Management of higher education with special reference to financial management in African institutions

Transcription

1 ПЕР Contributions No. 28 Managmnt of highr ducation with spcial rfrnc to financial managmnt in African institutions Bikas C. Sanyal Michala Martin This documnt was prpard for Rgional Consultation and prsntd for th World Confrnc on Highr Education* (WCHE) hld 1-4 April 1997, Dakar * Th World Confrnc on Highr Education (WCHE) will b hld in Parisfrom5 to 9 Octobr 1998 Paris 1998 UNESCO: Intrnational Institut for Educational Plannini

2 Managmnt of highr ducation with spcial rfrnc to financial managmnt in African institutions

3 Includd in th sam sris: 1. Nw stratgis for financing divrsifid forms of ducation and training, Sylvain Lourié 2. Educational planning: rflcting on th past and its prospcts for th futur 1, Jacqus Hallak 3. Education for all: high xpctations or fals hops? 2 Jacqus Hallak 4. Educational planning for th yar , François Caillods 5. Partnrship in ducation: th rol of univrsitis in th Pacific Rim, Bikas C. Sanyal 6. Education policis in a comparativ prspctiv: suggstions for a rsarch agnda, Jacqus Hallak 7. Staff managmnt in African univrsitis 2, Bikas C. Sanyal 8. Managing schools for ducational quality and quity: finding th propr mix to mak it work, Jacqus Hallak 9. Education in a priod of chang and adjustmnt: som intrnational prspctivs, Bikas C. Sanyal 10. Capacity building for ducational planning and administration: IŒP's xprinc, Gabril Carrón 11. Excllnc and valuation in highr ducation: som intrnational prspctivs, Bikas C. Sanyal 12. Managmnt of budgtary dficits in highr ducation institutions: currnt intrnational xprinc and practic, Igor V. Kitav 13. L'xclusion : njux t défis pour la planification d l'éducation, Jacqus Hallak 14. Acadmic staffing and staff managmnt in Wstrn Europan Univrsitis: currnt situation and mrging issus, Michala Martin 15. Ls pouvoirs publics t l'éducation, Jacqus Hallak 16. Highr ducation managmnt in a priod of transition with spcial rfrnc to th Russian Fdration, Bikas C. Sanyal 17. Profil and trnds of continuing ducation in Franc, with spcial rfrnc to company training and highr ducation institutions, David Atchoarna 18. Communication tchnology for larning 1, Jacqus Hallak; Mioko Sdito 19. Ngotiation with aid agncis: a dwarf against a giant 2, Jacqus Hallak 20. Th us of computrizd information systms to incras fficincy in univrsity managmnt, Bikas C. Sanyal 21. Managmnt of Francophon and Anglophon Univrsitis in Africa - A comparativ analysis, Bikas C. Sanyal 22. Achiving basic ducation for all: rol of highr ducation and nw information tchnology 3, Bikas C. Sanyal 23. Educational challngs of th 21st Cntury: th vision of quality, Jacqus Hallak 24. Financing vocational ducation: concpts, xampls and tndncis, David Atchoarna 25. Public ducation authoritis: rnwing lgitimacy, Jacqus Hallak, Muril Poisson 26. Education and globalization 2, Jacqus Hallak 27. Nw stratgis for financial managmnt in univrsitis: th xprinc of OECD mmbr countris and Latin Amrican countris, Bikas C. Sanyal, Michala Martin 1. Also publishd in Frnch and Spanish. 2. Also publishd in Frnch. 3. Also publishd in Portugus.

4 Th Intrnational Institut for Educational Planning Th Intrnational Institut for Educational Planning (ПЕР) is an intrnational cntr for advancd framing and rsarch in th fild of ducational planning. It was stablishd by UNESCO in 1963 and is financd by UNESCO and by voluntary contributions from Mmbr Stats. In rcnt yars th following Mmbr Stats hav providd voluntary contributions to th Institut: Dnmark, Grmany, Icland, India, Irland, Norway, Swdn, Switzrland and Vnzula. Th Institut's aim is to contribut to th dvlopmnt of ducation throughout th world, by xpanding both knowldg and th supply of comptnt profssionals in thfildof ducational planning. In this ndavour th Institut co-oprats with intrstd training and rsarch organizations in Mmbr Stats. Th Govrning Board of th HEP, which approvs th Institut's programm and budgt, consists of a maximum of ight lctd mmbrs and four mmbrs dsignatd by th Unitd Nations Organization and crtain of its spcializd agncis and instituts. Chairman: Lnnart Wohlgmuth (Swdn), Dirctor, Th Nordic Africa Institut, Uppsala, Swdn. Dsignatd Mmbrs: David d Frranti, Dirctor, Human Dvlopmnt Dpartmnt (HDD), Th World Bank. Washington, D.C., USA. Carlos Fortin, Dputy to th Scrtary-Gnral, Unitd Nations Confrnc on Trad anddvlopmnt (UNCTAD),Gnva, Switzrland. Miriam J. Hirschfld, Dirctor, Division of Human Rsourcs Dvlopmnt and Capacity Building, World Halth Organization (WHO), Gnva, Switzrland. Jggan С Snghor, Dirctor, Unitd Nations African Institut for Economic Dvlopmnt and Planning (IDEP). Dakar, Sngal. Elctd Mmbrs: Dato'Asiah bt. Abu Samah (Malaysia), Corporat Advisor, Lang Education, Land and Gnral Brhad, Kuala Lumpur, Malaysia. Klaus Hitfnr (Grmany), Profssor, Fri Univrsität Brlin, Brlin, Grmany. Fa'iza Kfi (Tunisia),Prsidnt, National Union of Tunisian Womn, Tunis, Tunisia. Tamas Kozma (Hungary),Dirctor-Gnral, Hungarian Institut for Educational Rsarch, Budapst, Hungary. Tboho Moja (South Africa), Spcial Advisr to th Ministr of Education, Prtoria, South Africa. Yolanda M. Rojas (Costa Rica), Profssor, Univrsity of Costa Rica, San José, Costa Rica. Michl Vrnièrs (Franc), Profssor, Univrsity of Paris I, Panthon-Sorbonn, Paris, Franc. Inquiris about th Institut should b addrssd to: Th Offic of th Dirctor, Intrnational Institut for Educational Planning, 7-9 ru Eugèn-Dlacroix, Paris, Franc.

