Financial crunch at public-sector universities
HEC was allocated Rs59 billion against a demand of Rs103 billion — Rs6 billion less than previous year
The writer is Vice Chancellor of the University of Peshawar
Federal Education Minister Shafqat Mehmood, while interacting with students and faculty at a Karachi-based business school on August 1, 2019, denied any cuts in the higher education budget for 2019-20. In other news, Rs2 billion has been allocated to research institutions at universities thanks to Dr Atta-ur-Rehman, the Chairman of the PM’s National Task Force on Science and Technology, who claimed that this will ease the hardships faced by universities. This depicts the state of affairs at the highest level in terms of understanding issues faced by the university. The fact is that in the budget 2019-20, the Higher Education Commission (HEC) was allocated Rs59 billion against a demand of Rs103 billion — Rs6 billion less as compared to allocation in the previous year. On ground, the net effect was 20% cuts in budgetary allocations to the universities for the year 2019-2020.
Several factors contributed to the demise of financial stability at the universities over the years. Often this is attributed to mismanagement on the part of the administration. Some Vice Chancellors in the past were appointed through political blessings, and they went out of their way to oblige their benefactors by returning favors in employment and award of contracts to their cronies. By large such cases are infrequent, if not rare.
There is a common misperception that public-sector universities are fully funded by the government to cover their salaries, pension, and other operational expenses. Comparisons are drawn with government colleges where fees for degree programmes are less than one-sixth of the fee charged at the universities. There is a fundamental difference between financial regimes in government colleges and universities. While expenses incurred by the government colleges, including salaries and pensions, are directly paid from the government exchequer, the universities are paid annual grants by the government which together with resources generated by the universities make up the university budget. The government grant paid to the universities through the HEC usually makes 40% to 60% of the budgets, the rest coming from fees charged to students.
An in-depth analysis of university budgets over a span of time shows that major reasons for deficits in the public-sector universities include some internal factors such as politically-influenced over employment, the offering of non-productive degree programmes and undue perks and privileges to employees. However, external factors, which arise from governmental decisions, leave a much greater impact on financial health.
There is a strong imbalance between a meager increase or even cuts in governmental grants and increasing expenditures. An analysis of the University of Peshawar budget reveals that over a span of 12 years, salaries increased by 300%, pensions by 900% while the grants only by 92%. In particular, an annual increase of 5-10% in salaries and pensions announced by the government each year plays havoc with the university budgets. Over a span of 10 years, the University of Peshawar spent Rs1400 million to meet such annual increases announced by the government whereas it received only Rs400 million as compensation from the HEC. All these additional expenditures keep adding to deficits year after year.
The single-most staggering cause of hardship faced by older universities is pension. These universities spend almost one-third of their entire resources in catering pensions. The ballooning of crises can be imagined from the fact that when I joined the University of Peshawar as Vice Chancellor in 2017, the university’s pension payments amounted to Rs624 million. In my two years in office, the annual pension budget has increased to Rs1,040 million for the year 2019-20 against a total budgetary allocation by HEC of Rs1,250 million. The crises are now resulting in humanitarian sufferings; many recent retirees are not paid their hard-earned commutations and older pensioners, most of who rely on pension as their sole livelihood, remain uncertain about its timely delivery to their accounts each month.
Why are only these three universities facing this situation whereas the rest (over 25 more) have no pension worries? I inferred an answer based on my experience at the Karakoram International University (KIU) where I served as Vice Chancellor for three years. All the pensioners at KIU served elsewhere prior to joining and brought pension contributions from their parent institutions. The bulk of the employees at the KIU will retire sometimes after 2030. Many other universities face pension issues 15-35 years down the road.
This simple fact is beyond the HEC’s understanding. The budgetary allocations by the HEC are based solely on the strength of the student body, number of pensioners it caters and nature of facilities it provides to its students and faculty; without considering the historical background. HEC budgetary allocation formula treats a university like Peshawar with over a 1,000 acres residential campus, 500 faculty houses, 14 student hostels, world-class sports facilities, on a par with new district-level universities established only recently.
There is a long list of policy decisions implemented by the government over the years, which have brought the universities to their knees. The University of Peshawar that boasted to be the most comprehensive residential university in the country experienced several phases of disintegration and dismemberment. Assets and revenue sources, from the annexation of different programmes, were handed over to the daughter institutions without any compensation.
In the seventies, universities in Punjab and Peshawar shared jurisdiction over entire northern Pakistan. Whereas the University of Punjab still holds its jurisdiction on the whole of Punjab, the provincial government in Khyber-Pakhtunkhwa has shrunk Peshawar University’s jurisdiction to only the Peshawar district. With a single stroke of a pen, hundreds of colleges affiliated with the University of Peshawar were forced to re-affiliate with new universities. The HEC’s decision to switch over to BS (four years) from a traditional 2-year MA/MSc degree programme in 2009 forced the universities to double their faculty and staff and provide additional class rooms and laboratories. The University of Peshawar, now hosting exams of less than fifty thousand students from the previous hundreds of thousands, faces the loss of another precious revenue resource amounting to Rs400 million a year approximately.
