How are European universities funded? New evidence from ETER microdata.
ETER analytical report now available on-line.
The way resources are allocated to Higher Education Institutions represents a key dimension of public policies in order to secure responsiveness of higher education to societal needs and in order to ensure an efficient use of resources in a period of tight public budgets. In this respect, policies are increasingly putting emphasis on the allocation of financial means based on measurable goals and performance criteria, as well as on gaining more resources from students and from private donors.
This report, based on unique data from the European Tertiary Education Register, provides evidence on the level and composition of revenues for more than 1,300 HEIs in 20 European countries (referring to the year 2015), as well as on changes over the period 2011-2016.
Key findings are as follows:
First, there is a large disparity between the revenues gained by HEIs in Europe. Half of the HEIs in the ETER sample earned less than € 50 million in 2015, while only 150 HEIs accounted for half of all revenues in the dataset and exceptional 5 HEIs in Europe obtained revenues above € 1 billion.These are also at the top of international rankings, suggesting that that ranking positions are associated with large budgets. Moreover, HEIs in Western Europe have more revenues per student than in Southern and Eastern Europe.
Second, despite policies to increase revenues from students and companies, a typical European Higher Education Institution still receives about two-thirds of the revenues from the basic state contribution, with the exception of UK and Ireland, where student fees have become the main source of revenues. On the contrary, private HEIs in Europe are mostly funded by student fees.
Third, for most HEIs in Europe, third party funding accounts for a small share of total revenues. Specialization in technology and/or medicine, as well as high research intensity, are the main drivers for the acquisition of third-party funds. Professors in universities acquire nearly six times more third-party funds per capita than colleges, as associated with higher research orientation.The level of private third-party funds is low for most European HEIs.
Forth, HEI revenues in Europe increased over the period 2011-2016, with the exception of Italy, Malta and Lithuania, where the revenues decreased in the period 2011-2016. The increase in funding was larger than the increase in the number of students. The effect of the financial crisis seems to have been largely recovered in most countries.
Figure 1. Boxplots of revenues per student by country. The greyed area includes exactly half of the HEI in a country, while the black line is the median level of revenues.

Variables and methodological issues
Total current revenues. This variable measures the amount of money received by the HEI in the reference period, excluding non-recurring revenues, such as state contributions for investment, which are recorded separately. Both education and research revenues are included; revenues from ancillary activities and subsidiaries are excluded, as well as revenues of university hospitals.
Revenues are further broken down between core funding, defined as funding available for the operations of the whole institution, third party funding earmarked for specific activities and institutional units, both from public and private sources and student fees funding.
In ETER, all monetary amounts are available in national currency, € and € purchasing power parities (PPPs), i.e. monetary amount corrected for the price level within the country. In the report, we use amounts in PPPs as they allow for more sensible comparisons between countries.
Data sources. Financial data in ETER are provided by National Statistical Authorities or Ministries of Higher Education based on national administrative data; mapping schemes to the ETER definitions have been defined.
Data availability. Data on current revenues are available in ETER for 1,210 out of 2,991 observations for the year 2015; adding two countries for which data are available in the former years, i.e. France (2014) and Denmark (2013), data are available for 1,342 HEIs, i.e. slightly less than half of the ETER perimeter. Availability of the breakdowns tends to be lower. Longitudinal data for the whole period 2011-2016 are available for 1,105 HEIs in 21 European countries.
Comparability problems and limitations. Despite methodological efforts, a number of comparability issues remain, related to different HEI accounting systems (cash vs. accrual based), the inclusion of ancillary services and, more importantly, how income for long-term investment is recorded in accounts. A further issue is the inclusion of university hospitals, owing to different legal situations by country. To inform about these issues, ETER includes extensive annotation and metadata at the institutional and country level.
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The opinions expressed in this message are those of the authors and do not necessarily reflect the views of the European Commission
Copyright © European Tertiary Education Register, Università della Svizzera italiana,  Lugano, Switzerland.

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European Tertiary Education Register · Università della Svizzera italiana · Lugano 6900 · Switzerland

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