approved by the university Senates now operational. The doctoral programmes are the exception here.
There is no doubt that, given (still) better preparation, more coordination and greater realism with regard to the time horizons available and quality standards feasible, the material and immaterial resources consumed in the implementation of UG 2002 could have been substantially lower. Austria has 21 universities, and in many cases the same number of wheels were invented. As yet no full ex post cost/
benefit analysis of the implementation of UG 2002 has been published.
To sum up, much greater progress was made in terms of transparency for the internal university processes involved in the implementation of UG 2002 than at the suprauniversity level. The universities were doubtlessly offered very consid- erable incentives to make sparing use of resources and significantly improve their economic performance. Planning security has not yet been achieved, however, because of the many question marks that still remain, for example with regard to study programmes, finance and buildings.
(in some cases ex post) for the general salary increases awarded to the federal employees who were on their payrolls when UG 2002 came into effect.6,7
Of the total amount, comprising the basic and formula budgets plus reim- bursement of calculated salary increases for federal personnel as defined above, the Ministry—pursuant to UG 2002—is entitled to withhold up to 1 % for special funding requirements over and above the performance agreement. In the first performance agreement period (2007–2009) only about half this amount was activated by the Ministry (Court of Audit2009:21, text no. 23). The Ministry also informed the universities prior to negotiations that no university would ‘loose out’, i.e. would receive fewer funds than in the previous year, which is more an expression of egalitarianism than of a desire to stimulate competition.8
In view of the budgetary constraints confronting the Ministry, this introductory goodwill cannot be expected to last, all the more so as a university’s global budget can be reduced in subsequent performance agreement periods (e.g. 2010–2012) in incremental annual steps of 2, 4 and finally 6 % compared with the amount agreed for the previous 3-year period. In addition, URÄG (2009) now permits the Min- istry to withhold 2 % of the total amount ‘for funding requirements over and above the performance agreement and for annual special funding requirements for the universities’.9 This percentage translates into the not inconsiderable sum of
€150 million per performance agreement period.10At a time when a ceiling has
6 This regime is often underestimated: Any quantitative, structural or price changes which have been incurred in the meantime, i.e. since 31 December 2003, and relate to personnel that was not employed by the universities at the cut-off date must be financed by the universities themselves.
The effect of this rule is becoming increasingly burdensome as the (semi-)autonomous universities are confronted with a growing workload (resulting from higher student numbers and improved staffing ratios as well as the implementation of UG 2002 and URÄG (2009)) and the need for better qualified administrative personnel. The fact that new professors now sign private- sector employment contracts with the universities instead of receiving civil servant status from the federal authority makes them much more expensive for the universities, also because of their pensions, which now have to be agreed with the universities, too.
7 University funding in Austria can be broken down as follows (figures for total spending in 2007): 77 % global budget, 9 % other income and reimbursements, 7 % research and artistic work, 6 % student fees and 1 % artistic training (BMWF 2008:74). Part of the funding for research work and related reimbursements is ultimately paid by the federal authority, too, while student fees are subject to political decision-making. It can therefore be said that, on average, well over 90 % of the university budgets derives from the federal budget and legislative decisions at the federal level.
8 Unlike the universities, the Ministry was aware of the outcome of the formula budget when financial resources were being allocated on the basis of the performance agreement and obviously ensured that this promise was kept.
9 A maximum reduction of approx. 12 % per performance agreement period and university applies.
10 What these special funding requirements are meant to be is not specified in the law. It merely includes one example, which offers great freedom of interpretation and hence scope for interference on the part of the Ministry: ‘for certain projects for the creation or support of a national university space’. In the notes on Art. 12 paras. 3–5 and Art. 12 paras. 12 and 13 of
been imposed on total university funding, any increase in the allocation to one university can only mean a decrease for the others.
Universities have high overheads. With little scope for savings with regard to products and services (study programmes, ongoing research projects) and pro- duction factors (personnel with tenure in some cases, buildings, dedicated equipment), only minor reductions in university expenditures are possible in the short term. Given the notorious underfunding of the universities,11the amount of flexibly disposable funds for alternative expenditures is only a few percent points per year.12There are also legal limits to the generation of additional income (e.g.
student fees) and often additional upstream expenditures that must be met before any revenue is forthcoming (e.g. research, training courses).
A reduction by just 1 % point is therefore bound to lead to a severely dispro- portionate curtailment of any freedom of action the universities may still have. At the beginning of the first performance agreement period, the Ministry13 had additional funds to spend on the research infrastructure and socio-political objectives (e.g. anticipatory chairs and gender programmes) totalling about 1 % of the global budgets. Deployment of these funds had some positive results but also generated some of the effects described below.
At this point, it is worth considering whether we now have to say goodbye to the multi-year global budget and financial autonomy for the universities as pro- vided for in UG 2002. The reason is to be found in such additional sources of funding and especially in the degree of annual interference caused by the forth- coming special funding requirements:
Such ad hoc programmes usually have only limited deadweight effects; they cause deviations from the priorities already set by the universities (without the additional funds). Although they do achieve the effects targeted by the Ministry, they also undermine the multi-year global budgets and thus autonomous imple- mentation of the development plans. They are mostly packaged with a co- financing requirement for the universities and therefore tie down still more of the universities’ flexibly disposable funds. The universities therefore see them as Trojan horses, which the Ministry is unwilling to forego as they permit influence to be exerted throughout the performance agreement period.
(Footnote 10 continued)
URÄG (2009), a number of uses are listed ‘‘for the targeted improvement of the current situation of the universities’’.
