Dutch Universities of Applied Sciences towards diversified income: Saxion UAS case

Siep Littooij1

Paper presented at the International Conference 2010 on Decentralization in Higher Education from a Global Perspective: Implications for Vietnam and the Region; Sub-theme Diversification of Resources, Ho Chi Minh City, 29, 30 July 2010

ABSTRACTThe profile of Saxion University of Applied Sciences is representative of many other Dutch Universities of Applied Sciences. Saxion UAS is a large multidisciplinary university, located in the East of the Netherlands, predominantly teaching for Bachelor degrees in the professions. Saxion, when contrasted internationally on diversity of funding sources, displays a high dependency on teaching income. Emerging and stated categorical policies drive change in the Dutch higher education landscape, drive towards enhanced applied research, more outward orientation all the time while enhancing educational quality. Funding opportunities challenge the development towards external benefits of research, rather than education enhancing knowledge generation, which is the natural propensity of staff. Saxion learns to deal with research and acquiring research funding through the national RAAK programme, of which the lessons learned include the need to pick a position on the knowledge value chain, to aim for state of the art knowledge as a means towards success and to look at external demand articulation in a responsible way. Moving towards diversified funding, the organization model adapts so that the Board remains in charge of strategy and research finds strength in distinct organizational units. The university provides centralized services to support diverse funding models, while culture changes are supported to accommodate acceptance of funding diversity.

Dutch Universities of Applied Sciences towards diversified income: Saxion University of Applied Sciences as case study

Dutch Universities of Applied Sciences (UAS) are defined by law as institutions of higher education. Established mostly in the middle of the last century, some go back to teaching institutions with over a century of history, while all have a history of mergers to grow to the current sizes. The Netherlands now has 39 of these universities, out of a total of 53 universities. The other universities are research or academic oriented universities. The Dutch universities of applied sciences employ about 38000 staff and faculty and teach approximately 400000 students, approximately 2/3 of Dutch higher education students.

Predominantly, students acquire Bachelor degrees in 4 years, including approximately 1 year of practice. The universities take part in national experiments to develop and teach undergraduate 2-year programs at the level of ‘Associate Degree’. A limited number of students continue on to graduate with a professional Master. The UAS are either large multidisciplinary institutions with regional coverage, alternatively are highly sector specific institutions that draw students into specialist programs. The UAS teach for the professions and are engaged with the profession through a host of mutual ties, for example with professional associations or economic sector representations.

1 Manager International Project Desk, Saxion University of Applied Sciences, The Netherlands

The combined annual budgets (2005) amounted to approximately 2.7 billion euro, consisting for more than 2/3 of state budget contribution, earmarked for teaching. The underexplored strength yet of the UAS is the potential for applied research, a function that is only realized through non-state funding. The budget contribution, provided as a lump sum, is calculated using a formulai that includes student numbers and study performanceii. The remaining budget is generated as tuition fees paid by students and third party incomes. The annual available budget amounts to 7.647 Euro per student.2

Total funding for UAS 2005Fund type UAS NL 2005iii

Saxion UAS 2009iv

Euro (million)

Share 2009 Share

Budgets 1851 68,2% 108234 68,0%Tuition Fees 483 17,8% 31423 19,7%3rd Party 201 7,4% 9252 5,8%Other 180 6,6% 10272 6,5%Grand Total 2715 159181

Saxion UAS, a product of the 90’s institutional mergers, is now operating across several cities in the east of the Netherlands, with 13 schools. It teaches more 22.000 students (2009-2010) in more than 55 Bachelor programs, 7 Associate Degrees and 15 Masters.3 With 6 research centers a multidisciplinary research capacity has been established over the last decade.

The revenue in the year 2009 was a little over 159 Million Euro. The division over different income sources follows the national UAS pattern, with slightly more income from tuition and less income from 3rd party income.

Higher education policy in the Netherlands, part inspired by European policies, is slowly driving change, and subsequently diversification, of universities. Most relevant driver of this change is the impending change in the law on higher education, which will lead to a change in funding regime. It is also expected that the law will redraw the boundaries of the binary system of universities of applied sciences and research universities. The law is in draft form, has been discussed since 2005, but has not passed parliament as of mid-2010. The Ministry of Education Culture & Science (OCW) has issued two policy statements, driving towards applied research of UAS and enhanced international linkages for all higher education. The applied research function of UAS is to be realised in collaboration with (regional) employers and aims to strengthen the role of UAS for regional knowledge contributions. The association of UAS, in the meantime, has called for a higher education quality ambition. The national innovation system has a large number of funds and programmes available with specific goals and procedures, to which all universities are invited to contribute. This is collectively labelled here as the National Innovation Programmes. By and large, European policies drive in the same direction, providing funding for R&D and regional policies.