5 Th dsignations mployd and th prsntation of matrial throughout this documnt do not imply th xprssion of any opinion whatsovr on th part of UNESCO or HEP concrning th lgal status of any country, trritory, city or ara of its authoritis, or concrning its frontirs or boundaris. Th publication costs of this study hav bn covrd by a grant-in-aid offrd by UNESCO and by voluntary contributions mad by svral Mmbr Stats of UNESCO, th list of which will b found at th nd of th booklt. This volum has bn typst using HEP's computr facilitis and has bn printd in HEP's printshop Intrnational Institut for Educational Planning 7-9 ru Eugèn-Dlacroix, Paris UNESCO March 1998 ПЕР/ph

6 Contnts Prfac vii 1. Introduction 1 2. Th structur of th papr 3 3. Managmnt concpts and tchniqus 3 4. Institutional managmnt practics 7 5. Th contxt offinancial managmnt in th institutions of highr ducation 9 6. Functions and practics offinancial managmnt Changs in practics of managmnt of highr ducation with spcial rfrnc to financial managmnt in African institutions Lssons larnd 40 Rfrncs 45

7 IIEP publications and documnts Mor than 1,120 titls on all aspcts of ducational planning hav bn publishd by th Intrnational Institut for Educational Planning. A comprhnsiv catalogu, giving dtails of thir availability, includs rsarch rports, cas studis, sminar documnts, training matrials, occasional paprs and rfrnc books in th following subjct catgoris: Economics of ducation, costs and financing. Manpowr and mploymnt. Dmographic studis. Location of schools (school map) and micro-planning. Administration and managmnt. Curriculum dvlopmnt and valuation. Educational tchnology. Primary, scondary and highr ducation. Vocational and tchnical ducation. Non-formal, out-of-school, adult and rural ducation. Disadvantagd groups. Copis of th catalogu may b obtaind from th HEP Publications Unit on rqust.

8 Prfac Highr ducation is at th crossroads all ovr th world. Dramatic changs in th go-political ordr, globalization of socity and th conomy and th tchnological rvolution, spcially in th domain of information tchnology, hav affctd th systm of highr ducation trmndously. Loss of monopoly of th institutions of highr ducation in crating and dissminating knowldg and th diminution of public rsourcs for highr ducation ar subjcting th systm to critical analysis and dmands for transparnc and accountability. In Africa th systm is confronting mor srious financial crisis bcaus of th ovrall conomic crisis and th imposition of structural adjustmnt programms by th lnding agncis. According to on study th systm is in "an all prvading stat of physical, managrial and intllctual dilapidation". In spit of th crisis, th ducational ladrs of th rgion do bliv that bttr utilization of xisting rsourcs through bttr managmnt could go a long way in mting th financial crisis. Th rviw addrsss this issu. It givs a historical ovrviw of availabl managmnt tchniqus. Starting with th now rjctd Planning, Programming and Budgting Systm (PPBS) it dscribs brifly th tchniqus of'managmnt by Objctivs' (MBO), 'Zro-basd Budgting', 'Stratgic Managmnt' and 'Total Quality Managmnt' (TQM) and th way thy can b applid to highr ducation managmnt. Th us of prformanc indicators is bcoming incrasingly popular for improving managmnt. Th diffrnt typs of prformanc indicators applicabl to highr ducation ar providd in this sction. It is argud that managmnt practics ar dpndnt on th govrnmnt string policis of th country. Four typs of string policis hav bn idntifid, ranging from complt autonomy to complt control by th stat. Ths four typs of string vu

9 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions policis hav rsultd in four typs of dcision-making modls in th highr ducation institution, from th buraucratic modl to th ntrprnurial modl. Th contxt offinancial managmnt is thn discussd within th framwork of th systm's/institutions's mission and its organizational structur. Svn procdurs of financial managmnt hav bn idntifid for a givn organizational structur. Fiv mthods of govrnmnt financ of highr ducation hav bn obsrvd. This discussion is followd by a discussion of svn main functions offinancial managmnt, starting with acquisition or mobilization of financ and nding with th protction of financ. Tn sourcs hav bn idntifid for th institutions for funding thmslvs to rduc th stat burdn. Indicators rlatd to th sourcs of incom, financial strngth of th institution and short-trm liquidity and solvncy ar listd in th managmnt function, production of financial indicators. Changs in th practic of institutional managmnt in gnral and financial managmnt in particular, introducd to improv utilization of xisting rsourcs, hav bn givn from slctd industrializd countris,.g. Australia, Franc, th Nthrlands and th Unitd Kingdom. Thr ar xampls of good practics in crtain univrsitis of Africa,.g. Botswana, Côt d'ivoir, Ghana, Knya, Nigria, and Sngal. Our list is not xhaustiv, but th lssons larnd from ths good practics dmonstrat that good managmnt dpnds upon flxibility, transparncy, accountability and autonomy with rsponsibility. Good information is ssntial for good managmnt, and training of univrsity managrs and acadmic administrators in managrial skills is bcoming incrasingly important. Twlv lssons hav bn listd to conclud th papr. Ths ar: th importanc of managmnt capacity in th institutions, th nd for managmnt xprtis, th nd to pool xprtis at th intrnational and/or rgional lvl, th nd for intrnal undrstanding and accptanc, analysis of managmnt structurs and procdurs, bttr linkag btwn th institution and its nvironmnt, th nd for accountability masurs, financial planning and budgt, considration of th volution of th financial managmnt procss, incrasing fficincy, choic btwn cntralization and dcntralization and, finally, maintnanc of th momntum for chang. vin

