Funding Higher Education Institutions in NorwayPresentation by Jan Roth Johnsen

Student delegation from the University of Oslo 9. July 2008

2 Norwegian Ministry of Education and Research

• General overview• Principles of governance• Funding system• Experience and challenges

The Norwegian funding model in higher education

3 Norwegian Ministry of Education and Research

This is Norway

• 4,7 mill inhabitants• Total land area of 386 958 km2

– sparsely populated• GDP per capita 462 000 NOK

– 2nd in OECD• Oil driven economy

– surplus national budget• Membership of EU: No

– but member of EEA 1 Jan. 1994• Capital: Oslo

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The Norwegian Higher education institutions

One unified system and one act• 7 universities• 7 specialised universities• 24 University colleges• 2 national colleges of art

• About 25 private colleges– Mostly small, but one very large:

• National School of Management (9000 full-time and 9000 part-time students)

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Organization and overall funding of higher education

• The total number of students is 224 200• 31% of 19-24 year olds are now enrolled in

higher education• Women now comprise the majority (almost 60

per cent) of the graduates• Tax based systems• Public owned higher education institutions• No tuition fees in public owned institutions• State subsidies/ grants for students

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Funding system introduced in 2002

• Both a simplification and an extension of the economic responsibility of higher education: – simplification because the state’s control more

resembles overall control of framework– an extension because they activate a larger

element of local financial autonomy and responsibility

• Control by the authorities is restricted to the control of frameworks by means of contracts in order to ensure attention to national targets– plus some restrictions concerning investment in

capital goods, such as e.g. buildings

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Principle

• Simple – easy to understand– avoid unclear and crossing incentives– few and general indicators

• Foreseeable and predictable– stable indicators and weights – transparent and open

• Institutional level• Neutral

– no geographic, institutional or other preferences

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Components

• Basic component (60%)– about 55% of university budgets, 69 for

university colleges

• Education component (25%)– about 21% of the total allocation for university,

28% for university colleges

• Research component (15%) – result based redistribution: about 10% of

university budgets, 1-2 for university colleges– strategic part: about 14% of university budgets,

about 2 for university colleges

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Overall figures 2008

Basic:12 719 mill NOK; 60 %

Education5 134 mill

NOK; 25 %

Research3 193 mill

NOK; 15 %

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Basis component

• Average 60% of the total funding• A residual after the education and the

research component is calculated• Stable subsidy based on historical experience,

local differences and special tasks• The national targets of activity is evaluated

annually

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Education component

• Average 25% of the funding• Incentive-based component• Open budget frame• A close link between actual production and

unit cost funding• Resources are allocated according to number

of credit points taken and number of students on international exchange programs

• Make the Ministry’s budgetary process more predictable for the institutions and improve their capacity for planning and rational operations

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Education component

• Each study is placed in one of six categories according to how expensive they are. 60 credit points (one years study) gives (in NOK): – group A: 114 000– group B: 87 000– group C: 58 000– group D: 42 000– group E: 36 000– group F: 29 000– each exchange student generates 6000 NOK

• Covers 40% of the costs

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Education component

• The national target of activity is evaluated annually

• If the number of credits obtained by an institution within higher education exceed the national target set by authority, the financial subsidy is increased on the margin

• Correspondingly the financial subsidy is reduced on the margin if the number of credits are less than the national target

• Alteration in the result component is based on the results two years ago

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Research component

• Average 15% of the funding• Two parts; strategic and redistribution• Strategic – resources for Ph.D.’s, scientific

equipment etc.• Redistribution between institutions based on

indicators (weights):– scientific publications (0,3) – Ph.D. candidates (0,3)– allocations from EU’s Framework Programs (0,2)– allocations from Norwegian Research Council

(0,2)

• Closed budget frame

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Research component -Scientific production

• Local, national and international level• Defined by the origin of the authors• Publication types

– complete book– article in ISSN-title– article in ISBN-title

• Weighting of publication types– Level 1 and 2

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The 3 main components

Long term perspective and stability

Special cost structure and historical funding

Criteria based upon R&D (Funding from EU, NRC, PhD-candidates and publications)

Number of ECST-pointsNumber of exchange student

Basic component Education component

Strategic component

Redistribution component

Quality and activity in research

Quality and efficiency in education

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Some experiences

• Strong incentives• Increased number of ECTS-credits• Focus on research and results. There is a

discussion if the focus has gone from quality to quantity

• General acceptance of the principles in the model

• Pressure to include new indicators• Debate of publishing indicator

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Some challenges

• Reliable data• Some frustration with the online

documentation system• Some researchers claim there is too much

focus on accountable indicators• The internal design of incentives in institutions

– need to behave as autonomous bodies

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Public Higher Education Institutions

Private Higher Education Institutions

Research Council of Norway

European Commission

Ministry of Education and Research (Gov. budget)

State Education Loan Fund

Population

(X-)Students

Taxes

Tuiton fees

Loan/ Grant

Repayment

Resultat based funding

Resultat based funding

Appl. transfers

Global fundingFin. flow chart