2. The new regulatory framework for university funding

Transcription

1 Tuition fees in Spanish Public Universities in the academic year Cecilia Albert Verdú Universidad de Alcalá José Manuel Roig Cotanda Universitat de València May Introduction The economic crisis continues to impose severe restrictions on government spending. Consequently, we predicted 1 a substantial rise in tuition fees in Spain due to the economic downturn and the spiraling costs of higher education. This increase then occurred in the year through a qualitative change in the framework of funding for Spanish universities. Indeed, the Royal Decree-Law 14/2012, regarding urgent measures to rationalize public spending in education, specified how prices 2 should be set in public higher education, in a way that had not been done previously. In our opinion, these changes may have far-reaching consequences on the funding model for higher education in Spain. Thus, we consider it opportune to analyze and discuss these first steps, in order to provide us with a better understanding of where we are going in the near future. Our paper is structured as follows. In section 2 we develop the new regulatory framework on university funding set out by the Royal Decree-Law. Then, in section 3, we look into the cost of the service provided by higher education institutions, and examine how they are approaching their costs accounting analysis, as well as assessing the present state of affairs. Section 4 describes the increase in tuition fees in In section 5 we investigate the different factors which can help explain this increase; indeed this accounts for the core work of our analysis. The study ends with the conclusions derived from the previous sections in an attempt to better understand the funding system for higher education in Spain. 2. The new regulatory framework for university funding Under Article 81.3.b) of Organic Law 6/2001, of 21 December, regarding Spanish third level education (BOE ) until academic year public university tuition 1 Albert, C. and J.M.Roig (2011) p Prices or tuition fees are used interchangeable along the paper 1

2 fees were fixed by each autonomous region in Spain, within the limits set initially by the University Coordination Council 3 (until 2007) and later by the General Conference for University Policy (from 2007). The limits were set as a price range for both degrees and higher diplomas. The lower threshold was linked to the previous year s inflation rate in accordance with the Consumer Price Index (CPI) and the upper threshold was obtained by adding to CPI x percentage points, ranging x from 1% to 4%, over the last seventeen academic years (this is from to ) 4. The Royal Decree-Law 14/2012, of April 20 th, sets the thresholds in tuition fees for universities in order to approximate them to the cost of service provision (Article 6.Five.2 amending Article 81.3.b of Organic Law 6/2001). Although since 2007 the power to set tuition fees corresponds to each region these must be set within the limits established by the General Conference for University Policy. These limits are related to the costs of service provision in the terms set out in the aforementioned Royal Decree Law as stated below: 1 st Degrees: tuition fees cover between 15 per cent and 25 per cent of costs for first time enrollments, between 30 per cent and 40 per cent of costs for second time enrollments, from 65 per cent and 75 per cent of costs in third time enrollments, and between 90 per cent and 100 per cent in costs from fourth time enrollments. 2 nd. Master Programs which qualify for regulated professional activities in Spain: tuition fees cover between 15 per cent and 25 per cent of costs for the first registration; between 30 per cent and 40 per cent of costs for second registration, between 65 per cent and 75 per cent of costs for the third registration, and between 90 per cent and 100 per cent of costs for the fourth registration. 3 rd. Master Programs not included in the previous section: tuition fees cover between 40 per cent and 50 per cent of costs for the first registration and between 65 per cent and 75 per cent of costs for the second registration. " 3 The Organic Law 6/2001 on Universities (LOU) established, in Article 28, the Council of University Coordination as maximum advisory and coordination body of the university system. The Organic Law 4/2007 amended the LOU and replaced the former University Coordination Council by the General Conference for University Policy. 4 See tab "Serie horquilla precios GRADO" in the document entitled "Estadística de precios públicos universitarios curso " retrieved on October 5th, Note, moreover, that the transfer of higher education to the regions began in 1985 (Cataluña, País Vasco and Valencia) and was completed in 1996 (La Rioja, Castilla-La Mancha, Cantabria, Baleares and Aragón). 2

