbourne, in conjunction with the Group of Eight. Supported by the ANU Research and Innovation Policy Project. Link to further information
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GROUP OF EIGHT | AUSTRALIA