10 Managmnt of highr ducation with spcial rfrnc to financial managmnt in African institutions by Bikas C. Sanyal Michala Martin 1. Introduction Highr ducation is at a critical stag all ovr th world today. Dramatic changs in th go-political ordr, globalization of th conomy and socity, th xplosion of scintific knowldg and tchnological dvlopmnt, spcially in th ara of informatics and bio-tchnology, artificial intllignc and tlmatics, ar affcting th ducation systm in gnral, and th highr ducation systm in particular. Morovr, th mrgnc of nw socio-conomic structurs, crativ dstruction of xisting powr rlations, nw ways of producing and doing things and changs in th valu systm ar also affcting th contnt, mthod and structur of highr ducation. Th importanc of knowldg for socity has ld to th diminution of th monopoly of th formal highr ducation systm as th sol producr of knowldg, and th systm is now facing incrasd comptition with othr agncis, including privat industris. Highr ducation has bn divrsifid in trms of dlivry systms, on th on hand, and in trms of control, on th othr. Public rsourcs for highr ducation ar on th dcras all ovr th world and th product of th systm is lss and lss for th public good. Stakholdrs of highr ducation, th studnts, th mployrs and th govrnmnt, ar bing incrasingly critical of th institutions of highr ducation. Evrybody dmands 'valu for mony'(1). Th situation in Africa has not bn fr from th ffcts of ths changs in th intrnational contxt. In addition to th conomic uncrtainty, political and social uphavals hav affctd highr ducation in Africa. In svral countris in th continnt, highr ducation has bn suffring from 1

11 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions considrabl dstruction of infrastructur and facilitis through civil wars. Campuss hav bn abandond. Th svr conomic rcssions of th last two dcads and th structural adjustmnt programms imposd by th lnding agncis hav had dvastating consquncs for th univrsitis and othr institutions (2). "In fact, thfirstimprssion on gts of an African univrsity campus in th 1990s is on of an all-prvading stat of physical, managrial and intllctual dilapidation", according to on of th U N E S C O- BREDA studis(3) Diminishing financial rsourcs from insid and outsid th country hav affctd critical inputs: books, journals and quipmnt. "This is also manifstd in most African univrsitis in th squz on studnt accommodation, collaps or dclin of municipal srvics, crowdd classrooms, taching rducd to chalk and talk, frustratd tachrs who must hustl for additional incom, libraris whr acquisitions vots hav bn nominal for yars on nd, and impovrishd rsarch"(2, p. 146). In spit of th crisis, th univrsitis hav shown a rmarkabl capacity to surviv, as on author has notd: "Dspit th brains that hav bn draind out of thm ovr th yars, and th compromiss thy hav bn complld to mak with thir own standards, (ths) univrsitis rmain grat national storhouss of traind, informd, inquiring and critical intllcts, and th indispnsabl mans of rplnishing national talnt. Thy hav considrabl rsrvs of ladrship and commitmnt on which to draw. Impovrishd, frustratd, dilapidatd and ovrcrowdd as thy may b, thy hav no substituts" {A). A voic of hop is also hard from anothr cornr: "Whn rsourcs ar limitd, th task is how bst to transform vn th shortags into maningful ducational and institutional srvics. Allocation of scarc rsourcs dmands a commitmnt to ralism and a dtrmination to fac a hard futur and mak th bst of it. Nvrthlss, th univrsity in Africa should continu to b proplld by th qust to manag not just for survival, but also for xcllnc''(2, p. 155). 2

12 ПЕР Contributions No. 28 Th Intrnational Institution for Educational Planning of UNESCO, having forsn th problms facing th highr ducation institutions in th dvloping countris, spcially thos in Africa, launchd a rsarch programm on th problms of highr ducation managmnt at th institutional lvl to crat a knowldg bas on th mthods of bttr utilization of xisting rsourcs. "Th HEP rsarch bgan with an xtnsiv litratur rviw and cration of an information bas, th writing of a sris of paprs on mthodological issus and th prparation of 14 in-dpth cas studis on diffrnt typs of innovations. Th rsults of ths activitis wr usd to prpar a st of training matrials for intnsiv training courss. Th xchang of individual univrsity xprincs in managrial innovations in ths training courss providd an additional knowldg bas for ZffiP"(5, p. vi). Th prsnt papr draws xclusivly from this knowldg bas. 2. Th structur of th papr Looking for ways and mans to improv managmnt of highr ducation institutions, w shall first giv an ovrviw of th managmnt concpts and tchniqus in highr ducation, followd by institutional managmnt practics dfining diffrnt govrnmnt string policis lading to th diffrnt typs of dcision-making modls in th highr ducation systms. This sction will b followd by som basic concpts of financial managmnt,.g. th contxt of highr ducation financial managmnt, including th rlation btwn th mission of highr ducation and financing, organizational structur of an institution and its rlation with financial managmnt procdurs and mchanisms of financ, th main functions of financial managmnt and, finally, a sction giving th xampls of changs in managmnt of highr ducation with spcial rfrnc to financial managmnt in slctd industrializd countris and African countris. 3. Managmnt concpts and tchniqus In many countris, rflction on th practic of highr ducation managmnt has takn plac within a contxt of an idological shift with rgard 3

13 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions to public policy. Policy-makrs hav incrasingly attmptd to diminish stat intrvntion and ncourag ntrprnurial bhaviour and accountability in th public sctor. Th xprinc in th USA provids a usful ovrviw of a numbr of th concpts and tchniqus availabl to highr ducation managmnt. Particularly during th lat 1960s and arly 1970s, svral systms for univrsity managmnt appard in th discussion among practitionrs and xprts on highr ducation. Ths systms wr drivd from concpts dvlopd ithr for stat agncis or, mor oftn, borrowd from thos xisting in th litratur on privat sctor ntrpriss. Th main focus of all ths concpts is thir mphasis on th clarification of institutional goals and objctivs as a basis for th systmatization of subsqunt managrial action. During th mid-1960s, th Planning Programming and Budgting Systm (PPBS) was imposd on all Californian stat agncis, including highr ducation institutions. It prscribd a rathr complx, linar procdur of stablishing an institutional mission and dtaild quantifiabl targts to b implmntd through annual budgt spcification. Howvr, du to its complxity and high staff and computing costs, PPBS was quickly succdd by Managmnt by Objctivs (MBO). M B О was basd on th assumption that th lack of clarly statd institutional goals constitutd a major obstacl to incrasd institutional ffctivnss. Ths institutional goals wrfirstto b clarifid by th acadmic community and thn to b xprssd in quantitativ objctivs to stand as standards of prformanc. Such standards should apply qually at th ovrall institutional lvl as wll as to individual staff mmbrs. M B O was followd during th mid-1970s by th Zro-bas budgting approach. This third systm rquird that th goals of an organizational unit should dtrmin th budgt and not th budgt dtrmin th goals to b achivd. By th nd of th 1970s, th concpts of stratgic planningfirst and managmnt latr, borrowd from th litratur for businss ntrpriss, cam up in th discussion on highr ducation managmnt. Th concpt aros within a contxt of diminishing public rsourcs, th xpctation of dclining studnt numbrs and, thrfor, incrasd comptition among institutions amounting to a thrat to survival. Th nw and fundamntal ida 4

