COVID-19 means that universities should not be held to performance funding targets

6/4/20: Since this post was written, the minister has indicated that performance funding is being reconsidered due to COVID-19.

The government’s university performance funding scheme was always based onĀ  questionable assumptions. Among them is the belief that we can reliably distinguish a university’s contribution to various outcome indicators from the other influences on those same numbers.

I’m sceptical enough of this in normal times. But COVID-19 means that, despite the extraordinary efforts of academics and other university staff to provide continuity of education and student support, three of the four performance indicators – graduate employment, student satisfaction, and equity group enrolment share – will or are likely to worsen compared to recent years. The fourth – attrition – will probably show a positive trend that also has little to do with university performance.

Due to the total amount of performance funding being linked to population growth, COVID-19 driven changes to migration levels will also reduce how much performance money is on offer.

Graduate employment

Let’s start with graduate employment, which has a 40 per cent weighting in the performance funding formula. As I argued in a blog post on Monday, previous record-bad employment results in 2014 will be significantly exceeded. Read More »

Universities with good performance may still miss out on performance funding

Last week the government released more detail about how its university performance funding scheme is to work (in the same week that the re-badged Department of Education, Skills and Employment’s administrative arrangements, showing some very dry bureaucratic humour, listed as one its responsibilities ‘reducing the burden of government regulation’).

Last week’s document confirms that the legal basis of performance funding will change from 2021. As I pointed out last year, at the moment there is performance funding but no performance fund. For 2020, all the government offers is to pay universities a bit more of their demand driven funding entitlements.

If a university’s demand driven entitlements (bachelor-degree EFTSL * the relevant funding cluster rates) don’t reach the performance funding maximum grant (2017 demand driven funding + special deals done since + population-growth based performance-contingent increment) it will not get the performance funding, or will get only part of it. Read More »

The legal basis of performance funding

In December 2017, the Commonwealth froze maximum Commonwealth Grant scheme funding for bachelor-degree places for the next two years. In subsequent years, the maximum payment will increase in line with growth in the 18-64 year old population, conditional on universities meeting performance indicators.

Just before the 2017 announcement, I outlined its legal basis. It used university funding agreements to set the maximum amount, with the method chosen because it did not need parliamentary approval.

At least initially, performance funding will be administered via the funding agreements, which include a standard statement that should the university meet its performance targets it will be advised of a new maximum funding amount.

A drawback of this method of allocating performance funding is that there is no performance fund. The underlying demand driven funding system is still operating, and under section 33-5(5) of the Higher Education Support Act 2003 universities receive the lesser of their demand driven funding amount (bachelor-degree full-time equivalent student places times the relevant Commonwealth contribution) and their maximum funding amount.

All the Commonwealth is doing is promising universities it will pay a little more of what they would have been entitled to anyway under demand driven funding. Read More »