In an earlier blog post, I calculated that universities made about $1.3 billion in 2018 from teaching domestic students. This post looks at profits and losses by field of education. Due to data limitations, the analysis is restricted to domestic bachelor degree students in Commonwealth supported places.
The first post included several methodological caveats. In drilling down further I must add more words of caution.
Costs are allocated according to the ABS fields of education. These do not necessarily correspond to the faculties and departments that organise and pay for teaching, and which have common cost structures from shared infrastructure and staffing.
For example, ideally law, which often has its own faculty, would have been separate from other ‘society and culture’ fields like humanities and social science. Economics is usually taught in commerce faculties, and so its costs would be closer to those of business courses than the ‘society and culture’ category in which it is placed. (If the ABS has ever had a worse idea than ‘society and culture’ I am yet to see it.) Read More »
Last month the government released the latest teaching and scholarship cost data, which is for 2018. The bachelor degree data by field of education is here, and Deloitte Access Economics also provides a detailed report. The Deloitte report looks at costs compared to discipline-level funding rates, but does not aggregate these up to analyse teaching’s contribution to sector finances. This post tries to do that.
As Deloitte’s report notes, teaching cost numbers should be used with some caution. Universities are multi-purpose institutions, carrying out teaching, research, community engagement and other activities. Staff and facilities are often not dedicated exclusively to a single purpose, and so costs need to be attributed to different activities. University accounting systems differ in their design and their ability to allocate costs in a detailed way.
Because of joint production, any ‘profits’ on teaching are not necessarily cash left over that universities can decide how to use. The money may already be spent on the research time of staff employed on a teaching and research basis, or in the capital and running costs of university buildings used for teaching and research.
With these caveats, across the sector Deloitte estimate that 52 per cent of university expenditure is attributable to teaching and scholarship. Based on the university finance report for 2018, that means Table A universities spent about $16.7 billion on teaching in 2018.Read More »
As of this morning eight universities are offering 43 ‘undergraduate certificates’ in the government’s university short courses program. Last week I outlined the then multiple legal and funding difficulties of ‘undergraduate certificates’.
But as I was writing that blog post a band aid legal fix was being applied. Undergraduate certificates have been temporarily added to the Australian Qualifications Framework. They can be awarded between this month and December 2021. This gets universities, and the Department, which otherwise lacked legal authority to pay Commonwealth Grant Scheme or HELP money to universities, off the legal hook.
Apart from highlighting AQF governance weaknesses? – it is just an agreement between education ministers – this leaves the question of what happens to undergraduate certificates after December 2021.
The links between short courses and qualifications
In answering this question we are not starting with a blank sheet of paper. The AQF recently had a major review, which reported in October last year. The review was sympathetic, as I am in general, to helping students build towards a credential. Students don’t necessarily want or need a formal qualification, but where they do we should, where we can do so efficiently with low integrity risks, help them achieve their goal incrementally and cost effectively.Read More »
A week ago, when I last reported on the saga that is university eligibility for JobKeeper, the government had just announced that its grants would be counted in university revenue, making it harder for universities to get the required 30 or 50 per cent (depending on their size) drop in their income.
Despite this, I thought that some universities might still be eligible. The University of Sydney believed that it was. This was because while no university is likely to be down 30 or 50 per cent on its annual revenue, the timing of when international students pay their fees could mean that, in certain months, the cash flow reductions were that large.
The amended JobKeeper rules dash that hope. While other organisations can calculate their revenue losses over a monthly or quarterly period, for universities the relevant period will be the six months starting 1 January 2020. Over a six-month time period, the fortnightly payments of Commonwealth grants are likely to push university revenue losses back below 30 or 50 per cent. Read More »
Update 4/5/20: It seems that State education ministers have agreed to temporarily putting ‘undergraduate certificates’ on the AQF.
Update 5/5/20: My take on whether ‘undergraduate certificates’ should stay on the AQF.
The COVID-19 higher education ‘short courses’ – four subjects at discount student contributions – are now appearing on CourseSeeker. As of this morning, there are 64 courses from eleven universities.
Most of them are graduate certificate courses. While letting the minister announce lower student contributions sets a bad precedent, these courses are not otherwise problematic. A graduate certificate is a credential listed in both the funding legislation and the Australian Qualifications Framework.? The university can legally receive Commonwealth Grant Scheme payments and the student is eligible for HECS-HELP.
The same cannot confidently be said for the other short courses. Although the minister’s early terminology of a ‘diploma certificate’ is not used, as of this morning there are 17 ‘undergraduate certificates’ (such as an Undergraduate Certificate in Information and Communication Technology) from three universities and a Professional Certificate in Aged Care from a fourth institution. Read More »
Update 2/5/20: The government has further changed the rules so that university income must be assessed over the six months from 1 January 2020.
When I first wrote about universities and JobKeeper, at the end of March, I concluded that although they were included they were unlikely to meet the required revenue falls. Especially for the universities with $1 billion plus annual revenue, the required 50 per cent fall in revenue seemed like a financial disaster beyond what COVID-19 issues could trigger.
Since then, the universities and JobKeeper story has had many twists and turns. In early April, universities briefly hoped that they would only have to meet the 15 per cent decline in revenue required of charities (they are educational charities). But the JobKeeper legislative instrument specifically excludes institutions listed in Tables A and B of the Higher Education Support Act 2003, which cover all public and private universities.
This flips the normal funding biases of higher education. Generally, educational organisations that were publicly-funded before 1989 have privileged access to government subsidies. Now, for a brief time, the educational charities that are not in the pre-1989 group have easier access to public funding. They only have to show a 15 per cent decline in revenue, instead of 30 or 50 per cent for Table A and B institutions, depending on their revenue. In 2018, 41 non-university higher education providers were registered educational charities.*Read More »
At least temporarily, some domestic students are financially better off due to the government’s COVID-19 measures. This is due to increased income support payments and JobKeeper exceeding their likely pay if they had been working.
Eligibility for JobKeeper is a two-stage process. First the employer has to be eligible, with a 30 per cent reduction in revenue for businesses with revenues below $1 billion, and a 50 per cent reduction for business with revenue above $50 billion. Most charities have a lower threshold of a 15 per cent reduction in revenue.
I have no direct data on how many students are employed in eligible firms, but student employment is concentrated in industries that we know have been hit hard by COVID-19 shutdowns.
Second, the student has to be an eligible employee. In the ABS Characteristics of Employment Survey for August 2019, about two-thirds of employed students aged 17-30 years who are studying full-time meet the criteria. They have either on-going employment (using the entitlement to paid sick leave proxy) or are casuals who have been with their current employer for 12 months or more. This analysis includes all students, not just higher education students.
[Update 25/4/20: The Treasurer has announced that full-time students aged 16 and 17 years will not be eligible for JobKeeper, adding an age condition that slightly affects my analysis.]
If these tests are satisfied, there is a flat payment from the government, but paid by their employer, of $1,500 a fortnight. This is likely to be much more than full-time students usually earn. According to the Characteristics of Employment Survey, their median earnings are $320 a week, or $640 a fortnight. JobKeeper is likely to more than double earnings for eligible students until it expires on 27 September 2020. Read More »