SA’s universities need funding hike of about R30bn a year to survive by Belinda Bozzoli (BDlive), 14 January 2016

14 January 2016

Students block registration at Wits' Braamfontein Campus in Johannesburg on Monday. Picture: FREDDY MAVUNDA

ARE universities a financial bottomless pit? It may seem that they are.

Shortly after both President Jacob Zuma and Higher Education Minister Blade Nzimande announced billions of rand in additional funding to reduce registration fees, relieve debt and increase the National Student Financial Aid Scheme (NSFAS), universities were confronted by militant students demanding financial relief at the beginning of the new academic year.

In fact, the amounts needed by universities for their proper functioning, sustainability, growth and improvement are finite. But they are also frighteningly large. If we take a "maximalist" view, the overall amount needed is of the order of an additional R30bn per year. Even a "minimalist" amount cannot be less than R20bn per year.

While the government has shown (after real threats to it emerged last year) that it at last understands that funding for these vital institutions needs to improve, an air of denialism about the real scale of the shortfall continues to prevail.

The amounts announced late last year, and repeated again early this year — R4bn here, R2bn there — are presented to the public as solutions to the problems of the sector, but they are not. They are both short term and reactive. It remains to be seen whether the government has the appetite for serious, long-term proposals rather than Band-Aids to cover their defensive wounds.

Our higher education sector is not large. According to World Bank data for 2013, our enrolment ratio stands at 19.7% — up from 15% in 1994. We have a long way still to go — the average for middle-income countries is 27%, although much of any further increase should be within the college rather than the university sector.

However, this achievement in growth was largely unfunded, or at best, underfunded. Short-sightedly, the government expanded the system but kept subsidy improvements below inflation.

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As numbers went up, subsidies went down in real terms. As classes got bigger, numbers of academics remained stagnant. And as poor students were encouraged to attend in ever larger numbers, financial support for them grew, but insufficiently fast.

Today’s focus on fees is no accident, for this is indeed the flashpoint of the whole system. Declining subsidies meant unsustainable universities, whose fixed costs rarely stick to inflationary levels, even when the system is not expanding.

At least 60% of fixed costs are for wages and salaries (far more in the poorer universities), while major items such as electricity, municipal rates and internationally priced book, laboratory, IT and digital subscription costs, have all shot up at rates far exceeding inflation over the past 10 years.

Student fees have been almost the only sustainable source of new income for universities to make it possible to pay their way.

Add rapid expansion and a falling rand to this, together with stagnation in the broader economy, rising unemployment and increasing poverty, and you have an unstoppable force (student incapacity to pay) meeting an immovable object — more or less fixed university budgets.

The system had to crack. Last year’s student protests were the educational equivalent of the moment when the lights went out after years of dithering and neglect by Eskom.

As we know only too well from the disaster of Eskom, rectifying a decades-long legacy of neglect costs far more than the sum of the costs would have been over time.

The two main areas of deficiency — university subsidies and student capacity to pay — have now accumulated to impossible levels.

• To restore university subsidies to levels where students would no longer have to pay astronomical fees (say the levels of 2012) and where outsourced workers could be affordably insourced, would require an additional R8bn-10bn a year

• To ensure that university fee increases are kept at inflation levels in future would require an annual increase of in University subsidies which exceeds the level of inflation by 2 to 3% (to match the levels of Higher Education Inflation) – roughly R2bn per annum

• To grow NSFAS to levels where the huge numbers of students unable to pay for their own university costs (including the so-called "missing middle") would be supported at least at minimal levels would take an additional R17bn a year.

• To relieve students unable to proceed or graduate because of enormous and unpayable debts would cost an additional R2.4bn

The total increase required, therefore, would be in the order of R30bn a year.

Will the President’s recently established commission into funding for universities have the courage to confront these levels of need? What will have to be funded and what will universities and students have to live with? And, whatever the commission’s findings, will it be taken seriously, or will it suffer the same fate as the much-vaunted Ramaphosa report into the same subject, tabled in Parliament in 2013, which has been almost entirely ignored by Treasury?

In the past weeks and months many proposed solutions have been bandied about, most of them offering possible new sources of funding in the millions rather than the billions. The bulk of a substantial amount such as R30bn can only be afforded by government.

But no government in today’s recessionary economy could possibly promise to find these amounts in any one year, or without fundamental changes in budgetary structure (involving large-scale reprioritisation of expenditure), taxation, the structure of the university sector, and/or the structure of the entire student loan and grant system.

The most we can hope for from the presidential enquiry is a multipronged proposal for a five-year period of gradual but significant increase in all three areas, drawn from multiple sources.

Many people in universities are despairing, however, at the prospect that even if solutions are found, they will not be properly implemented and they will not be in time to prevent further damaging disruption to this important sector.

Academic and nonacademic staff alike fear future retrenchments, deterioration in infrastructure, cuts in library and IT services and perpetual disruption by unhappy students.

Soup kitchens and other free food options are increasingly being implemented by universities for students who can’t even afford to eat, while student indebtedness has reached impossible levels.

The prospects for university education are grim indeed.