"If a university is serious about attracting fresh funds, its budget can no longer be a black box," said education Commissioner Ján Figel, addressing European higher education experts gathered in Brussels to debate the long-term financial sustainability of European higher education institutions. "Public and private parties need to know how their money is spent," he added.
The conference, which explored the links between university funding, governance and accountability, aimed to formulate "concrete recommendations for universities on the further development of their financial management towards full-cost accounting," said the vice president of the European Universities Association (EUA), Christina Ullenius. According to her, "only institutions that know the full costs of their activities and projects can judge if they are operating on a financially sustainable basis."
An ongoing EUA 'funding project' compared the income, expenditure flows, accounting systems, legal frameworks and progress towards full cost accounting of a group of European universities. The project's initial results reveal a huge diversity of national funding patterns and the development of full costing models in Europe. In addition, the findings show a lack of common understanding of the financial terminology used. Moreover, they reveal a lack of coherence in defining the full costs of activities.
According to Commissioner Figel, universities should become responsible for their own long-term financial sustainability by "tapping public and private sources". In addition, he said that "public spending needs to be a function of outputs rather than inputs. Universities need to be paid for what they do and not just for what they are or have been".
However, "it makes sense to talk about financing only in the broader context of the modernisation of our institutions and systems. To me, modernisation means above all that universities should become more open to the needs of society," added Figel.
In May 2006, the Commission made a series of recommendations on how to modernise higher education in Europe. In its most contested suggestion, the report urged member states to give universities more autonomy and accountability and encouraged governments to "open up [universities] to the business community".
Commissioner Figel said that the EU executive's proposals "entail a new relationship with public authorities", because more autonomy means limiting the role of governments while making universities capable of attracting other funds for which they would be accountable.