14 ПЕР Contributions No. 28 of stratgic planning was that institutional plannrs and administrators should b continuously outward looking, assss changs in thir rlvant nvironmnts and plan for ths changs with a long-trm prspctiv. Stratgic planning can b dscribd as having th following major componnts: institutions idntify xtrnal thrats and opportunitis through nvironmntal scanning of political, conomic, social, dmographic and cultural chang in th nvironmnt; institutions undrtak a continuous assssmnt of intrnal strngths and waknsss with rgard to rsarch and taching programms, financs, facilitis, rsourcs, as wll as managmnt procsss and institutional valus; xtrnal opportunitis and thrats ar rlatd to institutional strngths and this two-fold valuation procss lads to th dtrmination of th basic mission of th institution, that is, th statmnt of its basic purpos and its distinctivnss as opposd to othr institutions of highr larning in th country and abroad; th mission is translatd into long-trm goals which ar broad statmnts on th fundamntal dirctions for th futur; goals ar thn dtaild in mor oprational and short-trm objctivs spcifying clintl groups, th mix of programms and srvics, as wll as th comparativ advantags of ths ovr compting institutions; th 'mission statmnt' which summarizs ths functions and prioritis srvs to inform potntial clints (studnts and sponsors of rsarch or consultancy) and govrnmnt funding agncis of th particular nich that th institution fills in th national highr ducation systm. Stratgic planning and managmnt is procss orintd: it calls for participativ approachs in th dtrmination of th organization's mission, goals and objctivs, as wll as th stablishmnt of a st of masurs by which th organization can tst th achivmnt of ths goals and objctivs; major institutional stakholdrs ar xpctd to b involvd in th intrnal and xtrnal assssmnt procss; 5

15 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions dpartmnts may b rqustd to dvlop thir own stratgic plans which will b intgratd into th ovrall stratgic plan of th institution. It is oftn mphasizd that it is th procss of stratgic managmnt which is mor important than th writtn plan bing dvlopd. Sinc th mid-1980s, th concpt of Total Quality Managmnt (TQM) has mrgd. Again, it is a concpt borrowd and adaptd from privat sctor managmnt. Total quality managmnt for highr ducation institutions is basd on many of th assumptions inhrnt in th stratgic managmnt concpt. It taks up th concrn for improvd quality of highr ducation output, a concrn widly xprssd by many govrnmnts and thir agncis and discussd in th litratur on highr ducation managmnt. It mphasizs th importanc of stting up a mission which dscribs, in a dtaild mannr, th organization's spcific bnficiaris, thir nds and th mans to attain th bst customr satisfaction. TQM, lik stratgic managmnt, is procss orintd. It is charactrizd by tamwork, systmatic analysis of th problms, and th intnsiv us of information to achiv th objct of continuous improvmnt of srvics with rgard to th bnficiaris' nds. Also, T Q M is participativ and strsss th nd for staff dvlopmnt. It mphasizs th stting up of tams, including thos who will actually implmnt th chang or prform th work, and thos who shar ownrship in th procss bing plannd or improvd. In rcnt yars much attntion has bn focusd on th dvlopmnt of prformanc indicators for highr ducation systms as masurs of accountability and ffctivnss. Incrasingly, govrnmnts ar insisting on prformanc indicators to hlp thm dcid whthr th substantial public funds bing allocatd to highr ducation ar bing fficintly and ffctivly usd. Usually basd on quantitativ information, ths indicators assist in chcking on th appropriatnss of th mission of a systm or an institution and th xtnt of mlfilling th mission. Prformanc indicators can b usd to show fiv aspcts of th prformanc of highr ducation: 6

16 ПЕР Contributions No Th quantitativ dimnsions of th main inputs (studnts, staff, buildings, quipmnt, books, mony, tc.) into th systm/institution. 2. Main outputs in quantitativ trms (studnt placs, graduats, rsarch publications, patnts, tc.). 3. Th rlationship btwn inputs and outputs (studnt-yars pr graduat, studnt/staff ratios, cost pr graduat, rsarch publication/patnts pr faculty mmbr, so-calld fficincy masurs). 4. Th quality of th systm's/institution's activitis (xamination succss rats, mployability of graduats, impact of rsarch on national and /or intrnational acadmic community and/or productiv/managmnt procss); and 5. procsss within th systm/institution that may b amnabl to managmnt dcisions (amount of srvic taching by on institution/dpartmnt for anothr, avrag lngth of tim faculty taks to rturn studnt assignmnt, dgr of studnt satisfaction with instructions, tc.). Th last thr aspcts can b combind to b calld 'procss indicators', whil th first and scond ar calld 'input' and 'output' indicators, rspctivly. 4. Institutional managmnt practics It is clar that institutional managmnt is significantly influncd by th typ of govrnmntal string policy in forc. Four major typs of govrnmntal string policis for highr ducation hav bn articulatd: 9 Systms oprating undr slf-rgulation with a broad framwork of accountability with gratr us of fr markt incntivs, which ar found in Canada, th Nthrlands, th Unitd Kingdom, and th USA. Systms in transition from cntralizd planning to slf-rgulation, which ar found in th Nordic countris. Systms oprating undr slf-rgulation but xprincing difficultis,.g. th Russian Fdration and som Eastrn Europan countris; and systms undr dirct cntralizd planning and control, as sn in som Eastrn Europan and som continntal Europan countris (.g. Austria, Franc, Italy, Portugal) and a larg numbr of dvloping countris, spcially in Africa. 7