3 Since the Royal Decree-Law establishes parameters concerning service costs within which regional governments can operate, the first question we would like to know is whether each autonomous government possesses comprehensive information on these costs. Secondly, we wish to analyze the response of the autonomous regions in relation to the establishment of tuition fees within the established interval and whether we can detect any significantly different behaviors. Should we find any considerable differences, it would be most interesting to investigate these further to discover those factors leading to divergence. In other words, our aim is to find explanations behind the decision-making process of regional governments. Explanations may be related to factors such as financial stress within each autonomous region, an indicative measure of which could be its debt in terms of GDP, or indeed the political make-up of the government in power in the region. Related to the data we need for our analysis, we have information on tuition fees for the year , which is the first year of implementation of Royal Decree-Law, this information is provided by the Ministry of Education, Culture and Sports 5 ; and in connection with the debt levels of the autonomous regions we include time series analyses provided by the Statistical Bulletin of the Bank of Spain Cost accounting in Public Universities Probably one of the most important difficulties to comply with the Royal Decree-Law 14/2012 is the difficulty of knowing the cost of the service. This question is not so trivial, neither from the theoretical nor practical point of view (see Carrasco et al., n.d., Lizcano, 2012, Malles and Del Burgo, 2010). From the practical point of view, knowing the cost of the service means that universities develop cost accounting, but the reality, as we shall see, is that many of them lack such an instrument. We agree with Hernández Armenteros (2006: 94-5) when he says, "The determination of funding requirements for the provision of a service, in our case university service, is closely and directly related to the cost structure representative of the factors required for their provision, with the universe to which it is intended and with the efficiency you want and hope to achieve. Within the Spanish public university system it is notorious that funding needs are not being determined by processes as logical as that just described and, although this may have been understandable in the past, at the present time persisting in this direction is, at least an act of negligence on the part of agents with direct responsibility in this matter."

4 However, Lizcano (2012: 9) downplays the importance of this tool when he says, it is significant and somewhat singular that the regulation of the amount of something as substantial and supposedly objective and equitable such as university fees was based on a scale so subjective, complex and diverse as are the costs of universities." Today there is not a unified system for all universities and moreover not all universities have such a tool, despite several initiatives. These include initiatives as distant in time as the Analytical Accounting System for Universities (Sistema de Contabilidad Analítica para Universidades, SCAU) conducted in 1991 by the universities of Alcalá, Carlos III and Autónoma de Madrid; the start of the project launched by the IGAE (Intervención General de la Administración del Estado) in 1994 Analytical Accounting Standard for Autonomous Administrations (Contabilidad Analítica Normalizada para Organismos Autónomos, CANOA); the Sorolla project; another project in collaboration between the IGAE and the Office for University Cooperation (Oficina de Cooperación Universitaria, OCU); as well as other pioneering initiatives in different universities (Oviedo, Jaume I, Cadiz, Zaragoza, Las Palmas,... ). In our view this claim from Hernández Armenteros (2006: 88) still remains valid "Today the application within universities of an Integrated Information Accounting System is more a political challenge rather than a technical one, although conceptual, instrumental and technology issues are important and must be resolved prior to implantation in our institutions of integrated accounting information. However, the process of implementation of cost accounting in every university has a recent history. The Council of Universities and the University Policy Conference meeting on April 26th, 2010, established that during the period all Spanish universities had to consider the implementation of a cost accounting system with which to consider the actual costs of the various activities undertaken by universities and thus be able to relate costs to funding for those activities. Since 2009, they had been working in this direction. In December 2009 the Joint Committee on Finance decided to create a commission to develop a cost accounting model for Spanish higher education that would conform to the various missions of Spanish public universities. In September 2010 the commission completed the document entitled Analytical Accounting Model for Universities relying on the consensus of all members of the commission. In December 2010, the document was sent to all members of the University Council, of the General Conference for University Policy, and members of the Observatory of Scholarships, Grants and Academic Performance. 4

