Universities ‘overfunded’ relative to other education sectors

Universities receive more funding relative to the size of the higher education sector than primary and secondary schools across developed nations, according to a new analysis.

The analysis in the latest edition of the Organisation for Economic Cooperation and Development’s Education at a Glance data set compares public funding for different levels of education with the distribution of students between each sector.

Using a statistical measure for the relative allocation of resources, known as the location quotient (LQ), it finds that on average across the OECD, higher education received the most funding relative to its share of full-time equivalent students in 2018.

Tertiary education had an LQ of 1.07, according to the analysis – where 1 represents parity of public spending to the distribution of students – while secondary schools had an LQ of 1.03. Primary education, at an LQ of 0.92, was “slightly underfunded compared to the share of students enrolled at this level”.

The data on individual countries show that universities in Mexico and Turkey receive the most funding relative to student numbers, followed by the UK. At the other end of the scale, countries where higher education appears to be underfunded by the government relative to its share of students include Australia and South Korea.

According to the report, “this analysis clearly shows that some OECD countries emphasise broad access to tertiary education, while others invest in near-universal education for children”.

Speaking at the launch of Education at a Glance on 16 September, Andreas Schleicher, the OECD’s director of education and skills, appeared to focus on the UK as an example of a system where policymakers may want to rethink the balance of education funding.

Quoting other figures from the report, he said that “spending per student is twice as high at the tertiary level as it is at the lower levels” in the UK.

“And that really is something that is worth reconsidering. If you think where education makes a real difference, it is actually in building foundations. Where you can justify public money best is really in the early years.”

He added that “if I look at the last 10 years in the UK, spending on schools has more or less stagnated and spending on higher education is going up and up”, although he did – as he has in the past – go on to praise the student loan system in much of the country that passes a share of the costs on to graduates.

The LQ analysis uses “initial sources of funds” for public spending, which for the UK would mean student loan outlay is counted as public expenditure, according to the OECD. Its LQ may therefore be lower if later contributions from graduates were included.

However, there may be concerns that, coupled with Mr Schleicher’s comments, such an analysis could be seized on by policymakers and commentators keen to see money for universities cut in the Westminster government’s upcoming Spending Review.

Nick Hillman, director of the Higher Education Policy Institute, said that although there were “all sorts of problems basing national decisions on international comparative data, which is rarely as comparable as people assume”, such observations still “certainly” presented a risk for universities.

However, he said if politicians wanted the UK to continue having a “world-class” sector, “we all need to recognise that it is expensive to deliver, and we need to go on providing clear and robust information about the cost base of universities”. 

“Universities can also help themselves by showing they can act responsibly in things like controlling spiralling pension costs. No chancellor is going to want to provide higher education with a generous spending review settlement if they think the sector cannot take bold decisions when necessary,” Mr Hillman said.

simon.baker@timeshighereducation.com