Contents > 1. Overview of Sector > 1.6 Overview of Commonwealth funding

1.6 Overview of Commonwealth funding

• Outline of programmes and eligibility
  • Educational Profiles and accountability
  • Targets for the provision of student places
• Performance of institutions in 2001
  • Grants and places to institutions
  • Variations to the number of fully funded places in 2001
• National funding and student places for the 2002 to 2004 triennium

Outline of programmes and eligibility

The Commonwealth contributes around two-thirds (63 per cent in 2000) of the revenue received by higher education institutions. This consists of:

• grants made through the EST portfolio under the Higher Education Funding Act 1988 (HEFA) and the Australian Research Council Act 2001 (ARCA);

• Higher Education Contribution Scheme (HECS) contributions also provided under HEFA (18 per cent in 2000); and

• other Commonwealth Government grants.

The majority of that funding, around $5.9 billion, was provided in 2001 through the Education, Science and Training portfolio (formerly Education, Training and Youth Affairs), as follows:

• $4 671 million (including HECS) for general operating purposes (primarily undergraduate teaching); and

• $1 198 million for research and research training. This excludes some science-related funding transferred to the portfolio in November 2001 (see Section 3.4).

Funds for operating purposes are provided to universities as a single block operating grant for a specified number of student places within the context of an educational profile that covers a higher education institution’s teaching and research activities. Resources are allocated on a rolling triennium basis which provides institutions with a level of funding on which to plan for at least three years.

These general operating resources consist of a base operating grant and a range of other grants provided for specific purposes including equity, workplace reform, teaching hospital grants, superannuation grants and special capital funding (Capital Development Pool). The base operating grant includes teaching, capital (capital ‘roll-in’), and Indigenous Support Funding Programme components. It also includes marginal funding for over-enrolments and Workplace Reform Programme funds. The teaching related component forms the largest part of the operating grant. It provides funds for both academic and non-academic staff salaries.

Eligibility for grants for general operating purposes through the EST portfolio is determined by section 4 of HEFA. Institutions currently eligible for funding are the 38 self-accrediting universities (excluding Bond University), two other self-accrediting institutions (Batchelor Institute of Indigenous Tertiary Education and the Australian Maritime College) and two non self-accrediting institutions (Avondale College and Marcus Oldham College).

The funding arrangements that support teaching and learning are described in detail in chapter 2 of the Report.

Funds for research and research training are allocated either through performance-based block funding programmes administered by the Department or peer-reviewed competitive grants administered by the Australian Research Council. In addition universities receive competitive and non-competitive research funding from a range of other agencies and programmes such as the National Health and Medical Research Council (NHMRC) and Cooperative Research Centres.

Eligibility for research and research training funds through the Department’s block funding programmes for institutions is determined by schedule 1 of HEFA. Institutions currently eligible are the 39 self-accrediting universities (including Bond University) and three other self-accrediting institutions (Batchelor Institute of Indigenous Tertiary Education, the Melbourne College of Divinity and the Australian Maritime College). Avondale College and Marcus Oldham College are not eligible for research and research training block funds.

The funding arrangements for research and research training are described in detail in chapter 3 of the Report.

The internal allocation of operating resources is the responsibility of institutions. Higher education institutions are autonomous organisations that are responsible for the distribution of funds between faculties and schools based on their own assessment of priorities and needs.

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Educational Profiles and accountability

Educational Profiles are one of the key elements of the Commonwealth’s accountability framework for higher education institutions. The process is annual and is part of the legislated framework for funding higher education in Australia (the Higher Education Funding Act 1988, ‘HEFA’). This legal framework enables the Commonwealth to be assured of the financial health of the sector and that institutions are spending Commonwealth funds in accordance with the conditions of their grants.

Under HEFA, the Minister decides the approved form of the educational profile after consultation with higher education institutions. In 2001 the approved form was:

• an outline of the main features of an institution’s strategic plan including comment on any changes in strategies or core activities. This included extracts from institutions’ strategic or business plans covering priorities for core teaching and research activities; proposed discipline shifts and staffing profiles; rationalisation initiatives and mergers; indications of shifts in demand; and strategies in response to emerging trends and fee-paying opportunities;

• statistical data on students (student load) for the current year and the next triennium to enable assessment of outcomes and performance;

• a capital management plan showing projected capital income and expenditure, projected loans and debt redemption;

• a research and research training management report;

• three other plans outlining strategies and performance on equity, Indigenous education and quality assurance and improvement; and

• data on on-line university courses.

Under HEFA, institutions are also required to provide their audited financial statements for the previous calendar year by 30 June of each year.

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Targets for the provision of student places

The base operating grant for higher education institutions is provided on condition that each university supplies:

• an agreed level of total non-research fully subsidised places [defined in equivalent full-time atudent units (EFTSU)] for that year; and

• an agreed level of undergraduate fully subsidised places. This is the minimum number of places to be dedicated for undergraduate teaching activity for that year.

Since 1998 universities have received, as part of their base operating grant, the minimum discounted Higher Education Contribution Scheme (HECS) amount ($2 641 in 2001) for each HECS-liable undergraduate student enrolled above the number of fully subsidised undergraduate places funded by the Commonwealth through universities’ operating grants.

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Performance of institutions in 2001

Grants and places to institutions

In 2001, higher education institutions delivered a total of 415 600 places (EFTSU) for domestic students (excluding enrolments in the Research Training Scheme, fee-paying postgraduate, fee-paying undergraduate and non-award courses). This is some 25 300 places or 6 per cent more places than institutions were contracted to provide by the Commonwealth.