5 After a period of brief consultation, the final version of the Analytical Accounting Model for Universities was presented on March 10th, 2011 in the Joint Committee on Finance, where it was approved. Subsequently, both the Council of Universities and the University Policy Conference approved the document (March 17th, 2011 and March 24th, 2011 respectively). Getting to this point, as Rodríguez Plaza (2012: 3) mentions "not imply reaching a goal, but rather it means the first step of the implementation process of the, otherwise unavoidable, cost accounting system at each university." As of April 1st, the implementation process began coordinated by the commission of efficiency, effectiveness and accountability (Observatory of Scholarships, Grants and Academic Performance). It will be responsible for carrying out monitoring of the implementation of cost accounting in universities. According to the information gathered by the commission of efficiency, effectiveness and accountability, in October 2011 there were 21 universities that had decided to implement the OCU s proposal, 8 universities chose the CANOA, while 8 other institutions chose different systems 7. According to Rodríguez Plaza (2012:18) at the end of 2012 about 20 documents on CANOA model customization had been presented, of which only 6 had been validated by the IGAE. And as for the computer implementation of those 6 documents, 1 was done for OCU, 3 for CANOA and 2 for other systems. Comparing these data with the deadline for the implementation process (see Appendix 2. - System Implementation Plan for Universities Analytical Accounting Cost Analysis Model for Universities) we can concur with Rodríguez Plaza (2012:20) that "the degree of compliance, we can say universities that are «keeping up with» deadlines, is very small." Therefore, in our view the provisions of Royal Decree-Law 14/2012 were impossible to meet at the time of its publication in the Official Gazette on April 21st, 2012 and on that date the cost of providing the service was unknown. We do not want to end this section without pointing out that the establishment of tuition fees as a percentage of cost opens the door to differentiate between universities and between centers with different costs. Furthermore, this differentiation is not only related to costs but also to students, objectives, specialization and quality. The different pricing between universities and even between centers could be a first step to differentiation and competition among universities. Indeed, not all universities are equal. In this sense if we look at the international experience we observe that 7 Information provided in the Report of the Commission on Efficiency, Effectiveness and Accountability (2011), document retrieved on May 20th, 2013 on the website of the Social Board of the University of Valladolid 5

6 tuition fees at Oxford and Cambridge are not the same as those of other British universities, neither in United States are those of Harvard, Princeton and Yale comparable to other American universities. Barr (2012: ) argues for competition in the field of higher education in terms of both efficiency and equity. From efficiency perspective, on the demand side it will be a misallocation of resources if students cannot use price as a signal, while on the supply side price ceilings erode incentives to improve quality, and price floors erode incentives to improve efficiency. Therefore, Barr concludes that the argument for introducing competition in the field of higher education is not ideological. Also from the point of view of equity there are arguments to defend differentiated prices. The differentiation may allow charges to those who can pay and redistributive policies help those who cannot pay. 4. The increment of tuition fees Pursuant to Royal Decree-Law 14/2012 the academic year marks a turning point in the model for Spanish university funding to the extent that an almost general increase in tuition fees entails an increment in tuition fees differences between regions. Table 1 shows the increase in tuition fees by regions, this has been clearly higher for master s degree programs than for undergraduate degree programs in almost all cases 8. Regarding undergraduate degree programs, these fall into two distinct groups: the first group includes the autonomous regions that did not raise their fees (Asturias and Galicia) or did so below 20%; while those in the second group increased their fees by more than 20% (Castilla-La Mancha, Valencia, Madrid, Castilla and Leon, Canarias and Cataluña). With regard to the master s degree programs we can divide these into three groups: first, autonomous regions that have increased prices by less than 10% (País Vasco, Galicia and Baleares);second, regions that have increased fees by more than 100% (Madrid, Cataluña, Andalucía and Canarias); and the third group, where the remaining ten autonomous regions allocated increases of between 10% and 100%. 8 For this analysis, unlike Duch (2009), we do not need to take into account inflation differentials between regions 6

7 Table 1. Undergraduate and non-professionalizing master s degree programs average annual increase in tuition fees, academic year , by regions. Autonomous Region Undergraduate programs Autonomous Region Master programs Non professionalizing Asturias 0,00% País Vasco 2,00% Galicia 0,00% Galicia 5,83% Extremadura 1,91% Baleares 7,32% País Vasco 2,00% Castilla-La Mancha 39,85% La Rioja 2,12% Asturias 45,54% Andalucía 2,38% Extremadura 48,36% Aragón 3,60% Murcia ) 61,31% Cantabria 3,60% La Rioja 63,36% Navarra 4,00% Castilla y León 63,73% Baleares 9,21% Cantabria 65,75% Murcia 11,79% Navarra 66,41% Castilla-La Mancha 20,33% Comunidad Valenciana 76,23% Comunidad Valenciana 33,34% Aragón 96,72% Madrid 38,09% Madrid 121,01% Castilla y León 41,85% Cataluña 130,82% Canarias 42,11% Andalucía 144,20% Cataluña 66,67% Canarias 170,77% Source: Ministerio de Educación, Cultura y Deporte: Now, let us look at the increasing differences in tuition fees that caused the uneven change in prices during The differences between regions are higher in undergraduate than in master s programs. As mentioned above, in all the autonomous regions tuition fees for master s programs have increased more than undergraduate degree courses, except in País Vasco where at both levels the increase was about the same and in Baleares where fees for master s programs increased by almost two points less than undergraduate degrees. Table 2 outlines some descriptive for all autonomous regions for academic years and , to allow for comparisons. In the case of undergraduate degree courses, during there was a maximum difference between regions of 9.40 per credit for first registration. The minimum fee ( 10.71) was in Canarias, while the maximum was in Cataluña with a fee of nearly twice that. During these differences have increased and multiplied more than twofold. In master s programs, differences have multiplied by four: while during the difference between the most expensive and the cheapest regions was euro per credit, in this increased further to

