Kenya: New University Funding Model to Solve Cash Crisis in Public Institutions – Monari
Nairobi — The new university funding regime announced by President William Ruto will see the current scenario of cash crisis bedeviling public universities dwindle.
The University Fund (UF) which guides the allocation of State cash to public universities has stated that the new funding formula for universities and technical and vocational education and training (TVET) institutions will revolutionize the education sector.
UF Chief Executive Officer (CEO) Geoffrey Monari stated that the previous model in which the government was to pay 80 percent of the differentiated unit cost (DUC) while students cater for the 20 percent wasn’t sustainable.
“With this new education formula we see stability in the next five years. We’ll see a revolution in higher education. DUC wasn’t working for the student and university. Because of increasing enrolment and funding remaining the same, government contribution dropped to 48 per cent,” said Monari.
The new proposed model will see students receive funding as opposed to the previous arrangement of higher learning institutions.
The students will receive state funding, based on their family background as well as the cost of university programs.
President William Ruto announced that the four categories under which students will be funded will consider whether they are either vulnerable, extremely needy, needy or less needy.
The vulnerable in universities will receive 100 percent scholarship with the government scholarship standing at 82 percent while the loan takes 18 percent.
The extremely needy students will receive 70 percent of government scholarships while the loans will contribute to 30 percent of the tuition fee.
The needy and less needy will receive 93 percent of government scholarships with 7 percent being household contributions in meeting the fees requirement.
Those in the above category will receive higher loans from the Higher Education Loans Board (HELB) with the expectation being the culpability to repay back the loans.
“We have moved from awarding the less needy lower loans because we need a sustainable fund due to their capability in repaying the loans. If we burden the poor with huge loans at the end of their studies, it becomes a lifetime responsibility,” Monari stated.
The UF CEO however pointed out that the journey to save public universities facing huge debts will take a process with the new model aimed at progressively changing the situation.
“Universities now have huge debts. The quality of education has been affected because of the debts. Universities couldn’t pay salaries or remit statutory deductions. Had DUC continued, funding would have dropped to 21 per cent by 2027/28,” Monari said.
The Public Universities debt to statutory bodies now stands at Sh61.1 billion with Sh17.7 billion owed to Pay as You Earn (PAYE), Sh24.5 billion unremitted pension and Sh3 billion for other payroll deductions.
“We are looking into having a meeting with the involved government agencies. We will come up with a quick repayment plan and put in place waiver in some of these interest. Solving the current situation will not take days, it is a long term plan,” Monari stated.
The funding gap for students in public universities has more than doubled in the past two years, as the funding for public universities has not been commensurate with student population growth over the years.
Data from the Universities Fund shows that the gap has hit Sh27 billion in the last financial year, signaling even tougher days ahead for cash-strapped institutions.
Cash flow challenges for universities have been made worse by the sharp decline of students enrolling for the parallel degree program courses over the past four years which generated billions for the institutions.
Decreasing State capitation to universities is linked to the rapid increase in institutions over a short period and reduced government revenues.
The country has 74 universities, 37 of which are public.