Universities are increasingly acting in a business rather than educational manner as they seek revenue sources to plug gaps in State funding and the ongoing demand for large-scale capital investment, writes Arthur Beesley

Latin might be the language at graduation time, but money talks louder in universities today than the ancient Roman tongue.

If colleges were seen through the ages as the seat of "light, liberty and learning", the modern university is a different beast altogether. Just as alchemy is no longer on the curriculum, colleges today are marked by a relentless fight to make ends meet and rivalry to get ahead in the superleague for research funding.

Leaving aside the intellectual race and the battle for the brightest students, two symbolic events occurred in the past week that emphasise the degree to which the billion-euro higher-education business is struggling to pay its way.

First, UCD president Dr Art Cosgrove said Irish institutions should try to increase their intake of foreign students, who pay higher fees, for "financial and cultural reasons".

Second, an unidentified university emerged as the beneficiary of an elaborate tax-avoidance scheme, described by Revenue as an "abuse" of the reliefs intended to encourage investment in student accommodation. Revenue said: "If the abuse is not closed off, it will undoubtedly be used, if not already being used, by other third-level colleges."

So much for best practice, although observers pointed out that the scheme, which was marketed by AIB, was not technically in breach of the law. Even so, the complex structures required to avoid tax in this case implies a determined dedication to cost-cutting.

But with a day-to-day funding squeeze blamed on a steep rise in registration fees next term and the Department of Finance pushing unsuccessfully for the reimposition of tuition fees in the Programme for Government, it would seem that the education balance sheet is under pressure. Indeed, universities are not allowed to run deficits.

Dr Cosgrove's pronouncement - in a college newsletter - captures the extent to which universities are increasingly on the look-out to grow the student base and tap new sources of funding.

"Overseas students bring in a substantial income to the university and also add a certain amount of mix to the culture here," he said.

Is this the emergence of the professor as a businessman? Not quite, for educational institutions are not-for-profit organisations. Yet it still demonstrates the extent to which universities are seeking new revenue sources to plug gaps in the stream of funding from Government and the ongoing demand for large-scale capital investment.

More than €1.4 billion was allocated in State grants to third-level eduction in the Budget estimates for this year, according to the Department of Education, up from €637 million in 1997.

This is in addition to the many millions available through research grants, from either the public or private sector. For example, some €600 million in funding is available for allocation from Science Foundation Ireland, a State body set up to support research in biotechnology and information and communications technology.

But big as the overall increase in funding has been, universities say the current allocation still leaves them in a tight funding situation with the State's share of day-to-day funding. Many cite frustration on the part of college managers in an environment where student numbers are increasing all the time, wages are rising through national agreements, and Government demands for specific degree programmes must be met.

Hence the development of expensive post-graduate taught programmes and the clamour for research grants. Add to that moves to increase the intake of foreign students and the increasing role of university foundations to raise money from wealthy philanthropists, and a picture emerges of a funding base that is almost always under pressure.

"If we were just relying on fee income from the undergraduate programmes, we wouldn't be able to keep the buildings open," said one informed observer in a big university. She said many colleges cross-subsidise costly programmes - in the technology-heavy areas, for example - with revenues from lucrative business courses. Indeed, another individual said colleges were routinely encouraged to expand their revenue sources.

With hundreds of millions of euro flowing through the largest institutions in any one year, the development of commercial nous and corporate standards appears to be a basic requirement.

"We would consider it very seriously as a business from a value-for-money perspective," said one university manager.

The development is characterised on the one level as the simple replacement by certain institutions of old job titles - such as bursar and registrar - with the corporate-sounding designations such as vice-president with a specific remit.

But it is a deeper phenomenon than that, which is also reflected in the changing style of the education process.

A recent report for the Higher Education Authority by Prof Malcolm Skilbeck, a former director for education in the OECD, described the development thus: "The pressures on universities and their responses to them have brought about a shift in orientation: less the scholar and teacher as source of canonical knowledge and more the student as learner and client; less the enclosed college, more the wide-ranging exercise."

Prof Skilbeck identified a large number of "actions" required to meet new challenges.

Among them, he said managers should "increase and diversify sources of university income: sale of services; consultancies; partnerships; management of intellectual property; rents from wider, year-long use of facilities; fee-paying students; and a wide range of entrepreneurial activities".

These included selling services on the international market, closer links with industry and the extension of fee-paying courses. To varying degrees, all these are already features of the Irish scene, with work-experience programmes common and increasing numbers of part-time courses available.

Universities are crucial to the State's economic fortunes and highly sensitive to the short-term changes outside the faculty wall. Note that applications from school-leavers this year for computer-related courses fell amid the downturn that followed the dotcom collapse.

But like any large business, universities must focus on the long term too. Indeed, if the Republic had not awoken in the 1960s from the fog of isolationism and rampant emigration to expand a sleepy and highly selective education system, the boom that followed 30 years later is unlikely to have happened.

Enter the new economy and a changed scenario today that makes different demands of that system. In university parlance, it is similar to the difference between fresher-level introductory studies and advanced post-doctoral research. No longer agrarian and post-industrial in its dependence on high-tech and financial business, the economy makes its own demands of universities.

Indeed, a feature of the current downturn in the US is that many redundant workers flocked to universities to study for Masters in Business Administration (MBA) programmes to boost their job prospects.

Irish students are no strangers to such programmes, whose managers pride themselves on their rankings in international league tables.

The development of these programmes present good business opportunities for universities, although certain observers claim high-earning faculties are run as "independent republics".

But just as money without academic quality is never going to create a reputation for intellectual excellence, a university's standing will not survive without a sufficient flow of cash.

One gets nothing for nothing, as it were. Nifty accounting might cut corners whenit comes to taxation, but there is a wider agenda when it comes to paying for education.