8 Table 2. Descriptive chart showing average tuition fees per credit in first enrollment, by region. Academic year and (in euro). Undergraduate Degree courses Master s Degree programs N Range Minimum Maximum Average Academic year ,71 20, ,40 (Canarias) (Cataluña) 17 10,31 20,63 (Castilla La- Mancha) 30,94 (Castilla and León) Standard Deviation 15,35 2,74 25,86 2,96 Undergraduate Degree courses Master s Degree programs Academic year ,89 33, ,63 (Galicia) (Cataluña) 17 45,04 26,49 (Galicia) 71,53 (Canarias) 18,02 5,32 44,56 14,96 Source: Ministerio de Educación, Cultura y Deporte: In short, tuition fees have raised more for postgraduate programs than for undergraduate courses and this holds true for differences across regions 9. Undoubtedly, both the increase in tuition fees and the increasing differences between regions will be affected by total demand for undergraduate and master s programs and its distribution across regions (and universities). This variation in demand, along with rising tuition fees, could help us know whether universities have really increased their resources or not. It is expected that, ceteris paribus, the demand for university education holds a negative relationship with the increase of tuition fees (if fees increase, then the quantity of education will subsequently decrease). From economic point of view the total price of a college education is its opportunity cost, which includes direct costs (tuition and materials) and indirect costs (such as wages that students fail to earn by attending university). However, we also know that the indirect cost of studying at college decreases at a time of economic crisis, characterized by high levels of youth unemployment, thus decreasing the likelihood of students losing out on paid employment. 9 There is a detailed analysis in Observatori del Sistema Universitari (nd) 8

9 During we can clearly see two opposing effects on the total cost of a college education: first, an increase in direct costs (tuition fees) which leads to a decrease in the overall demand on places and second reduced indirect costs (increased unemployment rates), which should lead to an increased pressure on university places. The key question therefore is to determine the impact this has had on the total cost of college education. One way to infer whether the total cost of college education has increased would be to check whether the number of students enrolled on university programs has risen. According to the forecasts of the Ministry of Education, Culture and Sports a predicted increase in numbers of 25,000 students for the academic year (where in there were 1,469,653 students enrolled). At this point it is important to note that enrollment may not be the best indicator of the real demand for university education, and the actual number of credits each student enrolls for would make a much more appropriate indicator. However, this expected rise in student numbers does not seem to correspond to the actual increase in credits which, according to some universities, has in fact been lower than in the previous year. This figure is not available at present but some information may corroborate this assumption 10. Thus, by way of example and without drawing any conclusions, on September 30 th 2012 the University of Valencia reported a drop of 46.03% in credits taken diploma courses, an increase of 33.55% on undergraduate courses, a decrease of 23.06% on master s programs and also a decrease of 74.89% on doctorate programs. Given that diploma courses are at present being phased out of Spanish university system while new undergraduate degree courses are still being implemented as part of third level education reforms, perhaps what could be of most interest in these data is that overall we can see a decline of 6.21% in registered credits. If data were available it would be interesting to study whether there is any relationship between the rise in tuition fees and changes in the credits by region. In a country like Spain, where grants and loans have little weight as explained in detail below, low tuition fees have been chosen as a way of ensuring equal opportunities. While it is true that the LOU put forward the idea that tuition should reflect part of the cost of the service, no explicit way to do so was outlined. The Royal Decree-Law 14/2012, by making explicit that tuition fees must cover a certain percentage of the cost of the service, changes the design of tuition fees as a mechanism to ensure equal opportunities (equity) to a notion of tuition fees as a collecting mechanism (efficiency). 10 On December 3rd, 2012 the Valencian university chancellors at a press conference claimed that the increase in tuition fees had reduced the number of credits enrolled between 5 and 10 percent on average in the Valencian Community (see news in El Pais Valencia, retrieved from 9