17 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions Ths four typs of string policis hav ld to four typs of dcisionmaking modls in th institutions of highr ducation, including dcisionmaking infinancial managmnt. Th first and th longst surviving modl is calld th collégial or consnsus modl, whr: (i) Dcisions ar mad by acadmia on a dmocratic basis through councils and/or committs basd on long dlibrations; (ii) th had of th institution has lss powr and rmains in his post for a short priod; and (in) th administration is gnrally wak and provids mainly logistical support. Th implications of this modl ar slow and soft dcisions, individual acadmic frdom and absnc of univrsity-wid objctivs. Th scond modl is calld th political dcision modl, whr: (i) Dcisions rsult from prmannt ngotiations among th stakholdrs (profssors, studnts, administrativ staff, govrnmnt, businss, local community, industry and labour unions); (ii) th ngotiations in this modl may tak mor tim and ar mor complx than thfirst; and (iii) although univrsity-wid objctivs xist, individual acadmic frdom is lss. Th third modl is calld th buraucratic modl. Its charactristics ar: (i) Nationwid systms for highr ducation, strict govrnmnt rul for rcruitmnt, promotion, salary structurs and study programms; (ii) administration is strong: profssors and hads of institutions ar pur xcutivs; (iii) it is consrvativ, uniform and lss innovativ, suffrs from lss initiativ and from prvalnc of ruls ovr rsults. Th fourth modl is calld th ntrprnurial modl. Th institutions in this group ar:

18 HEP Contributions No. 28 (i) Entrprnurial and autonomous; (ii) supply srvics of taching, rsarch and consultancy and ar paid by thir customrs, namly, studnts, govrnmnt, ntrpriss, rgional/local community, tc.; (iii) comptitiv and ar concrnd with cost-ffctivnss and accountability, multi-sourc funding, stratgic alliancs and us of modrn managmnt tchniqus. In practic, an institution will mak a combination of th abov four modls to suit its own contxt(6). 5. Th contxt offinancial managmnt in th institutions of highr ducation Th financial managmnt of highr ducation oprats within constraints dtrmind by thr main factors: * th mission;» th organizational structurs; 9 th sourcs and mchanisms of financ. 5.7 Mission As mntiond abov, for a larg and complx systm of highr ducation, th mission statmnt has th particular function of informing th potntial clints (studnts and th sponsors of consultancy and rsarch srvics) and th funding agncis of th govrnmnt to xamin th spcial rol and plac of an institution within th national systm of highr ducation. Thr is oftn a rciprocal rlationship btwn mission and funding: an institutions's mission may influnc th public funds it rcivs; howvr, th funds it obtains, and th way thy ar allocatd, hlp dtrmin its mission. It is slf-vidnt that thfinancial managmnt of an institution ought to oprat within its mission. An institution with a mission that mphasizs community srvic will not allocat rsourcs in th sam way that a major 9

19 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions rsarch institution will, for xampl. Howvr, in practic, and possibly bcaus thy may b sn as a constraint on futurflxibility, mission statmnts tnd usually to b couchd in vry gnral trms and ar oftn intrchangabl btwn institutions. 5.2 Organizational structurs Rducd to th simplst trms, th organizational structur of a fully fldgd institution of highr ducation consists of four aras: a cntral administration; cntrally providd srvics; spcializd taching and rsarch dpartmnts; non-acadmic srvics. Evn this simpl modl of th organizational structur of an institution allows for svn basic financial managmnt procdurs, as listd blow: 1. all rsourcs ar rcivd by th cntr, and ar allocatd, managd and administrd from th cntr (th pur buraucratic modl); 2. stratgic dcisions ar takn at th cntr but routin dcisions and implmntation ar mad by dpartmnts (dcntralizd buraucracy); 3. stratgic dcisions ar takn at th cntr basd on a consnsus within th framwork of collctiv bargaining (political dcision modl); 4. incom is top slicd for cntral administration and srvics: th rmaindr is allocatd to dpartmnts to us in accordanc with acadmic prioritis (collégial modl); 5. incom is 'arnd' by dpartmnts but administrd from th cntr (corporat ntrprnurialism); 6. incom is arnd by dpartmnts: it is 'taxd' to covr cntral administrativ costs and th rmaindr is spnt by dpartmnts according to th rquirmnts of th xtrnal 'purchasing' agncy (managd ntrprnurialism); 7. incom is arnd by dpartmnts and rtaind by thm: thy 'buy' cntral srvics as thy ar ndd (libral ntrprnurialism). In practic, of cours, rsourc allocation procdurs ar usually a mix of mor than on modl. For xampl, xtrnally fundd rsarch oftn 10

20 ПЕР Contributions No. 28 rquirs somwhat diffrnt financial managmnt procdurs from th cntrally fundd cor activitis of th institution of highr ducation. Th modls ar bst sn as points on a spctrum: at on xtrm all rsourcs - staff, spac, and consumabls - ar allocatd cntrally; at th othr xtrm, facultis or dpartmnts ar almost autonomous cost cntrs mting thir own rquirmnts from incom that thy thmslvs hav gnratd. Som institutions of highr ducation ar vry nar to th top nd of this spctrum and othrs ar at th bottom. Many African countris still hav vry buraucratic systms of financial managmnt imposd on thm by govrnmnts, but vrywhr thr is som shift towards dvolution downwards of financial managmnt rsponsibilitis. Financial managmnt has bcom incrasingly concrnd with what conomists hav com to call th 'principal-agnt' problm. In othr words, how dos th prson who controls rsourcs prsuad thos using thm to act in ways that ar consistnt with th objctivs of th 'principal'? Th largr and mor complx an organization, th mor difficult it is to do this. In broad trms th dcisions on how rsourcs ar to b allocatd can b mad in th institutions by diffrnt managmnt procdurs following th four dcision-making modls dscribd in th prvious sction. Th rol offinancial managmnt is diffrnt in th four cass: in th collégial managmnt systms acadmic critria tnd to b paramount, and institution administrators ar sn to b prforming a supporting rol - in xtrm cass th institutions may b sn to b run for th bnfit of its acadmic staff; with th political dcision modl, collctiv bargaining bcoms dominant; th administration plays a consnsus-building rol; in buraucratic managmnt structurs th rols ar rvrsd, dcision-making is hirarchical, th administration is dominant and acadmic staff ar 'managd' by profssional managrs and administrators; in ntrprnurial organizations, individuals and dpartmnts bst 11

