How national funding systems support the European Universities alliances?

Check out the new Commission study on the state and effectiveness of national funding systems of higher education across the EU.

The European Commission published a study mapping the state and effectiveness of national funding systems of higher education in the context of support of the European Universities Initiative. The study focuses on two main topics:

• analysis of the implementation and impact of performance-based funding systems in the 27 EU countries;
• understanding how and to what extent such national funding schemes can be used to support the European Universities Initiative.

Performance-based funding systems are widespread in the EU 

Member states distribute core funding to higher education institutions (HEIs) in different ways, however performance-based funding has become quite widespread in the EU (currently used in 21 higher education systems). In 13 countries, including Czechia, there is a moderate degree of performance orientation (meaning between 15 to 60 percent of the core funding is allocated based on the performance). Also, the definition of performance and criteria set up vary among national contexts. In general, there is a tendency to modernize and re-evaluate the indicators.

The study shows that performance-based funding mechanism can lead to a more transparent way to distribute core funding to HEIs and also has a potential to support dialogue between HEIs and national funding authorities. Among other benefits it´s worth mentioning the increased quality of teaching, learning and overall research outputs, greater focus on student needs and guidance, improvements in the internacionalization processes etc. Authors of the study also point out potential risks of this funding scheme, such as disadvantaging smaller, regional or specialized HEIs, administrative burden or indicators conflicting with institutional autonomy of universities. The set up of right evaluation criteria is therefore essential.

How countries support HEIs involved in alliances

Member States allocate funding to the alliances in two ways:

• targeted funds, one-off contribution or for a particular period; and/or
• funds integrated in the HEI’s core funding.

The targeted national funding for the HEIs that are part of an alliance is provided in 21 EU countries, while another 3 member states are considering to put it in place as well. The type and amount of national subsidies differs among countries (fixed amount vs. percentage contribution). In 17 countries, funds are integrated in the HEI´s core funding - instead of or in addition to targeted national support for alliances’ institutions. In total,11 HE systems combine both ways.

How to ensure sustainability of alliances in the future

The study also takes into account the experience of the alliances themselves and mentiones several points in this regard. One of them is the lack of resources: EU funds combined with national level funding are not sufficient to cover all costs of the alliance, so HEIs cover the difference from their own resources. At the same time, it appears that the financial sustainability of alliances will continue to depend heavily on EU grants and targeted funding at the national level.

Recommendations for member states and alliances

The study also provides a series of recommendations related to national higher education performance-based funding systems. For example, it highlights the importance of flexibility and involving HEIs in the co-designing process.

As for the European universities alliances, the expert recommend them to diversify their revenue sources and develop sustainable business models exploiting synergies and complementarities between European, national/regional, and alliance-induced income streams. There is also room for increasing transparency of the institutional resources used within alliances.

According to the authors of the study, national authorities could, in line with the Commission’s recent European strategy for universities, consider performance agreements with HEIs and/or provide targeted national funding provided for several years, allocated separately from core funding.

The study was prepared for the European Commission by CHEPS (Centre for Higher Education Policy Studies, University of Twente) and ICF. The results will be taken into account when preparing the next European universities investment framework after 2027 (we are currently in the middle of the 2021–2027 programme period).

In March, the Commission also published a study called The road towards a possible Joint European Degree. European Joint Degrees, as well as European University Alliances, are among the key initiatives of the European Strategy for Universities and are also essential to achieving the European Education Area.