Failure to attract international students at the root of third level crisis, says report

What’s billed as the first “independent review of the financial health of third-level institutions” makes grim reading for college management, staff and students.

It is no secret that higher education is facing a funding crisis but the Grant Thornton study shows key indicators are moving in the wrong direction.

Two related problems stand out: the way in which Irish universities have slipped down global rankings and the failure of the same institutions to attract a higher number of international students.

While the Higher Education Authority (HEA) is predicting a significant increase in international student numbers in 2013, the report says: "It is notable that in the five years from 2007 there was a 12 per cent decline, despite a government campaign to market Ireland as a world-class education destination."

Staff numbers

Increasing the challenge has been a drop in core staff numbers of 8.5 per cent between 2007 and 2011, and a rise in the general student population of 26 per cent.

While the report recognises institutions are in competition with one another for the top students and funding, it says they should “consider outsourcing those functions that are not related to their own distinctive brand characteristics”.

Savings of 20-30 per cent are “considered achievable” by either sharing or outsourcing “non-core functions”, such as estates management, payroll, pensions and some areas of human resources.

But, as with all reforms, it says stakeholders need to be brought on board.

“Effective change management or management of the ‘people side’ of change will therefore be crucial for institutions considering adopting any of the options proposed.”

The report also contains an analysis of liquidity and solvency, using an indicator called the "quick ratio" (of current assets versus liabilities) to measure an institution's ability to meet its short-term financial obligations.

Liquidity
While there was a slight improvement in short-term liquidity among the seven universities, three of them – DCU, UCD and UCC – had a ratio of less than one in 2011, "which indicates that they may have difficulty meeting their short-term liabilities".

Liquidity was stronger in the Institute of Technology sector, with only one institute having a ratio of less than one in 2011.

The report comes ahead of the planned completion this autumn of a Higher Education Authority study into how best to fund higher education in the future, with various proposals being mooted including a student loan scheme and a graduate tax.