10 Average tuition fees charged by public institutions, first degree programmes, in USD From Table 1, it would appear that, at least in some regions of Spain, the purpose of seeking or maintaining equal opportunities has prevailed over the idea of collecting. Without doubt they should reconsider this approach in the near future in order to comply with the new regulations. So far Spain has been characterized by low tuition fees as well as the low percentage of students who receive grants or any kind of financial aid. Using these two criteria, Spain is located, in the ranking of OECD countries (OECD, 2012: p. 277), in the southwest quadrant of Figure 1, next to countries such as France or Italy. After the increase in tuition fees in , and future increases that will certainly occur in the coming academic years, there is a reasonable doubt about the funding model (quadrant) to which our country is heading. There seem to be two possibilities open to us: that either the number of students with a grant or other financial support will increase significantly as we approach an Anglo-Saxon funding model, or on the other hand that more and more we resemble the Japanese model. Figure 1. Financing Models of Tertiary-type A Education in OECD countries (academic year ) United States Japan United Kingdom Australia New Zealand Italy Netherlands Switzerland Spain Austria Belgium (Fr.) Mexico France Finland Iceland Denmark Sweden Norway % of students who benefit from public loans and/or scholarships/grants Source: OCDE, Education at a Glance 2012, Figure B5.1, p A comparison in grants and other financial aids in higher education between Spain and OECD countries shows that the growth in the period has been higher in Spain, 175% compared to 107.1% in the OECD. But if we look at the percentages in terms of GDP in the OECD, this was 0.29% in 2009 compared to 0.14% in 2004, while in Spain it was 0.11% in 2009 and 0.04% in In Figure 2, taken from OECD (2012: p. 10

11 Chile Denmark Slovenia Italy Slovak Republic United Kingdom Austria United States Finland Portugal Hungary New Zealand Belgium Ireland Germany Norway OECD average Netherlands Australia Sweden Spain Israel Switzerland France Brazil Estonia Canada Mexico Korea Czech Republic Indonesia Argentina Poland Japan Iceland % of total public expenditure on education 276), we can see the little weight that public subsidies to higher education have in Spain compared with other OECD countries. On the other hand, total grants and state aid to higher education 11 in year was 1,235,426,941.4, compared to 1,117,119,019.4 for the previous year, that is to say there was an increase of 10.6%, while the average increase in the price of tuition at first enrollment (see Table 1) was 16.6%. A comparison in absolute values would give us more information about how much students are overpaying (although this would require knowing the number of credits enrolled, which is unavailable at the moment) and how much is being spent on scholarships and grants, however, since these data are not available, we have to resign ourselves to that approach in percentage terms. In addition, information from the Ministry of Education shows that financial aid in income contingent loans were eliminated this academic year, while during they amounted to 30,525,607, benefiting 2,235 students. This finding goes against the practice observed in other countries. Higher tuition fees, especially if they involve major changes to the funding model, are usually accompanied by considerable grants and by the introduction or increase in income contingent loans. These numbers suggest that the funding model adopted by Spain is closer to the model that represents Japan with high tuition fees and low financial aid for students. Figure 2. Public aid to higher education as a percentage of total public expenditure on education, by type of aid and OECD (2009) Scholarships/ other grants to households Transfers and payments to other private entities Student loans Source: OCDE, Education at a Glance 2012, Figure B5.3, p Ministerio de Educación, Cultura y Deporte (nd), p

12 5. Factors explaining the increase in tuition fees We have analyzed the following relationships in order to try to understand the reasons behind the decisions made by the Spanish regions when increasing public university tuition fees. A. The starting tuition fee level. Although a range for increase tuition fees has been implemented in previous years in order to limit disparities between universities, differences had been building between the autonomous regions of Spain (AR). We also have to take into account the different year in which each regional government became responsible for higher education, as well as the varying degrees of experimentation that each region can offer through their Universities 12. One would expect that those who start from a lower tuition fee level could think that they have more room to increase them. According to Figure 3, the reality contradicts this idea, except for Canarias. For the rest of the AR two groups can be established: one where tuition fees have increased very little (less than 10%), regardless of low or high starting fees; and another group in which the higher the starting tuition fee, the higher the increase (Castilla-La Mancha, Comunidad Valenciana, Castilla and León, Madrid and Cataluña). 12 As stated in Ministerio de Educación, Cultura y Deporte (nd) p