21 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions abl to gnrat incom ar dominant partnrs and th most important function offinancial managrs is to nsur that thr ar adquat incntivs to ncourag thm to do so - customrs dcid. 5.3 Mchanisms of govrnmnt financ During th past 10 yars, many countris hav xprincd a shift from input-basd to output-basd public funding of institutions. In input-basd funding systms, public funds ar providd to mt th costs of th input into th institution, for xampl, staff salaris, quipmnt, consumabl itms, buildings. Institutional managrs ar rquird to spnd th funds on th inputs for which thy ar providd, but within ths constraints it is th institution which dcids what outputs to produc. Output-basd funding pays th institution for th srvics it provids. In ffct th govrnmnt 'buys' srvics from th organization. It is for th institution to dcid how to allocat rsourcs btwn th various inputs to produc th contractd outputs. It is important to apprciat that ths shifts from input-basd to outputbasd funding ar occurring not only in highr ducation; most public srvics ar xprincing similar dvlopmnts. Th shifts rflct idological and tchnological changs that go far byond highr ducation. Th implications for financial managrs of a shift from input spcification to output spcification ar vry larg indd. It rprsnts a shift in th powr rlationships btwn th institution and th xtrnal funding body, and also, within th institutions, btwn th managrial and th acadmic staff. Broadly, thr ar fiv mthods in which govrnmnt can fund univrsitis. 1. Th institution submits a priodic (usually annual) budgt basd on its stimat of th costs of its commitmnts to staff salaris and othr ssntial inputs. It may bargain with th govrnmnt ovr th prcntag of this budgt which is to b mt. Th grants ar 'armarkd' or 'hypothcatd', which mans that th univrsity must spnd th funds on th itms spcifid by th govrnmnt. 12

22 ПЕР Contributions No Th institution rcivs a singl block grant basd on th grant rcivd in th prvious priod plus an incrmnt, and is fr to spnd this mony as it wishs within vry broad lgal limits. 3. Funds ar basd on a formula rflcting past prformanc, but th univrsity is abl to spnd th funds as it wishs onc thy ar rcivd. Th basis of most formula is studnt numbrs (wighd by subjct, lvl of study, tc.). But, incrasingly, govrnmnts ar trying to includ in th formula a wighting to rflct th acadmic prformanc of th studnts, th quality of training and rsarch undrtakn. 4. Th govrnmnt buys acadmic srvics from th institution. This is similar to 3 abov but funds ar basd on prospctiv futur prformanc rathr than prformanc in th past. 5. Th institution slls its taching, rsarch and consultancy srvics to a wid varity of diffrnt customrs, studnts, mployrs and public authoritis. Again, th actual mchanisms ar oftn a combination of two or mor of ths modls. In particular, various combinations of 3, 4, and 5 ar oftn discussd. For xampl, formula may dtrmin much of th funding, whil a proportion is dtrmind by th 'sal' of incrmntal studnt placs to th govrnmnt. On much discussd possibility is studnt vouchrs, whrby studnts pay fs but ar rimbursd in whol or part by govrnmnt grants. Howvr, it is usually possibl to idntify a dominant modl corrsponding to on of ths idal typs. Anothr important point is that most funding modls ar, in practic, incrmntal in that institutions rciv last yar's allocation plus or minus an incrmnt, with diffring consquncs: whn th incrmnt is positiv, thr ar fw problms; whn it is ngativ, thr ar usually considrabl difficultis in allocating th cuts andfirmfinancial managmnt is ndd if th ffcts ar not to b randomly distributd (for xampl, staff rduction basd upon individual dparturs rathr than policy dcisions) to th long-trm dtrimnt of th institution. 13

23 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions It is not possibl to rlat ths xtrnal funding mchanisms xactly to th intrnal rsourc allocation procdurs, but xprinc in many countris suggsts that mthod 1 abov and, to som xtnt, mthod 3, rquir a substantial masur of buraucratic rgulation to nsur that rsourcs ar spnt as rquird by th govrnmnt or cntral funding agncy. Mthod 2, and som aspcts of mthod 3, usually prmit som dgr of collégial managmnt in which acadmic prioritis ar vry influntial. Mthods 4 and 5 rquir in varying dgrs markt-orintatd managmnt in which ntrprnurialism and th satisfaction of markt dmands ar rwardd(7). 6. Functions and practics offinancial managmnt Th main functions offinancial managmnt includ: th acquisition or mobilization of rsourcs; ncouraging incom-gnrating functions; managmnt of cash rsrvs; th allocation of rsourcs; production of financial indicators;» th utilization of rsourcs;» valuation and auditing; protction of financs. 6.1 Th acquisition or mobilization of rsourcs Th majority of rsourcs ar normally rcivd from govrnmntal authoritis, or raisd by tuition fs plus additions from a varity of othr sourcs, such as th community, parnts, charity, tc. Whil public subsidis ar likly to rmain th major sourc of funding for highr ducation in most countris, thy ar bcoming incrasingly insufficint to nsur th financial viability of highr ducation systms which ar rapidly xpanding undr th prssur ofrisingsocial dmand. Evn whn govrnmnt funding is forthcoming, it is flt to b disadvantagous for th institution to rly on a singlfinancial sourc. With lss stat support and limitd opportunitis to impos or incras fs, many univrsitis hav had to bcom involvd in a wid spctrum of incom-gnrating activitis. In this contxt, it is important that univrsity councils includ rprsntativs from businss and industry in ordr to 14

