Speech by Dr Michael P. Mortell,
President, University College, Cork
at the Conferring of Degrees and Diplomas in the Faculty of Commerce
Monday, 20 July 1998 at 10.00 a.m.
 
The Funding of Universities

I would like to say a few words about how universities are funded, ie. the various sources from which the funds come, for what purpose they come, what the stresses and strains in the system are, and finally indicate the likely directions for the future.

Under the current regime, each university receives a block grant from the Higher Education Authority. This block grant is essentially recurrent funds to be used by the university for salaries etc. The State gives capital money for buildings and equipment. Then the State also pays to the university the fees of all full-time undergraduate students.

(It should be noted that under the 1997 Universities Act, the traditional right of the older universities to set and charge student fees was maintained. The only difference now is that the State pays the fees for a certain class of student). Graduate students, part-time students, and evening students themselves pay fees directly to the university.

There is an income to the university for doing research on behalf of various agencies, eg. EU, various state agencies and industry.

The university also derives income from fundraising activities. This income comes from business, industry, individuals and from alumni. Finally, a levy on students for a particular project can raise significant money.

So the sources of funding at present which a given university may have are a mixture of block grant, undergraduate fees, and capital money from the State; together with individual student fees, research income, fundraising income, and student levy.

To give you a fix on the overall amount of money we are talking about;

In 1997, the total Block Grant for the 7 universities was £180 million

the amount the State paid for undergraduate fees was £65 million;

the capital monies for building was £17 million;

capital monies for equipment was £2.4 million

That was a total expenditure of about £265 million.

This is a large sum of money. However, to put it in context it is about half the money allocated to FAS for training. It should be noted that the Irish university system has one of the lowest costs per graduate in the OECD. So we are highly efficient.

The figures give only part of the picture as I will illustrate with UCC figures.

In 1997, UCC had a total budget of just under £70 million. The State by way of block grant, fees paid, and capital for building and equipment contributed £48 million or nearly 70% of total budget.

The remaining 30% came from individual fees, research income, fundraising and bank debt.

Now I am not complaining about this 70 : 30 balance. Of course the State must continue to support universities, and at a greater level - but it is a very healthy thing for an individual university to have a diversity of funding sources, and that these yield significant funds. If this is not the case, then the university is critically constrained in achieving the objectives it sets; and it is totally in the hands of the political whims of the day.

I will illustrate this in a number of ways. Firstly research income: the faculty at UCC have raised £68 million in research money over the past 5 years - a huge sum of money and significantly more than any other university in the State. As a consequence there are 420 research staff directly employed. The result of their research work and that of all our researchers puts UCC on the international research stage, where we must be. Then, we are able to attract top class faculty to UCC, because top rate faculty want to do research. Then we can give the very best education to UCC students. We can also attract and support high-level industry in this regard. This is a virtuous cycle. It would never happen if UCC were totally dependent on the State for research money. The State simply has not funded research in this way (Ireland has one of the worst records in the OECD), and the value, short-term and long-term, of such a research operation is only slowly dawning on the policy makers.

My second example is Fundraising:

Over the past 7 or 8 years we in UCC have raised more than £25 million from business and private sources, both inside and outside the State. What has this allowed us to do that we couldn't otherwise do?

It seems to be Government policy now to only partially fund building projects in universities, as distinct from other institutions. For example, the O'Rahilly Building cost £14.25 million. The State put in £9 million. UCC had to produce the other £5.25 million by fundraising. If we didn't raise the funds, we wouldn't now have that building. The students and faculty would be the poorer for it.

Another example: UCC is land-locked on a small 45-acre campus. We had to acquire very expensive blocks of land adjacent to us to provide for the future development of UCC over a 25 to 50 year period. We could never have acquired these strategic sites if we were depending on the State to provide the money. The time scale for state decisions is simply not part of commercial reality. So the fundraising arm of UCC, ie Cork University Foundation, was the critical factor in enabling us to purchase these sites. The long-term strategic interests of UCC, and of society at large, were achieved through the generosity and foresight of private donors.

My third example is the student levy:

The Building we are in here today, Devere Hall - Áras na Macléinn, was the brainchild of the Students Union President of the day. A proposition for a student levy was put to the student body at large and passed, so that the yield would underwrite the payment of the building over a number of years.

Similarly, a combination of student levy, again agreed by the student body, and fundraising will pay for the Indoor Sports Complex it is intended to build on the Mardyke site. To-date not a penny of State funding has been allocated for the Sports Complex, but £8 million has been raised through student levy, the De Vere donation and other private funds.

To summarise my basic point: it is the diversity of sources of income which are independent of the State that gives a university such as UCC the flexibility to formulate and drive its own agenda.

We at UCC must continue to get our fair share of resources from the State; but it is in the strategic interests of UCC to continue our search to extend the range of funding sources available to us - even though there is evidence which indicates that the State can cynically use a University’s ability to raise funds to reduce its own contribution.

In that respect we have to intensify our efforts to get our graduates to "give something back" to their Alma Mater. After all, they are the primary beneficiaries of the University. To-date, £1 million of the £25 million raised has come from alumni. If each graduate gave a small amount each year, the cumulative effect would be enormous. This will have to come about over the coming years.

What I can say with certainty is that, for the future, no university will thrive in the highly competitive marketplace, whose horizons are receding all the time, without diverse and significant sources of funding to give the university the flexibility and independence of decision that will be necessary.