At the undergraduate level, institutions delivered 399 500 undergraduate places, some 31 800 places more than the required minimum number of funded places. Since 1998 institutions have received additional (or marginal) funding equivalent to the minimum up-front discounted HECS amount for these students. This provides institutions with the capacity to support additional students at a low marginal cost and offer more study opportunities. Institutions will receive an estimated $66 million in additional funding from the Commonwealth for 2001 marginally funded places. There was $31 million paid in advance in 2001 and the remainder will be paid in 2002. Institutions received $45.7 million in 2001 for 2000 marginally funded places.

The performance of each institution in providing total and undergraduate places is detailed in Table 1.12.

Table 1.12: Institutional performance in delivering domestic higher education places, 2001^(a)

(a) Total Commonwealth fully funded places. Commonwealth fully funded places are expressed as equivalent full-time students units (EFTSU).

(b) Commonwealth fully funded non-research places. Excludes Research Training Scheme higher degree research places but does include a small number of HECS-liable research places currently being phased out. Excludes fee-paying places.

(c) Commonweath fully funded undergraduate places.

(d) Undergraduate places excludes fee-paying undergraduate places.

(e) Includes undergraduates and postgraduates.

(f) Figures for the University of Notre Dame are Commonwealth-funded places only. Fee-paying undergraduate and postgraduate places are not included.

(g) An undergraduate fully funded level (target) is not set for the Australian Maritime College or Batchelor Institute of Indigenous Tertiary Education.

Source: Higher Education Statistics Collection.

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Variations to the number of fully funded places in 2001

During 2001 a number of variations to the fully funded levels (total and undergraduate) as announced in the Higher Education Report for the 2001 to 2003 Triennium were made.

Figure 1.24: Actual (1998 to 2001) and projected (2002 to 2004) number of places with total and undergraduate load targets (in equivalent full-time places)

Notes:

1. Based on actual domestic enrolments 1998–2001 and Profiles data enrolment projections 2002–2004. 

2. Actual undergraduate data for 2001, including marginal funding, is higher than previously estimated in Profiles data. The projections for 2002–2004 do not take into account the increased enrolments in 2001. 

3. Fully funded levels from 2002 include research training scheme (RTS) places maintained at the same number as in 2001. 

4. Research Training Scheme places from 2003 are indicative; they have been maintained at the same number as in 2004. 

5. Comparable data cannot be produced for years before 1998 as this was the first year of marginal funding for undergraduate over-enrolment. From 2000, institutions could no longer enrol postgraduate fee-paying students within the quantum of Commonwealth fully funded places.

The University of Sydney was unable to fill all of its Medical Rural Bonded Scholarship Scheme places in 2001. These unfilled places and funds were transferred to James Cook University (six places), The University of Western Australia (two places) and the University of Tasmania (two places).

An agreed minimum number of undergraduate fully funded places was approved for the University of Notre Dame to apply from 2001. As a result the University receives marginal funding for any HECS-liable places it provides above the agreed level. Under the Higher Education Funding Act 1988 (HEFA) the University of Notre Dame is exempted from the restrictions on fee-paying at the undergraduate level, including the penalty applying to institutions failing to fill all HECS-liable places. To ensure consistent treatment of all institutions, the fully funded rate will be recovered from the University, in accordance with section 108 of HEFA, should it fail to provide any of its funded places.

There were a higher than expected number of continuing research students at Deakin University in the transition to the Research Training Scheme (RTS). This left the University with insufficient places for new Australian Postgraduate Awards (APAs) and Australian Postgraduate Awards (Industry) (APAIs). A reduction of 36 places to the total number of fully funded places at Deakin University was approved, with no reduction to funding, to enable the University to offer additional research places.

Approval was also given for minor adjustments arising from the RTS for Charles Sturt University and the Australian Maritime College. Charles Sturt University elected to retain some research gap places that it had previously indicated it wished to phase out following introduction of the RTS. The Australian Maritime College elected to relinquish a number of gap places that had previously been allocated to the College within the RTS.

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National funding and student places for the 2002 to 2004 triennium

The national level of fully funded total and undergraduate places is shown in figure 1.24 from 1998 through to the end of the 2002–2004 triennium.

Total Commonwealth funding for the higher education sector for 2001 (actual) and the 2002–2004 triennium through the Education, Science and Training portfolio, excluding funds for Cooperative Research Centres (CRCs) and Major National Research Facilities (MNRFs) is shown in Table 1.13.

Table 1.13: Total Commonwealth funding through the Education, Science and Training portfolio for 2001 and for the 2002 to 2004 triennium^(a)

(a) See Appendix C for details on indexation arrangements. This table does not include funding provided through Education, Science and Training portfolio science programmes such as the Cooperative Research Centres and Major National Research Facilities programmes. Although these programmes benefit universities financially, in most instances payments are not made directly to universities. It includes a number of transfers from the base operating grant to research schemes. These are yet to be legislated and are therefore subject to the approval of Parliament (see notes to tables 3.1, 3.4 and 3.5 for further details).

(b) This is the estimate agreed with the Department of Finance and Administration in 2000. The Department currently estimates that $66 million will be required for actual over-enrolments in 2001.

(c) Amounts for 2000 and 2002 include a re-phasing of $1.7 million from 2001 to 2002. The re-phasing has yet to be legislated and is therefore subject to the approval of Parliament.

(d) Annual appropriation items (all these items are in 2001–2002 prices)

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