13 Increase average tuition fee for one credit in first enrolled undergraduate degrees: academic year (%) Figure 3. Average tuition fee for one credit in undergraduate degrees during and its increase (over the previous year) during , by region Cataluña Canarias Castilla y León Madrid 35 Comunidad Valenciana Castilla-La Mancha 15 Murcia 10 Balears 5 Cantabria Navarra Aragón Andalucía Extremadura País Vasco La Rioja 0 Galicia Asturias Average tuition fee for one credit in first enrolled undergraduate degrees (euros): academic year Source: Ministerio de Educación, Cultura y Deporte: B. The financial stress on regional governments. One would expect that the increase in tuition fees might correspond directly to financial difficulties experienced within each of the Spanish regions. An approach to financial stress could be given by debt to GDP measured as a percentage. In Figure 4 we can see that we have three groups: Those with a debt below 15% and an increase in tuition fees below 10%, those with a debt level below 15% and a rise in tuition fees above 35% and those with debt above 15% in which there is a certain positive relationship between debt and rising tuition fees. 13

14 Increase average tuition fee for one credit in first enrolled undergraduate degrees: academic year (%) Andalucía Aragón La Rioja Figure 4. Average percentage increase in tuition fees for one credit, in first enrollment undergraduate degrees during and Debt (as a % of GDP, II, 2012) by region Cataluña Castilla y León Comunitat Valenciana Castilla-La Mancha 15 Murcia 10 Balears Navarra 5 Cantabria País Vasco Extremadura 0 Asturias Galicia Public debt ( % of GDP, II- 2012) Source: Estadísticas precios públicos universitarios Curso and Banco de España, Boletín Estadístico, April A second approach to financial stress could be the increase of debt from one year to another (the reference period used is the second quarter of each year). In Figure 5 we see two groups: those that increase tuition fees below 10% and have a debt increase ranging from 3 to 8 points; and those with a rise in tuition fees above 10%, so in this group it would appear that in more indebted regions the increase in tuition fees is less significant. 14

15 Increase average tuition fee for one credit in first enrolled undergraduate degrees: academic year (%) País Vasco Andalucía Figure 5. Average percentage increase in tuition fees for one credit, in first enrollment undergraduate degrees during and public debt increase (as a % of GDP) between 2nd quarter 2011 and 2 nd quarter 2012 (percentage points), by region Cataluña Canarias Madrid Castilla y León Comunitat Valenciana Castilla-La Mancha Murcia Balears Navarra Aragón La Rioja Extremadura Cantabria Galicia Asturias Increase of public debt as % of GDP between 2nd quarter 2011 and 2 nd quarter 2012 (% points GDP) Source: Estadísticas precios públicos universitarios Curso and Banco de España, Boletín Estadístico, April The debt relief by an increase in tuition fees is certainly very small, although their relative importance is increasing with the number of students and credits. Figure 6 shows two groups: those that have a tuition fee increase below 10%, with less than 35,000 students; and those whose tuition fees rise above 10%. In the latter case there appears to be a positive relationship between the number of students and the tuition fees increase, with the exception of Andalucía. 15

16 Increase average tuition fee for one credit in first enrolled undergraduate degrees: academic year (%) La Rioja Aragón Andalucía Balears Figure 6. Average percentage increase in tuition fees for one credit, in first enrollment undergraduate degrees during and number of undergraduate students in , by region Cataluña Castilla y León Canarias Comunitat Valenciana Madrid Castilla-La Mancha Murcia Navarra Cantabria Extremadura País Vasco Asturias Galicia Number of undergraduate students in academic year Source: Estadísticas precios públicos universitarios Curso and Datos y cifras del Sistema Universitario Español Curso C. Political criteria: efficiency versus equity. With the information of a single academic year, , it is difficult to make any analysis of the influence of ideology in decision making. Authors like Kauder and Potrafke (2013) have discussed this issue for the German case, concluding that more left wing parties are more likely to decrease or even eliminate tuition fees in higher education, while the attitude of the right wing parties was the contrary. Starting from this premise, we have collected the political sign of each regional government by looking at the political party in power in Table 3. In all regions the ruling party has a majority, except in Cataluña, where there is a power-sharing coalition and in Extremadura, where there is de facto parliamentary support. 16

