ANALYSIS: Students across the country are demanding reduced tertiary institution fees, or even the abolition of fees entirely. In this article GroundUp presents data on issues that are relevant to the debate.
#feesmustfall student protesters react as a stun grenade detonates at parliament on Wednesday. (Photo: Matthew le Cordeur)
How important is the government contribution to university budgets?
University budgets in South Africa come from three main sources: government, student fees, and private sources (donors, fund-raising etc.). Over the last decade, the government subsidy has decreased as a component of total university income from 49% to 40%, while the contribution from student fees has risen from 24% to 31%.
Composition of University budgets 2000-2012. Source: DHET (2012) Audited financial statements of the universities for the period 2000/01 to 2011/12. Pretoria: DHET.
The overall government contribution is made up of a block grant and an earmarked grant. Universities can spend the block grant largely as they wish, but the earmarked grant is for a number of specific areas of spending, including infrastructure, training, and the National Student Funding Aid Scheme (NSFAS) among others (see here for the latest split).
Over the 2000-2012 period the block grant fell from 88% to 72% of the government’s total contribution, while NSFAS component doubled, from 7% to 14%.
What is the actual value of the government’s contribution to universities?
In 2012/13 the government contributed just over R24bn in total funding to universities (block and earmarked grants). This amounts to 2.3% of total government spending in that year and about 0.76% of GDP. (See National Budget Review.)
To put this into perspective, Roshuma Phungo of the South African Institute of Race Relations writes that this is low by global standards. "A more appropriate number would be 2.5% of GDP."
Both the government’s contribution and university enrolments have been growing rapidly. Total enrolment numbers increased from around 600,000 in 2001/2 to 953 000 in 2012/13, and the overall government contribution has grown, in real terms, by about 70% over the same period. The graph below shows the total government contribution per student, and the total number of students over time.
Total Government Funding per student (Rands) & Total Enrolment 2001-2013. Sources: DHET and CHE data. Notes: Funding is in real 2012 prices.
What this means is that the state contribution has grown with increased student tertiary enrolment. But many institutions started from a low base, and educational inflation, as discussed below, has exceeded the consumer price index. Also, students entering tertiary institutions in recent years are on average a lot poorer than in the early 2000s. Many have had weak school education, and require extra support at university. It is desirable, too, for universities to improve the quality of education they deliver, and be internationally competitive. This requires more money to be invested.
How much does each university charge?
It is difficult to gather information on university fees given the variation in costs across degree programs. However, StatsSA does collect information on higher education course costs from across the country and publishes this in a ‘tertiary education inflation index’ annually. We show these figures against the regular CPI in the graph below.
Available for the above years from StatsSa. Here is the 2015 publication.
It is widely acknowledged that university costs are rising too fast. A ministerial committee set up to examine the issue of university funding published their report in 2013, noting that “the current funding framework does not have a way of dealing with higher education inflation, this must be seen as one of the primary weaknesses of the current funding framework”.
The same review committee is clear on the fact that government funding for public universities is too low: “Government should increase spending levels on higher education. It is evident that expenditure on higher education is too low [...]. If participation rates of, in particular, African and coloured students need to be improved, more funding will have to be allocated to the public university system.”
Institutions like UCT are under pressure
The following table shows UCT's council controlled income and expenditure from 2010 to 2014. As can be seen, the institution more or less breaks even year-to-year. (A widely circulated media report has reported UCT as having a surplus of R696 million in 2014, but this includes restricted funds that the university council has no control over, and is consequently misleading in this context.)
UCT income and expenditure 2010 to 2014. Source: UCT annual report 2014.
Tight budgets are having direct consequences. For example, due to the worsening exchange rate and the enforcement of taxes on electronic transactions, the library subscriptions budget is expected to be cut by R5 million for next year, and that was in the context of a 10.3% increase in fees.
Can the student demands be met?
The student protest movements are demanding that there be no fee increase. At UCT they are also demanding improved wages for outsourced maintenance and security staff, including that the university should employ these staff directly. The academic staff will also hope for at least inflationary increases in 2016.
For the student demands to be met, for academic staff to get an increase too, and for there to be no serious infrastructural cutbacks at institutions like UCT, the state has to increase its student subsidy.
Roshuma Phungo argues that not only is this possible, but that higher education can be free: "If higher education was to be funded solely through taxpayer subsidies then a further R71bn, over and above the existing R25bn, would be necessary. Our analysis suggests that, with sufficient prioritising, that R71bn could be raised."