The communique from last Friday’s education ministers meeting stated, in part, that:

The Teacher Education Expert Panel … will focus on strengthening the link between performance and funding of ITE [Initial Teacher Education]. This will include but not be limited to advising on how Commonwealth supported places for teaching should be allocated based on quality and other relevant factors. [Emphasis added.]

This post examines how the government might go about doing this and the problems it would face.

Discipline-level funding under Job-ready Graduates

An initial problem is that the government does not allocate Commonwealth supported places to teaching.

Under section 30-10 of the Higher Education Support Act 2003 the government has no power to allocate student places except for ‘designated courses’, of which more below.

Education is not designated. It is funded under a block grant for ‘higher education courses’. Dollars rather than places are the unit of allocation and the entity that receives the allocation is a higher education institution, not a course or discipline. Recipient universities are free to distribute these dollars between courses according to their own priorities.

With its COVID-19 short courses the previous government bypassed the restriction on allocating student places by allocating dollars to specific courses instead. Using the funding agreements to quarantine dollars for education would, however, be a bad move. It is inconsistent with the apparent legislative intent, which is for university flexibility except in the case of designation. We need to restore full operation of the rule of law in higher education policy. Without amending HESA 2003 that means designation.

Designation

With designation the unit of allocation is student places to specific courses at specific higher education institutions. Currently only medicine is designated, but the minister can by legislative instrument add more courses (section 30-12 of HESA 2003). Such a legislative instrument is subject to disallowance by either the House of Representatives or the Senate. The number of places is then set in university funding agreements.

While designation of teacher education would be clearly legal it would have significant implementation issues.

Technocratic issues in allocating teacher education places

Block grant and demand driven funding systems support localised decision making about how many places to provide in which courses. They are adaptive systems, able to move quickly in response to changing circumstances. Technocratic systems of centralised allocation rely on bureaucrats and politicians to get the supply decisions right. With multi-month decision making processes and three year funding agreements if they get it wrong it stays wrong for a long period.

For teaching, the communique and the earlier Lisa Paul report on teacher education set a goal of ‘quality’ and ‘performance’ playing a larger role in how much funding each university gets for teacher education. So universities with demonstrated quality or performance on yet-to-be-determined metrics would get a larger share of student places/funding. But quality and performance are hard to measure.

Federal education minister Jason Clare has focused on the metric of completion rates, saying that only 50 per cent of teacher education students complete. That number seems to be the six year completion rate at 52.9 per cent for the 2015 teaching commencing cohort. But 14.6 per cent of the cohort were still enrolled. At the nine year mark, 67 per cent of the 2012 teaching commencing cohort had completed, with 4.7 per cent still enrolled.

The completion rates report is potentially misleading because it is based on individual students rather than courses. So six years after starting a teaching course 52.9 per cent of the original cohort had been awarded any bachelor degree, whether in teaching or something else. So some ‘teaching’ completions’ are of another course and some completions attributed to other courses are people who transferred into teaching and finished that.

University-level teaching commencing student attrition rates differ significantly, which if low can be a sign of quality issues. At the six year mark the proportion of students who had neither completed nor were still enrolled ranged from more than 40 per cent at a couple of universities with high online enrolments to 11 per cent at some Group of Eight universities. (Completions by university and other variables can be calculated from this clunky PowerBI site.)

However student characteristics have a significant effect on completions and many of the reasons given for dropping a course are outside the control of universities. Isolating the element of outcomes that can be put down to university ‘performance’ is difficult.

There may also be an issue with the Department’s data not capturing all teaching completions. The Australian Institute for Teaching and School Leadership says it has identified 10,146 additional completions between 2005 and 2019 that are not in the administrative data. This is equivalent to a 4 per cent under-count.

The system is always demand constrained

The technocrat view of which universities teacher education students should attend may not align with the universities they want to attend. Australia has a commuter campus system with high rates of students living at home compared to the UK or US. If a course is not available locally moving may not be feasible and so no enrolment occurs. Many teacher education students are mature age, with work and family obligations that also restrict their movements. The Lisa Paul report recognised the potential issue with regional campuses and students.