11 Cf. examples of comparable universities outside of Austria and the repeated statements made on the subject and evidence provided by the Austrian Science Board and Universities Austria.
12 Savings can be made, for example, by postponing appointments or procurement and capital spending items, and through the unexpected departure of personnel. Such options can hardly be expected to improve the quality of a university’s offering and are in any case neutralised by additional expenditures relating, for example, to increasing student numbers, price increases and rising costs, additional research projects without adequate overhead financing, and new and additional requirements imposed by the Ministry (e.g. legislative changes, annual special funding requirements).
13 Recent examples: ‘‘Research Infrastructure IV’’ and ‘‘Anticipatory Chairs 2007/08’’.
At the level of equipment, these funds are not normally employed for invest- ment in the general modernisation of the infrastructure; they are used to finance very specific items of equipment and involve follow-up costs in the form of running costs which are not covered by the start-up funding for the purchase.
The same applies to the acquisition of research funding that does not cover the overheads involved (e.g. from the Austrian Science Fund) and subsequently ties down other university resources in the form of personnel, space and equipment. It also makes it increasingly difficult and less rewarding to identify and activate further potential savings.
The promised increase in university funds of about 10 % in total for the next performance agreement period (2010–2012) will in any case be necessary to help finance a large number of additional expenditures that cannot yet be quantified (e.g. parts of the new collective bargaining agreement, increases in salaries, rents and leasing costs, additional requirements imposed by URÄG (2009) and the Ministry’s wishes relating to the special funding requirements that do not cover their own costs).
For a performance agreement as described in the following sections (requiring an amendment to the law), there should be three sources or sub-budgets as the basis for calculating the global budget. The second and third sub-budgets should be employed to promote competition between the universities, and the third sub- budget should be of a substantial magnitude.
6.3.1 Basic Budget
The basic budget presupposes coordination between the Ministry and the uni- versity concerned with regard to its teaching programmes and the financial resources required for the agreed student numbers. To ensure objectively correct allocation of resources to these basic university activities, the universities need to operate with standardised costs per study programme and student enrolled. In addition, it is necessary to quantify the additional financial resources required for each type of university for research or promotion of the arts (e.g. 50 % of the basic budget).
The standard teaching costs must be calculated with regard to student numbers and staffing ratios in line with international standards and on the basis of mean- ingful international comparisons. Universities which the standard cost method for teaching and research shows to be underfunded must receive additional resources, if necessary on a step by step basis over a number of years. In the case of a university that lies (well) above the standard budget there are—economically speaking—two possibilities: either the surplus amount corresponds to a study programme focus to be agreed with the Ministry, in which case the additional funds belong in the third budget (profile budget), or the additional expenditures must be reduced in the longer term except where they lie outside the sphere of influence of the university concerned (e.g. running costs for dysfunctional
buildings). With regard to the as yet unknown parties affected and the difficulties of implementation, it is—politically speaking—obviously easier to let sleeping dogs lie.
6.3.2 Performance Budget
It would be advantageous to have a performance budget in the future, too, for allocation to those universities that are more successful than others in fulfilling certain predefined parameters. There should only be a negative performance budget for those universities that are well above the standard costs in their basic budgets (e.g. more than 10 %) and at the same time below average with regard to the performance parameters. This new performance budget should only account for 1 or 2 % points of the total amount and should partly be self-financing.
6.3.3 Profile Budget
For profile-building and focus-setting at the universities, there should also be a profile budget. The amount of this budget depends on whether the universities’
political masters are willing to leave the rhetoric behind and actually spend more money on the universities over and above the basic budgets.14
This model offers three very distinct approaches to a multi-year global budget to be drawn up on the basis of performance negotiations. The same procedure can be followed for the annual special funding requirements.
Priority must be given to the basic budget. Only when this budget can be created as described above should work be initiated on the other two budgets. This would make it possible to finance all the objectives listed in the notes on URÄG (2009) as necessitating a special funding agreement: the interests of the Ministry (and thus of the universities) could be accommodated as follows15: ‘measures for the creation or support of a national university space’ could be financed in part out of the basic budget but mainly out of the profile budget. This would necessitate coordination of study programmes at individual locations and between universities and universities of applied science, and would also lead to further cooperation in the field of research.
The ‘initiation of new scientific developments’ could easily be accommodated in the profile budget. The ‘promotion of cooperation between the universities’ could
14 The Austrian Science Board (2007):6, makes the point very clear: ‘Only if the universities have a secure financial basis that permits them to properly fulfill their normal functions in research, teaching and the training of the next generation of scholars can it make sense to embark on a competitive process such as the performance agreements are meant to initiate.’
15 Cf. special section of the notes on URÄG (2009), no. 8 (Art. 12 paras. 12 and 13).
also be achieved in this way. The ‘promotion of interdisciplinary cooperation, especially with regard to study programmes and at the school–university interface’
could be covered by the basic budget (coordination of study programmes) or—where very full coordination at individual locations is targeted—through the profile budget.
‘Improvement of student/staff ratios’ is also a function of the basic budget.
‘Strengthening the promotion of women’ is a function of the basic budget. Here again, standards need to be established. ‘Creating additional classes for working students—part-time courses’ is also an item for the basic budget.
A reserve must be created for unforeseeable events, i.e. accidents (e.g. a fire in a university), or developments which could not be anticipated when the performance agreement was drawn up. The reserve could be assigned as an additional funding requirement to the basic budget or the profile budget.
This model would also make both the performance agreement and the global budget (the annual special funding requirements) more transparent and logical and would above all strengthen the performance element.