Annual Conference of the Canadian Association of University Business Officers In Tune with the World

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Annual Conference of the Canadian
Association of University Business
OfficersIn Tune with the WorldMontreal, June
19-22 2006

• Higher Education in the New Millennium Breaking
  Boundaries
• Bernard Hugonnier
• OECD Deputy Director for Education

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Outline

• Governance
• Financing
• Quality
• Internationalisation

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I- Governance main challenges for higher
education institutions (HEIs)

• HEIs have to
• Adjust from an elite to a mass education
• Diversify themselves as education needs (society,
  economy, individual) diversify
• Find the right balance between their various
  missions
• Conserving and transmitting knowledge
• Forming students, future teachers and professors
• Contributing to basic and applied research
• Contributing to local development
• Contributing to enlighten moral and ethical
  issues
• Contributing to the development and deepening of
  democracy
• Ensure quality while higher education is
  massifying
• Find the appropriate financing resources while
  public funding is getting limited
• Modernise their governance and management
  (notably as regards human resources)
• Respond to the challenges of internationalisation
• To face world competition and changing
  environment

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Governance two main trends

• A widespread shift towards more autonomy and
  entrepreneurship
• A strong demand for better public governance
• The principal components of good public
  governance are
• Autonomy, accountability an transparency
• Efficiency and effectiveness
• Responsiveness and forward vision
• Higher education institutions are and will
  increasingly be asked to implement these
  principles

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Management of human resources

• High-quality human resources are essential to the
  teaching, research and public service missions of
  higher education systems .
• Several conditions have to be met
• Attracting top talent requires good standards,
  fairness in hiring, good working conditions and
  good institutional leadership.
• Issues regarding the ability to engage in outside
  consultation, intellectual property rights,
  working hours, parental leave, childcare, gender
  and minority inequities in faculty hiring needs
  to be addressed.
• The exchange of knowledge between the public and
  private sectors, through the movement of human
  resources, is to be promoted
• Regulations on dual employment or restrictions on
  participation in entrepreneurial activities by
  public researchers should be removed
• Centres of excellence and fellowships should be
  further developed to foster the mobility of
  researchers across research institutions and
  between them and firms.

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International environment and competition

• Domestic higher education systems increasingly
  face international pressures and competition
• Under voluntary harmonisation agendas (e.g. the
  Bologna process in Europe, which has led to
  similar initiatives at a smaller scale in Latin
  America and Asia)
• Under the pressures of international comparison,
  manifested by quality labels, ranking efforts and
  consumer choice
• As a result of the increasing frequency of
  partnerships and recognition agreements
• Like the older-established research universities,
  higher education institutions of all types
  increasingly see themselves
• More as actors in a global market
• Than actors restricted to a domestic role or
  agenda.

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Governance main challenges for
governments

• Governments have to reassess how best to align
  the activities of higher education institutions
  to national purposes
• Many countries, such as Japan, have chosen to
  devise new structures of governance, permitting
  higher education institutions to exercise wider
  autonomy over their own finances and management
• Other countries, such as New Zealand, have opted
  to make institutions more accountable for the
  accomplishment of public purposes through
• the control of their performance or outputs
• the establishment of performance reporting,
  performance contracts or similar tools of
  governance

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Governance main challenges for
governments

• Governments have to they ensure that
• Increasingly autonomous institutions will deliver
  the governments education and social policy
  agenda
• The public interest is adequately represented
• Financial incentives introduced for policy
  purposes do not cause HEIs to act sub-optimally
  reducing diversity and responsibility and perhaps
  threatening their own financial sustainability
• The risk will be minimized that a more autonomous
  and market driven university system will become
  financially unstable
• On the Edge Securing a Sustainable Future for
  Higher Education, OECD, 2004.