So one risk is that reallocating teacher education places exacerbates overall teacher shortages by reducing places in the lower ‘quality’ universities prospective students want to attend and increasing them in higher ‘quality’ universities hours away from where they live.

Previous ‘quality’ policies such as the LANTITE test and NSW and Victorian admission rules probably partly explain why teacher training student numbers and completions are down and we have a teacher workforce ‘crisis’.

We don’t want another policy backfire that leaves us with a smaller teacher workforce than we would have under current policies.

How would designation affect the funding of universities with education faculties?

As part of the transition to designated education places the nominal existing funding for teacher education would have to be clawed back from higher education course maximum grants. Based on 2020 education EFTSL and 2022 funding cluster rates places in education are worth about $800 million, or around 12 per cent of the funding available for ‘higher education courses’ in 2022. The designation may not cover 100 per cent of all Commonwealth supported subjects coded to ‘education’, just to initial teacher education.

For universities with large education faculties, however, the claw back would be much larger. For Edith Cowan education places are 39 per cent of their 2022 higher education course funding, and for ACU 25 per cent.

These universities would be exposed to significant new risks. A reduced share of their funding would be protected from cuts from 2025, when the maximum basic grant amount for higher education course in their funding agreement cannot be lower than it was the previous year. Instead, the designated teacher education places and funding would be contingent on meeting performance criteria.

Designation can also lead to stranded places. For the reasons described in the previous section designation can cause mismatches between demand and supply. When universities cannot fill their designated teaching places they also cannot use the funding for other purposes. This was a common problem under the pre-JRG system, which also designated postgraduate coursework and sub-bachelor places.

In my analysis of 2018 funding agreements and enrolments 18 universities were ‘under-enrolled’ against the PG coursework allocations, resulting in a nearly $60 million loss of CGS funding. Much of this was due to unused teaching places.

More flexibility with public funding for students is the only good aspect of JRG. Going back to designation is not generally desirable.

One upside of designation, however, is that student places are paid at the CPI-indexed Commonwealth contribution rate. By contrast maximum grants for higher education courses are not indexed and could decline significantly in real terms due to current high inflation.

Another potential upside for universities of the proposed policy is that additional designated places in teacher training means that they could expand enrolments without using their higher education course funding, freeing up more resources for other disciplines.

Regional Indigenous teaching students

The education ministers’ communique mentions increasing the number of First Nations and regional students. JRG has a small demand driven system for Indigenous students from regional and remote areas. Unlike the maximum grant for higher education courses or the maximum places for designated courses there is no funding cap on these students.

Under the definition of demand driven in HESA 2003, however, it is mutually exclusive with designation. Regional Indigenous students who want to do teaching training would need to be accommodated within the designation cap.

The initial number of designated places could take into account the former demand driven education places, but flexibility would be lost and future Indigenous students would be put into funding competition with other applicants.

University incentives

As with JRG I don’t see that this process is giving sufficient thought to university incentives. There is a potentially wrong assumption that universities will want to expand their education enrolments as a reward for ‘performance’ or ‘quality’. But this may not be the case. It may not fit with the university’s strategy. Or university leaders may take the view that the incentives are insufficient. Recall that education was one of the fields that had its total per student funding cut in JRG. Risk averse universities may want to avoid a field with contingent funding, especially as the coming ‘Costello baby boom’ means that they will easily be able to reach their maximum grant with students in other courses.

Timing

Given the schedules of working groups on teacher issues, to report in December 2022, and the difficulties in overturning the funding agreements in place until December 2023, I doubt that changes could take place until 2024.

This would give universities vulnerable to the new policy direction time to preemptively cut their teacher training enrolments, to avoid having the associated funding clawed back and then potentially lost through reallocation under performance driven designated funding.

Conclusion

While of course it would be good to improve teacher training, the performance funding scheme has a JRG feel to it – an overly complex policy based on questionable empirical assumptions that will not be able to manage the associated incentive and risk problems. It could easily create more problems than it will solve.