24 ПЕР Contributions No. 28 strngthn th linkags important for forming partnrships and in ordr to dvlop markting mthods. Th following is a list of possibl sourcs of funding: privat studnts; variations of tuition fs; xamination fs; rsidnc fs; contracts for rsarch, courss and consulting (usually a prcntag of rvnu arnd gos to th Dpartmnt concrnd); intllctual proprty rights (patnts and books); commrcial activitis (printing, softwar); invstmnts in productiv aras; ndowmnts (this is a tradition in th USA and prstig univrsitis in th Unitd Kingdom and Japan);» forign aid. Various routs hav bn followd to divrsify funding sourcs. Traditionally, incom is gnratd by undrtaking rsarch and srvic contracts on bhalf of public and privat companis. Th rturns on srvics such as consultancis and dvlopmntal work ar xpctd to covr all costs and indd to provid th institution with a nt incom. In many countris public institutions ar fr to mak us of ths arnings, but in Grmany and Dnmark, for xampl, it has bn ncssary to amnd th rgulations govrning th financs of institutions, or to mak othr spcial provisions to nabl thm to rtain thir outsid arnings. Howvr, it is obvious that countris which ar prdominantly agrarian or hav a small modrn industrial sctor, hav limitd scop for srvic contracts. Anothr traditional way of raising financial support from industrial and commrcial firms is in th form of grants or scholarships for spcific acadmic or profssional programms. As far as dvloping countris ar concrnd, dirct donations hav bn strongst in Asia, whr th stablishmnt of foundations offringfinancialsupport for studnts has bn common. Privat foundations, for instanc, hav dvlopd in Indonsia, Thailand and South Kora. 15

25 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions Howvr, vn undr th most favourabl scnario, ths additional rsourcs ar not likly to rprsnt a high proportion of institutions' budgts. Any incom-gnrating activitis should b applicabl to th modalitis of a particular highr ducation institution, b dmand orintd and locally spcific. In addition, thy should b tstd by mans of an xprimntal phas. 6.2 Encouraging incom-gnrating functions Th prvious function ovrlaps that of ncouraging individuals and units in th univrsity to gnrat incom on bhalf of th univrsity as a whol and to rward thm for doing so. Thr ar two ways in which individuals can b rwardd for undrtaking activitis that produc xtra incom: on is to trat such activitis as part of th normal work programm of th univrsity and to nabl consultancy work to count as a critrion in applications for promotion or snior posts; «th othr is to allow individuals to rtain a part of th incom that is gnratd, ithr for thmslvs individually, or for th dpartmnt or cntr in which th individual has a spcific intrst. 6.3 Managmnt of cash rsrvs Th xtnt of this function, managmnt of th institution's cash rsrvs, dpnds largly on th ovrall lgal framwork within which th institution oprats. In countris whr institutions hav nofinancial autonomy and no cash rsrvs, obviously th function dos not xist. Howvr, as mor and mor countris mov in th dirction of dcntralization and dvolvd budgts, this function bcoms a vry important on. In countris with a wll-dvlopd banking systm, proprly managd cash rsrvs can gnrat a significant incom for th institution. Th managmnt of th institution's incom-gnrating ntrpriss is growing in importanc. Bookshops, gust-houss, printing srvics, confrnc and 16

26 ПЕР Contributions No. 28 sports facilitis, consultancy srvics, intllctual proprtyrights and many othr srvics which gnrat incom, costs and cash balancs nd to b proprly managd in th intrsts of th institution. 6.4 Th allocation of rsourcs Th allocation of rsourcs rflcts th prioritis among all th activitis of th univrsity. In th short run, ths dcisions ar highly dtrmind by th rsourcs th institution has alrady acquird, but ovr tim mor options for changing allocations may bcom availabl. Th currnt rsourc constraints and dcisions ar rflctd in th budgt plans drawn up for th comingfinancial yar. A basic budgt plan shows th amount of funds to b raisd and th shar that is xpctd to b spnt on ach of th individual budgt hads. Som institutions ar now kping a crtain proportion, 5-10 pr cnt, at th cntr for stratgic us, such as incntivs, innovations and information systm dvlopmnt. Also, som institutions ar sparating taching and rsarch funds. Th following ar othr masurs that hav bn adoptd: Dvloping th concpt of an intrnal rsourc allocation authority (oftn a planning and rsourcs committ) srving as an invstor, to whom proposrs of activitis must prsnt commrcial and financial, as wll as acadmic, justification; «structuring th institution's activitis and financial accounting rcords around cost/profit cntrs so that th ntir univrsity community is mad awar of th cost of ach activity and th sourcs of incom which fund it; «dvolvingfinancialrsponsibility and accountability closr to th oprating units, as far as xprtis and th information systm prmit, but not at th xpns or abdication of all cntral control; adopting formula funding, oftn basd on nrolmnts, output of graduats and othr prformanc indicators - whr govrnmnts us formula for funding purposs, institutions oftn follow th sam procdur for intrnal allocation and it may b ncssary, whn instituting formula funding, to put asid som rsourcs to assist crtain facultis in th transition phas. 17

27 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions 6.5 Production offinancialindicators As indicatd bfor, gnration of usful prformanc indicators is bcoming of growing importanc. Modrn managmnt systms dpnd upon comprhnsiv information, and a larg proportion of th information ndd concrns th dirct or indirct us offinancialrsourcs. Any nw financial managmnt systm must tak on th routin production of financial ffctivnss and fficincy indicators. A mor dtaild list is givn latr. 6.6 Th utilization of rsourcs Rsourc utilization is th phas whr th budgt plan is put into opration. Broadly intrprtd, this task ncompasss all th managmnt activitis of staffing, running th prmiss, ordring supplis and so on, which incur xpnditurs. Othr activitis, such as running a bookshop, hiring school prmiss or slling courss for a f, which bring in additional incom, may also b includd. Th spcific task for financial managrs is monitoring th budgt rgularly throughout th yar in ordr to compar actual incom and xpnditurs undr various budgt hads with plannd xpnditurs. If thr ar diffrncs btwn th ral incom and xpnditur, as is likly, it is th job of managmnt to corrct thm. This may involv adjusting crtain xpnditur plans or xrting bttrfinancialcontrol ovr intrnal budgt holdrs, such as th hads of dpartmnts, in ordr to ithr curtail or stimulat spnding. It is hr that an fficint managmnt information systm is important in kping univrsity ladrs and administrators up to dat on th acadmic andfinancial prformanc of th various sgmnts of th institution. Som spcial training in budgtary comptnc for all administrators and hads of units can prov xtrmly usful. Most highr ducation staff hav vry littl background infinancial managmnt, as may b indicatd by th following: pattrns of tardinss in mting dadlins; mistaks in complting forms or in computation; 18

