Norway: expert group suggesting the introduction of contracts

norwayflagIn April 2014, the Norwegian ministry of education set up a new expert group to examine the funding system in Norwegian higher education. At the time, we also interviewed professor Bjørn Stensaker who is a member of this expert group, and he highlighted that “one of the main aims of the Commission is to look into how quality within the sector can be fostered through the funding system.

The mandate of the expert group was to:

  • stimulate devlopment of quality in education and research
  • contribute to a diversified sector (division of labour and profiles)
  • contribute to cooperation with society and industry
  • provide strategic room to maneuver for the institutions while making them accountable for results
  •  contribute to cost-effective resource use
  • provide stability and predictability for the institutions
  • create incentives for competition in European arenas and strenghten international coperation

On January 7th, the commission delivered the report to the ministry, with a set of recommendations rgarding the funding system. The report gave an evaluation of the current funding system, as well as a set of recommendations for the future.

The report highlights that in principle, the system is of appropriate size, as there is low unemployment rates amongst the graduates, and the match between graduate profiles and labour market needs is in general rather good, with some exceptions. One problem where there has not been significant improvements in the last ten years is system efficiency, and the report highlights persistent dropout rates as an indication of this. Regarding research, there has been considerable increases in output – both in terms of publications and in terms of completed PhD degrees. The sector has become more international, both in terms of education and research. A key concern highlighted in the report is the fragmentation of the system with many small environments, while institutions have become more alike, and the report argues that this can be linked to the framework conditions and funding system that creates similar incentives for all institutions. 

The report has extensively examined key trends in funding in higher education across Europe, with greater focus on performance and incentives to steer the sector. The key suggestion is to keep the funding system “simple, clear and transparent”, where few areas are emphasized to assure performance. In essence, the model proposed is further development and adjustment of the existing model and not a complete system overhaul. Focus is put on that this funding is dealt to institutions who can make their own internal strategic decisions.

The key funding components would be the same in the new model, and the share of performance based funding in the new recommendations would remain at  about 30%. Main changes would be in what is being rewarded in the performance component. Incentives for study point production would be kept, but instead of focusing on level (bachelor or master), there would be four categories for costs. This suggestions also draws on a report by NIFU and Deloitte that was published in December 2014 had examined the real cost per student in Norwegian higher education. Key conclusions included that study place costs more in universities than in university colleges. In general, 3/4 of the costs are related to salary costs within the institutions. Furthermore, the cost effectiveness of larger institutions was not clear cut- there were large differences between institutions and size could not explain such differences. As expected, there are great differences in terms of disciplines – and the price difference can be as high as ten times (medicine in university vs economy in a university college).

In addition, new incentives would be linked to mobility indicators – both for students, young researchers as well as EU project funding. With respect to EU funding, ERC would be prioritized. To facilitate focus on research, the group recommends futher strenghtening of the so-called “level 2” publications (highly ranked journals according to the national classification).

Perhaps the most clear new suggestion is the introduction of contracts that concern development, quality and profile of the institution. The contract sets certain ambitions for each of the institution, and an independent committee would evaluate performance according to set objectives, in cooperation with the quality assurance agency (NOKUT) and the Research Council of Norway (RCN). The expert group report emphasizes that the purpose of these contracts is to reward differentiation and quality enhancement, and that this would lead to more clear profiling in institutions. The three main components of such contracts would be development of quality, development of collaboration with society and industry, and development of institutional profiles. Such contracts would last for 3-4 years, and 5% of the funding would be linked to such contracts.

The whole report about the funding system can be downloaded here (in Norwegian, pdf)