2 The annual available budget for Dutch research universities is approximately 23.085 per student, arrived at through a different funding formula for students and different earning opportunities, for a much larger part spend on research.3 The number of Bachelor programs as counted for full time four year students. Optional and partial offers increase the number Bachelor programs.

To obtain an international perspective of funding diversity, it is useful to compare the funding sources of Dutch UAS with (brief) data collected from European peersv, with a focus especially on the research function, such as funded by either government grants or business contracts. Standards and Poor’s assessment of total UK institutional income (2006) shows a 25% income from government funding for education. With another 25% generated in tuition fees, the teaching revenue amounts to just over half the budget. Roughly 28% is derived from funding for research, sourced from a range of funding sources. Uniformly understanding the figures is difficult, given different reporting statistics. Saxion UAS reports a figure of 7.105.000 Euro of research, both grants and contracts in 2009, or 3.9% of the total budget. Leporivi shows that, comparing aggregated and somewhat old data, Dutch University income from grants and contract is relative to Europe a small proportion of income. Saxion then earns a very small part of its income this way.

Lepori surveyed in 2007 the funding situation for European UAS, in order to formulate a funding policy for Swiss UAS. Recommendations for the future funding of this type of institution build on the binary divide underlying the mission and role the UAS in the national higher education systems. He then challenges the research mandate and the shape of research activities, that is here further paraphrased as:

“The ‘Lepori challenge’ to UAS grant funding strategy”

The challenge becomes clear by exploring the dilemma of the two research orientations known in Higher education that emerge from the mission that knowledge is to be simultaneously developed ánd taught. With UAS in binary national systems are predominantly operating as teaching universities, they suppose their knowledge delivery to society is realized through the pathway of

Development / the environment Customer demand driven: Customer

funded Focused on key (national) theme’s Institutional co-funding in relation to

economic partners Technology transfer to meet immediate

customer demands

Enhancement of teaching ‘supply’ driven for students : Generic

funding Dispersed over all programmes Institutional funding towards excellent

professionals Technology development to meet

human capital demands in society

training students that enter the workforce upon graduation. Naturally such UAS are more interested in the enhancing their teaching. Research universities find their pathway through publications.

Surveying the Dutch funding landscape we can distinguish the different funding categories embedded in the funding policies, aiming for specific funding targets. The table below lists, without exhaustion, funding agencies or clusters of targeted funding programmes. The list on the right is not only short, the funding programmes are relatively small; the spending categories are comparatively narrowly defined.

Trends and opportunities for UAS, Targeted funding Knowledge & Research for the economic environment

Knowledge & Research for enhancement of teaching

KNAW Platform BetatechniekZonNW SKEFP7 EU RAAKInnovation Platforms EVDDelta’s & Valley programs NUFFICIndustry & BusinessLocal governmentEDF e.g. Interreg, EFRO

Given the policy environment that drives universities towards more applied research, coupled with funding diversification and the search for autonomy, the Lepori challenge for UAS then becomes clear. While the great majority of available funds drive the knowledge development for the economic environment, universities that stick to their teaching mission have only a limited chance to diversify their funding. The continuing dependence on teaching, with its associated funding model, deprives then UAS from autonomous choices.

Universities that wish to escape this dependency are faced with a learning curve, not so much because of their lack of research experience but from their engrained historic thinking mode that supposes the benefit of research takes the student-oriented pathway of delivering knowledge to society.

In the dialogue about the developing role and function of UAS in the Netherlands, OCW has established a research fund designated only for UAS. This RAAK programme ‘Regional Attention and Action for Knowledge circulation’ enables the UAS to gather learning experience about the various issues that need to be addressed in research. The association of UAS has

i Factsheet Bekostiging Hbo, www.ocwduo.nl, accessed 14 June 2010ii Website www.HBO-Raad.nl, accessed 14 June 2010iii Financiering en financien van het hoger onderwijs 2000-2005, van Klaveren, D; CBS 2006iv Annual report and accounts 2009, Saxion 14 June 2009, www.jaarverslagsaxion.nlv Revenue Diversification and Sustainability: A Comparison of Trends in Public Higher Education in the UK and US; Standard & Poor’s Performance Evaluation Services; Commissioned by The Council for Industry and Higher Education (CIHE) December 2008vi Funding models of Universities of Applied Sciences; Rector’s Conference of Swiss Universities of Applied Sciences, Benedetto Lepori 2007; Servizio ricerca USI-SUPSI, Lugano

established an intermediary foundation with employer organisation and research institutes also in the board, to dispense the fund in a competitive allocation model. Funded since 2005, the amount recently announced for 2010-1013 just surpasses 67 Million Euro.