17 Table 3. Political party ruling the Autonomous Community, year 2012 Asturias PSOE Galicia PP Cantabria PP Murcia PP País Vasco PNV La Rioja PP Madrid PP Baleares PP Cataluña CiU-ERC Aragón PP C. Valenciana PP Canarias CC Andalucía PSOE Navarra UPN Castilla y León PP Extremadura PP-IU Castilla-La Mancha PP PP: Partido Popular PNV: Partido Nacionalista Vasco CiU: Convergència i Unió ERC: Esquerra Republicana de Catalunya Source: Own elaboration PSOE: Partido Socialista IU: Izquierda Unida CC: Coalición Canaria UPN: Unión del Pueblo Navarro Asturias, Andalucía and Extremadura, with socialist governments in the first two cases or presence of left wing IU in the parliamentary majority in the latter, are among the regions where tuition fees have risen less dramatically. However, there are also other regional governments run by the conservative Popular Party (PP) where fees have also increased very little. In any case, it is noteworthy that in those regions of Spain run by more left-wing administrations tuition fees have not been increased or only raised by a small amount. This is true even in Andalucía where the number of students is particularly large. However, as we said at the beginning of this section, it is difficult to draw conclusions with the data of a single year. D. Consistency between rising tuition fees and declining University transfers. The rise in tuition fees for the year was outlined in the decrees published in the relevant regional gazettes throughout the month of July 2012 (except on August 4 th in Murcia and September 7 th in Rioja). At that time no region had a draft budget for However, we assume that some estimation was done to determine the amount of increase in tuition fees. The analysis of the budgets for each of the Spanish regions, which are approved in late 2012, in regard to university education spending can indicate the thinking behind these estimations. Since we are living a tough economic period it is easy to confirm that all regions, except one, adjusted their budgets downwards. Indeed Table 4 shows the general decline of the total budget. 17

18 Table 4. Total public budget by regions in 2012 and 2013 (euro). Total Budget Autonomous Region Variation Andalucía , ,00-4,10% Aragón , ,10-0,86% Asturias ,00 a ,00-10,69% Baleares , ,00-2,74% Canarias , ,00-6,78% Cantabria , ,00-6,01% Castilla La Mancha , ,00-10,26% Castilla y León , ,00 7,72% Cataluña ,12 n.d. b Extremadura , ,00-2,51% Galicia , ,00-4,40% Madrid , ,00-12,93% Murcia , ,00-7,44% Navarra , ,00 c 0,00% País Vasco , ,00-10,84% Rioja , ,00-3,02% Valencia , ,00-7,15% a 2011 data 2011, 2012 is not available b Budget extension under discussion c 2013 data is 2012 extension Source: Own elaboration with data from Autonomous Communities web sites If budget cuts were equal in all areas of spending, budget variation for university education spending should match the total variation. Table 5 shows the information regarding budget variation for spending on higher education and its comparison with the total budget variation. 18

19 Table 5. Public budget for higher education by regions in 2012 and 2013 (euro). Higher Education Total Budget Autonomous Region Variation Variation Andalucía , ,00-12,34% -4,10% Aragón , ,20-0,19% -0,86% Asturias ,00 a ,00-8,47% -10,69% Baleares , ,00-6,77% -2,74% Canarias , ,00-8,34% -6,78% Cantabria , ,00-11,39% -6,01% Castilla La Mancha , ,00 3,60% -10,26% Castilla y León , ,00-9,38% 7,72% Cataluña ,39 n.d. b Extremadura , ,00-6,43% -2,51% Galicia , ,00-6,47% -4,40% Madrid , ,00-16,11% -12,93% Murcia , ,00-12,33% -7,44% Navarra , ,00-12,16% 0,00% País Vasco , ,00-11,94% -10,84% Rioja , ,00-7,41% -3,02% Valencia , ,00-10,07% -7,15% a 2011 data, 2012 is not available b Budget extension under discussion Source: Own elaboration with data from Autonomous Communities web sites To the extent that both variations do not match, we want to emphasize how much more (or how much less) the cost of higher education has decreased over the total budgeted expenditure, what we call "corrected variation higher education spending" and compare that result with the decision taken in relation to tuition fees. Table 6 shows the comparison. 19

20 Table 6. Variation higher education spending corrected for total expenditure and variation in tuition fees by regions, COMUNITY Corrected variation higher education spending Variation in tuition fees Andalucía -8,23% 2,38% Aragón 0,66% 3,60% Asturias 2,22% 0,00% Baleares -4,03% 9,21% Canarias -1,56% 42,11% Cantabria -5,37% 3,60% Castilla La Mancha 13,85% 20,33% Castilla y León -17,10% 41,85% Cataluña n.d. 66,67% Extremadura -3,92% 1,91% Galicia -2,08% 0,00% Madrid -3,19% 38,09% Murcia -4,89% 11,79% Navarra -12,16% 4,00% País Vasco -1,10% 2,00% Rioja -4,38% 2,12% Valencia -2,92% 33,34% Source: Own elaboration with data from tables 1 and 5 We see that only two regions, Aragon and Asturias, decreased spending on college education is less than the entire budget. Furthermore only one region, namely Castilla and Leon, increased its total budget, calling our attention to the fact that in spite of increasing the total budget by 7.72%, they decreased spending on higher education by 9.38%. The representation of Table 6 data in Figure 7 helps us to explain them. 20