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II- Financing

• As higher education participation and total
  outlays rise, the sustainability of a heavily
  publicly subsidised model of finance is coming
  under pressure

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The growth in university-level qualifications
have been continuedApproximated by the
percentage of persons with ISCED 5A/6
qualification in the age groups 55-64, 45-55,
45-44 und 25-34 years (2003)
2
3
10
15
23
16
14
9
21
1
A1.3a
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Current entry rates suggestthat the growth will
continueSum of net entry rates for single year
of age in University (2002)

A3.1
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Higher tertiary participation is becoming visible
in the qualification of the workforce Percentage
of 25-64-year-olds with academic or vocational
tertiary qualification (10 countries with
steepest growth)
A3.4
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Financing

• Public authorities provide the bulk 80 or more
  of expenditure on educational institutions in
  half of all OECD countries
• In four countries (Australia, Japan, Korea and
  the United States), public authorities pay less
  than half

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Investment in high-level qualificationsExpenditur
e on tertiary educational institutions as a
percentage of GDP (2002)

B2.1
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Financing

• In more than two-thirds of the countries for
  which data are available, increased participation
  was possible because growth in the private share
  of expenditure outpaced growth in public
  expenditure
• In four out of the five countries in which the
  public share of expenditure increased, the
  increases were manageable only because growth in
  overall enrolments was low

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Changes in spending per student in tertiary
education (1995100, 2001 constant prices )
B1
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How much student should contribute and what is
the consequence on equity?

• The financial pressure on public spending due to
  rising participation in tertiary education will
  increase unless
• Individuals finance a larger share of costs
• Overall costs are reduced, through reductions in
  total numbers of students linked to population
  decreases
• And/or through improved efficiency of provision
• Historically, participation in higher education
  has been strongly correlated with family
  socioeconomic status and the educational
  attainment of parents.
• Recent expansion of access to higher education
  has done little to alter this pattern, tending to
  benefit the least advantaged socioeconomic groups
  less than others.

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How much student should contribute and what is
the consequence on equity?

• In countries where higher education is heavily
  dependent on public finance, this inequity in
  access and participation carries the risk of
  adverse distributional consequences (the less
  well-off subsidising education for the elite)
  unless income tax systems are highly progressive
• The pattern of participation or non-participation
  appears unrelated to the presence or absence of
  tuition fees
• This suggests that other factors (foregone
  earnings, cost of living during studies) as well
  as social factors play a role in influencing
  participation
• This also suggests that a change in the
  proportion of public versus private funding will
  not itself produce inequity so long as
• Adequate financing exists from whatever source
• Concerted efforts are made to make higher
  education more accessible

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Who benefits from higher education?

• International evidence suggests that individuals
  who acquire higher education qualifications enjoy
  substantial private benefits

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The returns on high level qualificationsPrivate
internal rates of return (RoR) for an individual
obtaining a university-level degree (ISCED 5/6)
from an upper secondary and post-secondary
non-tertiary level of education (ISCED 3/4), MALES
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Who benefits from higher education?

• Adults with higher education, on average, earn a
  third to three-quarters more than persons with
  just an upper secondary education, are a third
  less likely to be unemployed, and four-fifths
  more likely to participate in formal or
  non-formal education and training.

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The earnings advantage of educationRelative
earnings of 25-64-year-olds with income from
employment (upper secondary education100)
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III- Quality

• Improving quality of higher education is becoming
  a major concern as a result of the increasing
  participation rate
• Higher education institutions, governments, and
  employers aim at different objectives
• Institutions seek to improve teaching and look
  for localized and detailed information that can
  lead to such improvement. They also seek to
  improve student performance (e.g. limiting
  dropping rate) and this implies improved
  selection and career guidance processes and more
  autonomy
• Governments want to improve resource allocation
  and look for data about systems that enable them
  to make decisions in this areas, notably
  information on the impact of teaching and
  research, whether measured by student completion
  rates, graduate employment rates and earnings, or
  patents obtained.
• Employers want assurance that the graduates of
  higher education programs are well-prepared for
  working life
• These divergent orientations make the improvement
  and measurement of quality difficult

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Quality

• The growth of cross-border education has focussed
  attention on the international dimension.
• The guidelines developed by the OECD and UNESCO
  seek to address the consumer protection issue, an
  objective shared by governments and legitimate
  cross-border providers who want to protect the
  brand image of their higher education systems and
  services.
• A rogue provider can damage these reputations and
  exploit eager students, while overly strict
  barriers can deny students the benefit of program
  options that are locally unavailable, and create
  incentives for the emergence of unscrupulous
  providers
• Cooperation between sending and receiving
  countries and quality assurance and
  qualifications recognition institutions is thus
  necessary

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Quality the international ranking of universities

