1. Alternative scenarios for the implementation of a new funding model in Latvian higher education Prof. Dr. Hans Vossensteyn (CHEPS) Conference „New Higher Education Funding Model in Latvia“ Conference Hall Citadele, Riga, Latvia September 24, 2014

2. The Cabinet Regulation 994: reasons for action 2 1.Single pillar model of state funding too limited approach 2.Little to no real performance / innovation orientation in state funding 3.No clear funding approach towards private HEIs and part-time students 4.Little funding for research-related developments such as knowledge transfer 5.Performance contracts between MoES and HEIs under-utilized 6.Emphasis on exact costs of a study place (vs autonomy, contexts, budget cuts) 7.All facilities as function of study places (vs expert opinion / economies of scale) 8.Promised funding levels not yet effectuated 9.Allocation subsidized study places opaque (e.g. # of academics with PhD?) 10.State-subsidized study places are likely to benefit higher SES students

3. Favourable conditions for reforms 3 1.The intentions to increase public investments in higher education and research 2.The forecasted decline in student numbers 3.An already diversified institutional landscape 4.A high degree of institutional autonomy required for profiled HEIs 5.A dedicated academic workforce

4. Various strategies to implement a funding change 4 Shock therapy (non preferred option) Radical change Substantial short-term effects for institutions Incremental change Apply a full new methodology but with a maximum annual budget change of „plus“ or „minus“ 5% (e.g.) Gradual reduction of „old model“ and implementation of „new model“ (preferred option) Reduce the relative volume of the study place model and increase the relative budget of the pillars 2 & 3 funding until an optimum level is reached

5. Tuition fees and student financial support: separate processes 5 Potential for moderate generic tuition fees Moderate tuition fees for all students more equitable Stimulates access of students from lower socio-economic backgrounds Replaces resource diversification revenues through part-time students Need-based scholarships and student loans („new style“) Stimulate access for talented students from lower SES backgrounds Replace institutional mechanisms with a (new) central infrastructure Refocus current loan subsidies to graduates in financial need Not necessary for the new funding model Both issues are not directly linked to the implementation of a new funding model for HEIs and can be organised in separate processes

6. Phasing in a new funding model (A) 6 Assumptions Pillar 1 funding increases by 2,5% annually, Pillar 2 & 3 by 15% each after a certain starting capital in 2015 (in practice less linear, more politically driven) Generic tuition fees are optional and kept stable (at 2013 levels)

7. Phasing in a new funding model (B) 7 Assumptions Pillar 1 funding is stabilised at 2014 levels, Pillar 2 & 3 increase by 5% each after a certain starting capital in 2015 (in practice less linear, more politically driven) Generic tuition fees are optional and kept stable (at 2013 levels)

8. Phasing in a new funding model (C) 8 Assumptions Pillar 1 funding decreases by 2,5% annually, based on decline in student numbers. This is compensated by an annual growth of Pillar 2 & 3 funds by 20% (in practice less linear) Generic tuition fees are optional and kept stable (at 2013 levels)

9. Phasing in a new funding model (3 compared) 9

10. Stakeholder consultation and monitoring 10 A joint effort A new funding model requires the contribution and adaptation of many stakeholders: one could imagine a pilot year Monitor implementation & effects by a Committee of Stakeholders Develop implementation plans Facilitate collaboration among stakeholders Monitor expected goal attainment Disseminate annual progress Identify training needs and provide training for implementation Suggest modifications to the model