21 Variation (%) Figure 7. Corrected variation higher education spending and undergraduate average tuition fees by region, Corrected public budget expenditure on university education (% variation) Average tuition fee for one credit Variation average tuition fee for one credit in first enrolled undergraduate degrees (variation %) Source: Estadísticas precios públicos universitarios, Academic year and Banco de España, Boletín Estadístico, April Figure 7 shows a certain tendency for most regions. Since all tuition fees increase (or remain equal, as is the case in Asturias and Galicia), almost all budget spending on higher education decreases (with the exception of Aragon, Asturias and Castilla-La Mancha). Once again Castilla-Leon attracts our attention given that it is in the high tuition fee increase range. This trend suggests that regional governments worked on the expectation that university resources would increase simply by increasing tuition fees, which in turn would justify a reduction in the budget allocated to higher education. However, further analyses are needed to confirm whether this forecast was indeed correct. To perform this analysis we would need to examine the impact of the rise in fees on demand; that is to say we need to know data on the number of credits students have enrolled for. 6. Conclusions According to the Royal Decree-Law 14/2012, Spanish autonomous regions have increased university tuition fees for the academic year In this paper we have analyzed various factors that may explain or provide a rationale for this decision. We 21

22 have analyzed four factors: the starting level of tuition fees, financial stress across regions, political criteria and consistency between tuition fees increases and the reduction in regional government funding for universities. While the first two aspects appear to be less relevant, the second two could provide some understanding of the difference in the decision making process across regions. During there were two events: an increase in university tuition fees and a reduction in government spending on higher education. Both factors show a joint rationale if the assumption that a rise in tuition costs would result in an increase in resources for universities, thus compensating for the reduction in income from government funding in the region. The question that arises is whether or not there was an alternative plan if universities experimented an income decrease in two ways: tuition fees and regional funding. And undoubtedly the answer is yes. Royal Decree-Law 14/2012 also amends the teaching hours of university professors in public universities established in Article 68 of the Organic Law 6/2001 of Universities. This change represents a teaching capacity increase that could reach 33% in some centers. Increasing teaching capacity has enabled universities to reduce costs by not hiring teaching assistants. And if this was not enough to balance the books, was there anything else planned? Again the answer is yes: for those universities that have deficits, Royal Decree-Law 14/2012 announced that for the following year these universities should make a reduction in spending equal to the deficit incurred by the institution. These changes point to a very important adjustment in the financing model for Spanish university education: to link tuition fees to the cost of the service implies that tuition fees differentiation is promoted, while college students and their families see how the cost of studying at university increases for them. What can we expect from universities? What are they going to do? We can expect them to differentiate their product and adjust tuition fees, within the range established, according to their quality. Although each autonomous region fixes their own tuition fees, the fact is that the Royal Decree-Law 14/2012 has left open the possibility of price differences between universities within the same region 13, that is to say tuition fees for the same degree can be different at each university within the same region. This means that universities must differentiate themselves, not in the degrees they offer but also for the prestige they have. If you set a tuition fee range based on public service costs, institutions will be at the upper limit of this range only if 13 In fact, in Madrid set a lower limit for tuition fees for non-professionalizing university master s courses( 65/credit on first enrollment) and a maximum for undergraduate studies that universities may fix. So far Madrid universities have agreed to charge the same tuition fees, but most likely these agreements are not feasible in the future. 22

23 their prestige guarantees a sufficient demand that does not threaten their existence, something that will only occur if their quality is recognized by society at large. This increased competition between centers and their differentiation is consistent with the objective that some Spanish universities are placed at the top of the college rankings (as produced by the Shanghai Jiao Tong University). It is very likely that the differentiation of centers according to their prestige recommends a regrouping or maybe a disappearance of some of them, at least within the same region. Finally, we cannot fail to mention that the consequences of an increase in tuition fees, when not accompanied by an improvement in aid to families through grants and loans will have unexpected consequences. It may force Spain to return in some years to the university of thirty years ago, where only those with sufficient resources could attend. On a more positive note this may have resulted in some Spanish universities advancing further up the international rankings. 23

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