Are there any embers of hope in this doomed situation? Faced with the daunting task of running with meager resources, the faculty, the staff and students at the universities in Khyber-Pakhtunkhwa are working hand in hand in taking meaningful measures to generate resources. Both Gomal and Peshawar universities added additional resources to the tunes of Rs400 million in 2018-19. Now, their own resources make up to 60-70% of total resources available to the universities, substantially surpassing the governmental grant. Many universities in Khyber-Pakhtunkhwa have now active offices for innovation and commercialisation aligning towards academic research. Fund-raising, career development, entrepreneurship and incubations are some of the new measures the universities are actively engaged in. However, all is in vain if the government persists with opening new universities every year. There is a strong need for timely measures on the part of the government for some immediate remedies along with some long-term solutions.
Published in The Express Tribune, August 18th, 2019.
Several factors contributed to the demise of financial stability at the universities over the years. Often this is attributed to mismanagement on the part of the administration. Some Vice Chancellors in the past were appointed through political blessings, and they went out of their way to oblige their benefactors by returning favors in employment and award of contracts to their cronies. By large such cases are infrequent, if not rare.
There is a common misperception that public-sector universities are fully funded by the government to cover their salaries, pension, and other operational expenses. Comparisons are drawn with government colleges where fees for degree programmes are less than one-sixth of the fee charged at the universities. There is a fundamental difference between financial regimes in government colleges and universities. While expenses incurred by the government colleges, including salaries and pensions, are directly paid from the government exchequer, the universities are paid annual grants by the government which together with resources generated by the universities make up the university budget. The government grant paid to the universities through the HEC usually makes 40% to 60% of the budgets, the rest coming from fees charged to students.
An in-depth analysis of university budgets over a span of time shows that major reasons for deficits in the public-sector universities include some internal factors such as politically-influenced over employment, the offering of non-productive degree programmes and undue perks and privileges to employees. However, external factors, which arise from governmental decisions, leave a much greater impact on financial health.
There is a strong imbalance between a meager increase or even cuts in governmental grants and increasing expenditures. An analysis of the University of Peshawar budget reveals that over a span of 12 years, salaries increased by 300%, pensions by 900% while the grants only by 92%. In particular, an annual increase of 5-10% in salaries and pensions announced by the government each year plays havoc with the university budgets. Over a span of 10 years, the University of Peshawar spent Rs1400 million to meet such annual increases announced by the government whereas it received only Rs400 million as compensation from the HEC. All these additional expenditures keep adding to deficits year after year.
The single-most staggering cause of hardship faced by older universities is pension. These universities spend almost one-third of their entire resources in catering pensions. The ballooning of crises can be imagined from the fact that when I joined the University of Peshawar as Vice Chancellor in 2017, the university’s pension payments amounted to Rs624 million. In my two years in office, the annual pension budget has increased to Rs1,040 million for the year 2019-20 against a total budgetary allocation by HEC of Rs1,250 million. The crises are now resulting in humanitarian sufferings; many recent retirees are not paid their hard-earned commutations and older pensioners, most of who rely on pension as their sole livelihood, remain uncertain about its timely delivery to their accounts each month.
Why are only these three universities facing this situation whereas the rest (over 25 more) have no pension worries? I inferred an answer based on my experience at the Karakoram International University (KIU) where I served as Vice Chancellor for three years. All the pensioners at KIU served elsewhere prior to joining and brought pension contributions from their parent institutions. The bulk of the employees at the KIU will retire sometimes after 2030. Many other universities face pension issues 15-35 years down the road.
This simple fact is beyond the HEC’s understanding. The budgetary allocations by the HEC are based solely on the strength of the student body, number of pensioners it caters and nature of facilities it provides to its students and faculty; without considering the historical background. HEC budgetary allocation formula treats a university like Peshawar with over a 1,000 acres residential campus, 500 faculty houses, 14 student hostels, world-class sports facilities, on a par with new district-level universities established only recently.
There is a long list of policy decisions implemented by the government over the years, which have brought the universities to their knees. The University of Peshawar that boasted to be the most comprehensive residential university in the country experienced several phases of disintegration and dismemberment. Assets and revenue sources, from the annexation of different programmes, were handed over to the daughter institutions without any compensation.
In the seventies, universities in Punjab and Peshawar shared jurisdiction over entire northern Pakistan. Whereas the University of Punjab still holds its jurisdiction on the whole of Punjab, the provincial government in Khyber-Pakhtunkhwa has shrunk Peshawar University’s jurisdiction to only the Peshawar district. With a single stroke of a pen, hundreds of colleges affiliated with the University of Peshawar were forced to re-affiliate with new universities. The HEC’s decision to switch over to BS (four years) from a traditional 2-year MA/MSc degree programme in 2009 forced the universities to double their faculty and staff and provide additional class rooms and laboratories. The University of Peshawar, now hosting exams of less than fifty thousand students from the previous hundreds of thousands, faces the loss of another precious revenue resource amounting to Rs400 million a year approximately.
Are there any embers of hope in this doomed situation? Faced with the daunting task of running with meager resources, the faculty, the staff and students at the universities in Khyber-Pakhtunkhwa are working hand in hand in taking meaningful measures to generate resources. Both Gomal and Peshawar universities added additional resources to the tunes of Rs400 million in 2018-19. Now, their own resources make up to 60-70% of total resources available to the universities, substantially surpassing the governmental grant. Many universities in Khyber-Pakhtunkhwa have now active offices for innovation and commercialisation aligning towards academic research. Fund-raising, career development, entrepreneurship and incubations are some of the new measures the universities are actively engaged in. However, all is in vain if the government persists with opening new universities every year. There is a strong need for timely measures on the part of the government for some immediate remedies along with some long-term solutions.
Published in The Express Tribune, August 18th, 2019.