ODT; Tertiary Changes May Help in Otago

Otago's tertiary institutions could be among the winners from a new funding system for the sector.
Tertiary Education Minister Michael Cullen announced yesterday he was ditching the "bums-on-seats"
funding in favour of more planning when distributing the $2.5 billion the Government puts into the
sector. The change, from 2008, is expected to allow institutions to step off the funding rollercoaster,
where money is uncertain until the students arrive.

Instead, tertiary institutions will negotiate three-year funding plans, taking into account both their
teaching load and the underlying cost of their part in the education system.

"Essentially, I want to change the mindset of the sector, so that it ceases to see dollars attached to
current year enrolments, and begins to see them as an investment that the government is making in
a tertiary provision plan that extends to the medium-term and beyond," Dr Cullen said in a speech
to an industry training conference in Wellington.

The current "bums-on-seats" system has operated since the late 1980s, but is regarded as having
led to funding blowouts in recent times, particularly in areas of low-quality provision and at the
expense of education and training where the economy needs it.

Otago Polytechnic chief executive Phil Ker said the announcement appeared to confirm the
Government would be looking at funding institutions for their basic organisational capability.

Under the present system, just $250,000, or 1%, of the polytechnic's core annual funding was not
linked to student enrolments, which left it extremely sensitive to any shift in student numbers.

"We are talking about the same amount of money being re-cut. Therefore, this is not a signal that
we are all saved. In that sense, I guess we have to be a little hesitant about what it means," Mr Ker
said.

"So, what this signals is a sustainability of funding that provides good time frames for individual
institutions to work through any adverse changes in the underlying market."

While there was more detail to come, it looked like the relatively smaller population base of Otago
would be taken into account when deciding what funding was required to make courses sustainable
in this part of the country, Mr Ker said.

Students said the reforms would need to be accompanied by more funding.

Otago Polytechnic student co-president Natalie Absalom said Dr Cullen's plan merely changed the
window dressing without addressing underfunding.

Co-president Richard Mitchell said the new system, with its emphasis on funding course
completions, would create new issues for the polytechnic sector, as a portion of their core business
was learners that were upskilling.

"Under a model that funds completions only, both the institution and the learner may be left out in
the cold, as far as funding is concerned. Essentially, this model could actively discourage upskilling
by refusing to fund it."

But the changes were welcomed by Association of University Staff president Prof Nigel Haworth,
who said universities had long been disadvantaged by a model that failed to take account of the
higher costs of research-based institutions.

"The three-year funding cycle will also allow institutions to make better long-term strategic
decisions," he said.

Business New Zealand chief executive Phil O'Reilly welcomed the greater role for employers and
industry in shaping educational priorities, signalled in the announcement.

Council of Trade Unions secretary Carol Beaumont said the reforms would ensure resources were
focused towards courses that met social and economic priorities.

However, National Party education spokesman Bill English said increased planning costs would
have to be covered by reducing funding for courses.

University of Otago and Dunedin College of Education spokesmen declined to comment until they
had time to look at the announcement.

This article was taken from the Friday 28th July 2006 edition of the Otago Daily Times with the express permission of the writer, Tom McKinlay.