Densil Williams | Wrong narrative on affordability

Once again, the debate on the financing of tertiary education is being put back on the agenda for public discourse. As expected, a flurry of articles has emerged, providing different views on the subject. However, what is not always clear is the unit of analysis that is under consideration. The general feeling is that when one talks about financing tertiary education, the analysis is about university education.

There are various conceptualisations of tertiary education. In some quarters, the term is used interchangeably with higher education. For the purposes of this article, we will stick with tertiary education. In its broadest sense, tertiary education can be defined as the system of teaching and learning that takes place after the completion of secondary education. It provides academic credits and competencies that lead to certificates, diplomas and degrees from universities, university colleges, polytechnics, community colleges and other similar institutions. This definition mirrors nicely the UNESCO characterisation.

Clearly, the tertiary system is not limited to universities but takes into consideration, all forms of teaching and learning processes after secondary school. Admittedly, the biggest portion of the cost in this sector in Jamaica goes to universities, which, by their nature, operate a high-cost model. For example, in the 2017-2018 fiscal year, the Government of Jamaica has budgeted to spend J$14.2 billion on the delivery of tertiary education of which more than J$10.6b, or about 75 per cent, is dedicated to universities (namely, the UWI and UTech). It is no wonder, therefore, why there is a heavy focus on financing university education.

 

Why invest in education?

 

As with most public-policy discussions, especially in fiscally constrained circumstances, the decision to implement normally narrows down to the cost to taxpayers versus the benefits that society will receive. Because of the heavy payment made to universities from the public purse and the benefits are not always conspicuous and immediate, citizens are questioning value for money for investing in university education. They argue that other areas of society such as health care and national security could use this badly needed cash.

It is important to note, however, that the traditional neo-classical models of determining value for money should not be used as the yardstick to evaluate return on investments in education. For, education is not a normal good or service that lends itself to the typical financial analyses carried out on Wall Street and in high-finance circles.

Education is a system of learning and knowledge creation where its value is both immediate and long-term at the same time. The benefits of university education to society are indisputable. Research shows that university education:

- Impacts positively, human capital development and formation, both at the level of private individuals and the society at large.

- Impacts the economy and society through research that facilitate economic analyses, building good governance models, and engagement of a wide range of social and other problems.

- Plays a pivotal role in supporting and enhancing the lower levels of the education system for example, by providing teacher training and innovations in curriculum design.

I could go on. If one really wants to see how university education has transformed lives and communities, they need to speak with the thousands of middle-class Jamaicans who benefited from free education and have now moved from humbling beginnings to having lofty careers all over the world.

If we had started from the premise then that we could not afford university education, can you imagine where some of these persons would be today? The narrative, therefore, should not be about affordability. Instead, we should be focusing on how to better finance the university system to ensure that all those who have the ability and desire to attend university gets the chance to do so.

 

New Funding Model

 

There is no doubt that if our society is to achieve any meaning level of development over the next decade, we will have to increase access to university education. In this Western Hemisphere, the Caribbean has one of the lowest levels of participation in tertiary education. Tewarie, former principal of the UWI, St Augustine, Campus observed that while countries such as Finland, USA and UK are committed to upwards of a 50 per cent participation rate, others such as Ireland and Singapore are also close to achieving that level of participation.

Further, he stated that even countries such as the Dominican Republic (23 per cent) and Costa Rica (16 per cent) have gone way beyond what some Caribbean countries have been able to achieve. Indeed, Tewarie noted that many countries in the Caribbean are yet to achieve 10 per cent participation. Clearly, we have a far way to go in terms of access for our citizens in the region, if we are to see meaningful transformation in our economies. If we are serious about tertiary education, affordability cannot be a hindrance to this very basic human right for all citizens in any decent society. We must find a way to make it affordable.

In determining the new funding model, the following principles as espoused by Dr Howe in a paper presented to the CARICOM Secretariat are quite useful:

- Primary emphasis should be placed on an equitable approach as a means of broadening access, particularly with respect to students of disadvantaged backgrounds.

- Funding models adopted should encourage innovation and creativity on the part of tertiary education institutions.

- An adequate range of flexible financing options and initiatives that enable students and their families to choose which ones are in their best interest.

Bearing in mind these principles, the following is a three-pronged suggestion for a new funding model:

1. Government must provide a block grant for research and innovation in universities. The grant must be tied to specific outcomes based on the needs in the society. This block grant can be funded from a reorganisation of recurrent spending.

2. Government and private sector should establish student-loan schemes that provide loans to students at developmental financing levels, given the developmental nature of the education system in which students are investing. The repayment of loans should be a function of the quality jobs that students get after graduation. In this way, the burden of repayment will be more manageable. There should also be fiscal incentives to persons who have loan payments and with salaries below a certain threshold.

3. Universities must be allowed to set their fees based on their own operating and fiscal circumstances without government stipulating a band, like the current 80:20 rule, which theoretically exist at the UWI. This way, universities will be forced to become more efficient and offer competitively priced programmes, assuming there is no dumping in the marketplace (a strong accreditation body will deal with this risk).

If the three-pronged approach outlined above is followed in designing the new funding model, we will see a more efficient university sector, no citizen who has the desire and ability to enter university will be turned away, and universities will be stronger financially, once they deliver attractive programmes and offer superior service to students.

- Densil A. Williams is professor of international business at the UWI. Email feedback to columns@gleanerjm.com and densilw@yahoo.com