• The expansion of governmental schemes for quality
  has been accompanied by a proliferation of
  nongovernmental rankings or league tables,
  national and international
• These league tables are often criticised for the
  selection and weighting of their quality criteria
  or the appropriateness of ranking entire
  institutions rather than faculties or programmes
• However, they seem to be shaping the behaviour of
  institutions
• What is unclear is
• The extent to which rankings are shaping students
  decisions, institutional strategies, and
  governmental and employer choices
• Whether the changes they induce improve or
  diminish the quality, equity and efficiency of
  higher education systems
• The OECD might be asked by Ministers to develop a
  methodology to carry out an international ranking
  of universities

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IV- Internationalisation of educationForeign
students in tertiary educationby country of
study (2002)
C3.6
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Internationalisation of educationForeign
students in tertiary education (2002)Percentage
of foreign students to total enrolment in
tertiary education

9
8
7
6
5
4
3
2
1
C3.6
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Internationalisation of education and the
developing world

• Internationalisation and trade of higher
  education (ITHE) contribute to the wealth of
  developing nations in the following areas
• Development, modernisation and quality
  improvement of higher education through
• The development of trained professionals
• Updating programmes and curricula
• Creation of new institutions
• Enhancing competition between institutions
• Development of quality assurance and
  qualification recognition agencies
• Absorption capacity of tertiary education
• University research capacity
• Knowledge accumulation and technology transfer
• Human capital (skilled workers)
• Modernisation of the economy and society
• Enhancing trade and international direct
  investment
• Migration of high skilled labor
• Capacity in trade in H.E.
• Internationalisation and Trade in higher
  Education, Opportunities and Challenges, OECD
  2004

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Internationalisation of education and the
developing world

• Internationalisation and trade of higher
  education (ITHE) contribute to the wealth of
  developing nations provided that
• Foreign provision meet the needs of the importing
  country (economic, social and cultural needs)
• The brain drain risk is minimised
• The education gap between the least developed
  countries and the other developing countries is
  mitigated thanks to appropriate development aid
  in education
• Learners are protected from low-quality provision
  and qualifications
• Strong quality assurance and accreditation
  systems exist
• High international validity and portability of
  qualifications prevail
• International co-operation among national quality
  assurance and accreditation agencies is increased
• The risk for the stability and continuity of the
  education system is limited

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Internationalisation of education and the
developing world The brain drain issue

• Ageing population and the shortage of some skills
  in developed countries might lead to some brain
  drain from developing countries
• This might have a negative impact on the
  development, education capacity and health
  conditions in the latter unless actions are taken
  to transform brain drain into a mutual brain
  gain.

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Internationalisation of education and the
developing world the brain drain issue

• For instance
• American hospitals had in April 2006 118,000
  vacancies for registered nurses. Yet, there are
  many more Americans seeking to be nurses than
  places to educate them. In 2005, American nursing
  school rejected almost 150,000 application from
  qualified people (mostly because of lack of
  faculty, mostly because professor of nursing earn
  less than practicing nurses, and the gap is
  increasing as the demand for nurses is
  increasing).
• The Federal Government predicted in 2002 that the
  shortfall of nurses would reach 800,000 by 2020.
  The US Senate is hence considering to remove the
  limit on the number of nurses who can immigrate.
• This would have a direct impact on health care in
  developing countries notably India and
  Philippines which are sending thousands of nurses
  to the US every year.
• A nurse in Philippines earns 2,000 a year
  compared with at least 36,000 in the US. 80 of
  government doctors in Philippines have become
  nurses hoping for an American green card
• At present 12,000 to 14,000 nurses immigrate
  every year to the US. This number could grow 5 to
  10 percent a year with the new legislation.
• Should not the Congress instead provides
  appropriations for domestic nursing programs?
• Should not it be more beneficial for both the US
  domestic work force and developing countries?
• (Source New York Times, U.S. Plan to lure
  nurses may hurt poor countries, by Celia W.
  Dugger, May 24, 2006)

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Conclusions

• A new world needs new higher education
  institutions
• Boundaries need to be broken for HEIs to adjust
  and better integrate themselves into the society
  and the economy
• Many reforms are still needed as regards
  governance and management, financing, quality and
  internationalisation.

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• Thank you
• www.oecd.org
• bernard.hugonnier_at_oecd.org