EUA report on public funding and financial crisis in Europe

A bit over a week ago, EUA’s Public Funding Observatory published a new report examining the relationship between levels of public funding in Europe and the relationship to the financial crisis.

Public funding overview in Europe 2008-2012   (Source: EUA)

The report indicates that while the effects vary across Europe, the financial crisis has had widespread effects on higher education systems in Europe. In some cases these effects have been quite severe. The report prepared a basic map of Europe that divides countries into four main groups:  increase over 1% (green), stable funding situation (blue), decrease between 1-10% (orange) and decrease over 10% (red). In addition, a number of countries were treated as “special cases” (gray).

As quite visible from the map, the countries that have suffered the most from financial crisis (a number of Eastern European countries, and Southern Europe) are also the ones where there have been large cuts in public funding, with some exceptions.

The 11 countries that witnessed a cut over 10% include Czech Republic, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, the Netherlands, Portugal and Spain. A number of these countries are also on the forefront of the news in terms of a general economic situation.

Countries like Latvia witnessed severe economic downturn: between 2008 and 2010 the GDP fell by one fourth and the debt level of the country went up from  7.9% of GDP in 2007, to 744% of GDP in 2010. In these cases, the cuts in public funding are a part of widespread cuts in all public sectors and in Latvia public funding for higher edcucatoion decreased 57% between 2008-2012. However, the list of countries with severe cuts also features Netherlands that has not been considered amongst those hit hardest by the crisis this far.

There are two countries that experienced downturn in public funding that is in the range between 1-10%: Croatia and Estonia. In both of these cases 2012 has been a stabilizing year. Another two – Finland and Belgium – have experienced a stable funding situation during this period.

The 9 countries with increase according to the report include  Austria, Denmark, France, Germany, Norway, Poland, Slovakia, Sweden and Switzerland. However, it is noted that in many cases this does not imply that universites actually have more funding to use – but the increase might also be linked to other reforms, or for example increase in student numbers, and thus in some cases it can also mean a decrease in real terms.

The report concludes with a call for seeing investment in higher education as an investment in future. However, seeing this as an investment also requires certain assurance that the investment will be worth it. As such it is also up for the universities to activaly particiapte in the public debate and be a catalyst for an upward spiral out of the economic difficulties. Merely stating something is an investment does not make it an investment – it is up for the institutions to be clear about what this investment can potentially return.

This  puts again focus on the types of governance mechanisms and instruments that are in place, how much autonomy higher education institutions experience and what they do with this autonomy. In current research literature and in terms of practical experiences there seems to be considerable uncertainty about what exactly is needed to provide more innovation, how exactly universities contribute, and what exactly characterises the successful initiatives. Initiatives such as the Aalto University in Finland show that there is some experimentation going on and the recepie of how to make it happen is not quite clear at this point. More public funding does not guarantee anything if the other potential factors contributing to a successful knowledge production environment are not in place. What these factors are is the million dollar question.

Mari Elken