Editorial | Urgent discussion of university funding, please

THIS NEWSPAPER’S report on Sunday of the worsened finances of Jamaica’s universities highlighted again the need for a robust debate on how, and who, should pay for higher education – a question around which the country has tiptoed for too long.

This is, at once, an economic, social and political question that transcends the mandate of the Education Review Committee headed by Professor Orlando Patterson, whose terms of reference, as enunciated by Prime Minister Andrew Holness, did not explicitly place this matter on their agenda.

Additionally, current circumstances also make it timely for The University of the West Indies (UWI), owned by Caribbean governments, including Jamaica, to expand on its proposal for private-sector investment in the institution (the model for which was not fully articulated), including whether it is still deemed feasible in the context of the COVID-19 pandemic.

These discussions should also take into account the future throughput to tertiary institutions, given the huge chunks of primary and secondary students who, for the year, have attended school only infrequently because they were without, or could not afford, the Internet connectivity to log on to digital classes. This, in Jamaica’s case, may have exacerbated the seeming trend of recent years of slipping enrolment in secondary schools.

The coronavirus pandemic had played havoc with the global economy. Jamaica is no exception. Gross domestic product for 2020 is expected to have declined by over 10 per cent. Tens of thousands of people have lost jobs. The long-standing problem of paying for their already-subsidised tertiary education has, in the circumstances, worsened for many Jamaicans.

Universities are finding it even harder to collect tuition fees, a situation further complicated by being forced to scale back services so as to be in compliance with the coronavirus protocols. They are having to be financially agile to maintain cash flow and meet their obligations.

For instance, Colin Gyles, the acting president of the University of Technology (UTech), disclosed that the institution liquidated more than J$1 billion in assets to meet its costs, including supporting some students with scholarships. It is good that UTech had assets to liquidate. That approach, though, is hardly sustainable.

For while UTech, based on its 2018 accounts (the latest available), had approximately $1.9 billion in readily convertible instruments, among its J$6.67 billion worth of assets, there were nearly J$1.7 billion in receivables on its books, over two-thirds (67 per cent) of which was owed by students. The Government, whose subvention of J$2.26 billion accounted for 31 per cent of UTech’s J$7.22 billion of revenue, owed the university nearly half a billion dollars. That was approximately 22 per cent of the value of the subvention.

Tuition (J$4.1 billion) accounted for 57 per cent of UTech’s revenue.

Such specific breakouts are not easily done for the UWI’s Mona campus, which, with an enrolment of more than 18,000 has, by far, the largest concentration of tertiary students in Jamaica. Mona’s accounts are consolidated with those for the entire UWI system, although the campus, based on the limited public information, is known to have, in 2017-2018, made a positive contribution of BDS$7.9 million to The UWI’s overall loss of BDS$95.2 million.

But Mona’s principal, Dale Webber, said that the campus’ tuition receivables were now as high as 35 per cent, a problem that is likely to be replicated across The UWI’s other campuses. That will give an idea of The UWI’s bottom line, especially if it is forced into write-offs, as was the case in 2017-2018 with significant amounts of debt owed by Barbados. The regional university’s audited accounts for 2018-2019 are not publicly available, but a summary report in a university publication showed a slight improvement on the previous year – a deficit of BDS$91.5 million.

FACING INSOLVENCY

Part of The UWI’s problem is that while it expanded rapidly in recent years, governments reduced their subventions (now hovering at around 45 per cent of income), and it has not been able to increase revenue from other sources fast enough. Jamaica, for example, has essentially capped its payments at around J$9 billion.

The UWI, the numbers suggest, potentially faces insolvency, or worse, unless it can dramatically increase its income, lower its costs, or find new and sustainable sources of cash. It is against that backdrop that the idea of some form of private-sector partnership, floated last year by its vice-chancellor, Sir Hilary Beckles, gained our attention. Professor Beckles, however, has not publicly advanced the conversation, including on what basis firms or individuals put capital in the institution and how this might change the character of the university.

It is, however, not only the state or quasi-state institutions that face financial crises. Lincoln Edwards, the president of the Seventh-day Adventist-owned Northern Caribbean University, reported that 60 per cent of his students cannot afford to pay their fees, running up receivables of J$400 million. He wants the Government to wipe off the debt and provide subsidies to the students, similar to what happens with people who attend state and quasi-state institutions.

All of this is taking place, the Government will remind, against the backdrop of tight fiscal circumstances. All the more that there should be an expansive conversation on the subject, taking into account Jamaica’s immediate long-term future into account.

EDITOR’S NOTE:

In yesterday’s editorial, it was suggested that Parliament’s Public Administration and Appropriations Committee (PAAC), like the Public Accounts Committee, has been chaired by an opposition member since its inception; in fact, the PAAC has been under the Opposition since the Bruce Golding reform of 2007.