The main ambition of the RAAK programme is to strengthen the UAS research capacity. Though articulated somewhat concealed, the set of documentation lists goals that could be interpreted as a desire to improve the demand ‘antenna’ of UAS among industry partners, stimulates the participation in peer to peer networking, develop research methods and to share knowledge, especially knowledge produced for specific target groups. Funding proposals must be submitted as consortia, through which the relations between UAS and SME’s are reinforced, as well as linkages with Academic University. Depending on the sub-type of the RAAK calls, core consortium partners can amount to 10 companies, with peripheral partners up to 50

The challenges in the formation of consortia with industry partners force an outward look. Meeting the proposal criteria for funding approval means that concrete research questions are addressed as articulated by SME’s (or public organisations). Through the collaboration in professional networks and industry clusters, UAS faculty has to acquire a much more precise understanding of research and knowledge demands in his/her professional field of work. Departing from the student oriented pathway of knowledge transfer, new processes of knowledge circulation are to be identified and actively serviced. To succeed, faculty must have an adequate understanding of the knowledge position they can deliver themselves. Alternatively they must source knowledge in the scientific realm on one side, then on the other side share and contribute to applications of knowledge in practice.

Reflecting on a few years implementation of RAAK, 3 strategic lessons are learned. First lesson is the importance of the understanding of how knowledge circulation functions and what the role of UAS means in the local environment. As a consequence, successful faculty manages to position each funding application in the knowledge value chain. A second lesson is to have aspiration and ambition in the knowledge function. Each research proposal will only be funded if the ambition is to add value to state-of-the-art work by ‘others’ and translate knowledge into applications that lead to success in collaborating industry organizations. The third lesson is that external, as articulated by responsible and committed partners, can only be intercepted and understood if the faculty see themselves and the UAS operate in an ecosystem. In such an ecosystem the UAS with its different partners are relating interactively, each with an own interest, but also living together in the local situation in such a way that is mutually supportive.

From these lessons and emerging conclusions, Saxion now recognizes and experiments with a re-iterating two step funding acquisition strategy:

1. Act in dialogue; Working together with actors in local industry, the profession, the community, developmental goals can be jointly identified and funding searched. The knowledge sharing pathway with society becomes a two-way dialogue, in which students, researching faculty and publications all are instruments. Funding agencies are also part of local and national ecosystems. Saxion aims to participate in dialogue with partners and about themes and topics that matter.

2. Acquire through competition; Local business works with the most knowledgeable and ambitious partners, government agencies equally pursue funding for the most ambitious proposals in progressing knowledge. Through the selective funding procedures, each

application must reach the highest standards possible. Saxion understands that for translating the knowledge ambitions into funded proposals, market principles help to move the ecosystem forward and aims to compete at the top of its capacity.

This strategy has emerged partly from the past experience with success and failure in funding applications, partly by studying and anticipating the implications of the policy environment. The implication of the funding acquisition strategy is that a diverse range of topics is pursued. Each theme or topic has its own arena, in which the partners, the funders and the university all participate. This results in a multiplication of arenas, both horizontally and vertically. Strategic selection of pursued themes keeps the workload manageable. Matching the dialogue partners at various levels and in various arenas is the operational challenge for Saxion in pursuit of funding diversification.

Saxion is on its way to adapt to internally to diversifying funding. This is expected to yield results in the near future, however much also still remains to be done. The current strategy document, leading up to 2012, commits the organization strongly to an outward look. This is also realized by the board, the members are actively pursuing participation in regional and discipline specific organizations. More strategic guidance in fund acquisition is to be realized in the near future, in part through steering research programming, in part through enhancing the funding acquisition strategy. Through board participation in the local ecosystem, much information is collected and disseminated about the position of the university. Feedback is coming in, undoubtedly leading to fresh looks at the strategy beyond 2012. Internally, the board has refreshed the perspective on the Planning & Control cycle to include not only regular expenditure reviews but also income reviews.

Having centralized the organization in the early and mid-2000’s, now decentralization is gaining strengths which leaves the organizational units with added tasks in research and fund acquisition planning that were not visible before. Acquiring funds through competitive funding programs now takes place in a consultative and strategic decision making process, that acknowledges funder rules. The organization model shows a growing acquisition and administrative capacity dedicated to externally oriented research. Professors and faculty are increasingly participating in regional and professional networks and are busy opening up their research lines to adopt external demand.

A serious effort is training additional project managers from a pool of staff or faculty that not only have a professional role in the education-as-a-process organization, but also gain experience in working in individual projects. With a few centrally appointed coordinators for research, for project capacity development and for scouting funding Saxion is enhancing its capacity to acquire a wider range of funds. Work is and still needs to be done to align further the general administration function with project and funder requirements.

The main challenge for the near future is the culture of the institution. While research readiness is growing and external demand articulation finds its place, an outreaching and entrepreneurial attitude towards funding acquisition still has to reach a higher level. Internal processes and attitudes towards both tangible and intangible costs/benefits of knowledge sharing through non-students pathways needs still to sharpen up. For the near future, the debate about the optimal pathway mix of providing knowledge to society will continue to challenge the funding strategy.