28 ПЕР Contributions No. 28 failur to prioritiz th uss of discrtionary monis; failur to communicat appropriat budgtary information to thos concrnd. It has bn found that a sris of short workshops or courss hld intrnally can much incras cost consciousnss andfinancial comptnc gnrally. 6.7 Evaluation and auditing Evaluation and auditing ar currntly th last dvlopd aspcts of financial managmnt. With incrasd autonomy, highr ducation institutions hav to b accountabl for thir acadmic and financial prformanc. Whil considrabl ducational valuation is undrtakn, vry littl of it rlats th valu of rsourcs usd to th rsulting ducational outcoms. Although ducational outcoms ar not asily masurd, nvrthlss dcisions hav to b mad, so thr is crtainly mrit in quantifying whr possibl. Thr is no on absolut and corrct way of costing, but if thr ar svral ways to achiv an objctiv, thn if th sam costing principls ar adoptd, rlativ costs can b masurd. Cost analysis should aim at summarizing nt rsourc implications of an ducational activity ovr a priod of tim, particularly if a chang is involvd. Cost pr studnt pr annum is a common masur utilizd, as is cost pr studnt hour. At prsnt, ducational valuation is usually undrtakn by govrnmnt advisrs and inspctors. Quit sparatly, auditing is normally rstrictd to chcking th probity of transactions undrtakn by ducational administrators. Idally, th auditors should assss th fficincy and ffctivnss of rsourc utilization by rlating srvic outcoms to policy objctivs (ffctivnss) and rsourc utilization (fficincy). Sinc in ducation th major oprating cost is taching staff, cost-ffctivnss is usually rlatd to staff hours usd and numbr of studnts bnfiting. In addition to th abov, it is bcoming mor gnral for institutions to conduct thir own slf-valuation, comparing prformanc both within th institution and with st stratgic targts. It is advantagous to involv staff in stting targts and masuring actual prformanc. 19

29 Managmnt of highr ducation with spcial rfrnc tofinancialmanagmnt in African institutions Accountability xrciss may b carrid out by staff assssing work in othr parts of th institution to thir own, so as to ngndr a sns of corporat rsponsibility. Th objctivs of ach cours hav to b clarly dfind and th prcntag st of studnts xpctd to succd, as wll as optimum taching hour invstmnt in ach cours, and th ducation procsss to b usd (.g. audiovisual and practical aids incras costffctivnss). Onc this task is compltd, th information provids a stabl databas for th futur which may b rviwd ach yar. In th framwork of accountability procdurs, it is bcoming common practic for institutions to publish an annual rport which includs comparativ data to show prsnt and past rsults and budgts. Such rports ar circulatd not only to govrnmnt dpartmnts but also to local authoritis, industry and studnts. Prformanc indicators can srv a usful rol in th valuation of th financial managmnt of an institution, although it is clar that thy do not tll th whol story. A list of spcific prformanc indicators rlatd to financial managmnt is givn blow for diffrnt tasks. Ths ar intndd only as xampls. Nonthlss, thy can b rviwd for thir potntial utility in th usr's spcific situation. (a) Indicators rlating to th sourcs of incom of th institution prcntag ratio of govrnmnt grants to total incom; prcntag ratio of tuition fs to total incom; prcntag ratio of forign studnt tuition fs to total incom; prcntag ratio of incom from rsarch grants and contracts to total incom; prcntag ratio of incom from othr srvics to total incom; prcntag ratio of incom from rsidncs and catring to total incom; prcntag ratio of miscllanous incom to total incom; prcntag ratio of surplus (dficit) to total incom. (b) Indicators rlating to thfinancialstrngth of th institution 1. day's ratio of total gnral funds to total xpnditur; 20

30 ПЕР Contributions No prcntag ratio of long-trm liabilitis to total gnral funds. (c) Indicators rlating to short-trm liquidity and solvncy 1. ratio of liquid assts to currnt liabilitis; 2. ratio of nt liquid assts to total xpnditur; 3. ratio of currnt assts to currnt liabilitis; 4. prcntag movmnt in nt liquid assts in a yar to nt liquid assts at th commncmnt of a yar; 5. days of total incom rprsntd by dbtors. 6.8 Protction of financ Of all th functions, this is th basic control function; it is th most traditional and by far th most widsprad rol of univrsity financial managrs. All th othr activitis ar, at last to som xtnt, dpndnt on this task bing satisfactorily prformd. As managmnt information systms and auditing procdurs improv, financial irrgularitis will b dtctd mor asily and th rgulations can b mad lss onrous(8). 7 Changs in practics of managmnt of highr ducation with spcial rfrnc to financial managmnt in African institutions Although our primary concrn is Africa, w shall provid som xampls of managrial changs at th institutional lvl as wll as in th ara offinanc from thos industrializd countris which at on tim or othr colonizd a numbr of African countris and thus lft significant marks on th institutions of highr ducation in Africa. Ths ar: th Unitd Kingdom, Franc, and th Nthrlands. W shall also giv th xampl of Australia bcaus this country has introducd significant changs in th managmnt systm to 'do mor with lss'. W shall cit xampls from Africa, both Anglophon and Francophon, whr changs in managmnt hav rsultd in bttr utilization of rsourcs. Managmnt for us is an art of practic, and thr is a lot to larn from good practics. In spit of th crisis facd by th institutions of highr ducation in Africa, som of thm arrisingto th challng. W provid only a fw of ths cass blow in this sction. W fl strongly that 'xampls ar bttr than prcpts'. 21