German universities denied funds in financial autonomy struggle

German lawmakers have blocked university funding worth hundreds of millions of euros and accused institutions of wasting money in the latest escalation of a long-running dispute over financial autonomy.

At least for some funding lines, university spending in Germany is still kept on a tight leash by the federal government, with the country’s top auditor demanding that universities pay back money that they have squirrelled away in reserves.

German universities are in a “struggle for autonomy”, said Frank Ziegele, the executive director of Germany’s Centre for Higher Education.

The dispute focuses on a multibillion-euro funding injection from the federal government designed to improve teaching. Although traditionally funded by their local states, institutions will receive an additional €20 billion (£18.2 billion) between 2007 and 2023 from the federal government as part of the so-called Higher Education Pact – which must be spent on teaching and learning.

Germany’s Federal Audit Office has issued a series of stinging criticisms of universities in recent years, accusing them of using this money to build up a financial buffer, raising questions over its deployment in construction projects, and the failure to improve staff-student ratios. 

One German MP who sits on the parliament’s powerful budget committee recently said that universities were spending the money in a “hair-raising” manner, frittering it away on things like car parks or meditation rooms.

In late November, the committee blocked 15 per cent of the pact earmarked for next year, equivalent to €190 million, demanding that universities stop using the money to build up a financial cushion, and focus the funding more narrowly on teaching and extra university places. A spokesman for the Federal Ministry of Education and Research said that universities need to “accelerate” spending €3.5 billion of unspent funds, and encouraged universities to use the pack for its “agreed” purpose, “to admit new students and to ensure high-quality studies”.

But critics say Germany’s auditors and MPs are taking an overly restrictive, narrow approach that makes it hard for universities to plan multi-year projects. 

The Federal Audit Office was “still sticking to this unrealistic system and cannot understand that universities need flexibility”, said Peter-André Alt, president of the German Rectors’ Conference. “This misunderstanding massively confines our space for action as universities.”

Judging universities on their student-staff ratios was a “very old-fashioned way to look at quality”, added Professor Ziegele.

In practice, it is also impossible for universities to construct new buildings, or renovate existing ones, purely to improve teaching – they are bound to be used for research or other functions, too, he said.

The broader problem for German universities is that they are caught between the demands of their local states, which generally give them the financial autonomy to spend money how they wish and build up reserves, and the federal government, which is playing an ever-greater role in funding but demands a strict audit of certain types of spending.

At the end of the financial year, some universities go through “December fever” where they rush to use up federal funds because any remaining money might be deducted from next year’s budget. This forced some institutions to splash out on “useless projects” to avoid losing funding the next year, said Professor Alt. 

“I don’t see a way out for the universities,” said Professor Ziegele. “This is really a bad situation. They will run into this problem again and again.”

david.matthews@timeshighereducation.com