Higher education budget cuts

Published May 3, 2019
The writer is a senior research fellow at the Institute of Development and Economic Alternatives, and an associate professor of economics at Lums, Lahore.
The writer is a senior research fellow at the Institute of Development and Economic Alternatives, and an associate professor of economics at Lums, Lahore.

AUSTERITY is upon us. With the IMF programme imminent, the cuts are going to get deeper. Barring debt servicing and defence, all government expenditure is going to take a hit. Debt servicing will not change as this is an international obligation and unless a creditor is willing to roll it over or refinance it, we will have to pay back the money. The defence establishment will not let civilian governments take anything away from them. The question there is always about limiting the increases for them.

The Higher Education Commission has already been informed, and this has been reported in the press, that the budget for the higher education sector is going to be cut. Compared to what the HEC would like to demand, the cuts might be to the tune of 10 per cent to 15pc in recurrent expenditures and up to a whopping 50pc in development expenditures. The ultimate numbers will not be known until the budget has been finalised.

Even if people rally behind the HEC to get the cuts to be as small as possible, and it will take some rallying for that, some cuts are still going to be there. A 10pc to 15pc cut in recurrent expenditures for the HEC means significant cuts in ongoing university programmes across public-sector universities. And a 50pc cut in development expenditure means that plans for almost all new programmes will have to be postponed or cancelled. The throw-forward of existing development schemes is going to take more than what will be given for development expenditures. So, there will be no space for new schemes.

Recently announced initiatives will have to be postponed or cancelled. These include the university in Hyderabad and the advanced study centre at Prime Minister House. Similarly, the plans for expansion of existing universities and the promises of opening new universities in the districts that do not have this educational facility will have to be shelved.

Even if universities get to work on raising private funding, it will take years to build a successful campaign.

The cuts might be deep enough to even having to close down some of the ongoing development projects. If universities started multiyear projects last year or the year before, and the funding was supposed to come over the period of the next few years, these projects will come under pressure and universities might have to either get resources for these projects from other sources or might have to cut down on a few of them.

But the more difficult cuts will be on the side of the recurrent budget. Most of the recurrent budget in the education sector is salary related. If the HEC budget is cut by 10pc to 15pc, how will universities manage?

Most public-sector universities subsidise educational provision: the cost of provision is higher and tuition fees do not cover the total cost. The HEC transfers cover the rest. But if the HEC transfers go down, can universities raise their fee to cover cost? This would have implications in terms of restricting access to higher education.

Only a small percentage of Pakistanis currently enrol at university level. If the fee is increased, it will restrict numbers on the margins and the rise will, inevitably, hit the poorer students more. Can the PTI government, which made so many promises about increasing opportunities for our young people, and which keeps talking about the ‘demographic dividend’, afford to cut funding for higher education and cause unrest among young people as fee levels increase?

It should be borne in mind that if universities have to fund 10pc to 15pc of recurrent expenses and some part of their development expenses from fee increases, the latter will have to be substantial. In some places, these increases might have to be 50pc to 100pc and it will still not be enough. Can the government afford such a situation? Even more importantly, should this government force universities to raise their fees to get more money, or should it not allow such deep cuts in the funding for higher education?

Can universities raise financing from other sources? Universities, in general, cannot fund themselves fully through fees and government transfers alone. They usually have endowment funds, based on donations from alumni, philanthropists and other interested parties that partially cover expenses. The endowment fund is invested to generate a stream of income that covers some part of the recurrent expenses, and special funds are generated to take care of some of the capital and development expenditures (donation for a building etc). Public-sector universities in Pakistan, barring one or two, have never taken fund-raising seriously. The IBA’s new campus gives an interesting glimpse of what is possible, but the institute is quite the exception in public universities.

When news of expected cuts in higher education funding was reported a couple of weeks back, newspapers also mentioned that universities had been asked to raise ‘charity’ so that they would be able to cover the shortfall. If raising financing through alumni and/or philanthropists is now being thought of, public-sector universities are not going to get far with the idea. The mindset will have to change about funding sources and opportunities.

Even if universities can change the mindset and get to work on raising private funding, it is not going to happen very quickly. It takes years to create successful funding campaigns. And Pakistan is not known for its philanthropic giving to the education sector. So, this is not a short-term solution.

If funding cuts do come through, this is going to spell a lot of trouble for universities and for students who depend on low-fee programmes. The public universities cannot develop alternate sources quickly and will have to cut programmes and/or raise tuitions substantially. This will have a heavy cost for the higher education sector, for the youth of the country and for the party in power. The PTI had better be sure of its priorities before it sanctions deep cuts in funding for higher education.

The writer is a senior research fellow at the Institute of Development and Economic Alternatives, and an associate professor of economics at Lums, Lahore.

Published in Dawn, May 3rd, 2019



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