The government urgently needs to clarify how the huge costs of merging tertiary institutions will be met, say the heads of the country’s universities and technikons.
They also remain sceptical that mergers will achieve the government’s education policy goals.
If mergers currently on the table are implemented over five years, they will cost R3,6-billion — close to half the country’s annual education budget.
This estimate is at the heart of a study released this week by the finance committees of the South African Universities Vice-Chancellors Association (Sauvca) and the Committee of Technikon Principals (CTP).
But the total cost could be much higher: insufficient information about the implications of equalising staff salaries and student fees between merged institutions mean that these costs are among those not included in the study’s estimate.
Other factors the study says it had to omit, and that could push the costs higher, include obligations concerning post-retirement pension, medical aid costs and accrued leave pay.
How much of the tab the government will pick up, and how much universities and technikons will have to fund themselves, is a central anxiety.
”Institutions have expressed concern at the absence of a formal indication from the Department [of Education] regarding the source and amount of funds which will be made available,” Sauvca said this week.
The need for this is pressing, ”especially in the absence of due diligence studies prior to the final decisions”.
Sauvca says the ”experience of the merger of Natal Technikon and ML Sultan (where the funds for restructuring are alleged not to have yet been made available) does not inspire confidence. Without a firm commitment in terms of funding, it will be impossible for the restructuring to proceed.”
Mergers are the chief instrument whereby the government plans to reduce the country’s 36 tertiary institutions to 21 and to achieve policy goals, including increased access to and equity in higher education.
”We have been doing ongoing work on a funding framework for mergers,” Ahmed Essop, chief director of higher education planning and management in the national Department of Education, told the Mail & Guardian this week. ”But we won’t release any details about funding and costs until the final Cabinet decision on mergers later this year.
”In terms of the legal process, it is inappropriate to comment: no decision has been taken on mergers. The minister of education has to consider representations [in response to the Cabinet-endorsed merger proposals] and then go back to the Cabinet.
”The Ministry of Education has accepted that mergers will be costly … The ministry is committed to providing appropriate financial support to institutions … We’re in discussion with the Treasury about mechanisms for funding: that will be finalised in the run-up to the Cabinet discussion — probably late in November.”
Sauvca also says that of ”pressing concern is whether the expenditure of these funds [on mergers] will indeed result in the achievement of the objectives outlined in the NPHE [the government’s National Plan for Higher Education]. The sector has yet to be convinced that the rationale for many of the mergers is aligned with the objectives of the NPHE.”
How institutional debt will be handled needs to be settled before mergers can be implemented, the Sauvca/CTP report says.
”Although accumulated debt is, strictly speaking, not a cost caused by merging, leaving it unresolved will have negative consequences. Some institutions have already announced that they are unwilling to accept partners whose debt is likely to destabilise their own financial positions.”
”Satisfactory answers” are still needed to ”valid questions”, Sauvca said this week.
”Not the least of these is whether this money [to fund mergers] could be spent more usefully given the many demands on the limited pool of funds.”
Meanwhile, opposition to tertiary mergers took a new twist last weekend when an anonymous document, alleging that mergers will involve prohi-bitive financial costs, was apparently e-mailed to a number of prominent public figures and institutions.
Calling for an ”urgent review of the merger process”, the document claims to draw on the Sauvca/CTP report on merger costs. The document was e-mailed before the Sauvca/CTP study was released.
It cites the Sauvca/CTP figure of nearly R4-billion, but says this will rise to R10-billion when other merger costs are factored in, such as equalising remuneration packages and pension packages of staff at merging institutions, and upgrading IT systems to cope with larger institutional sizes.
The Sauvca/CTP study does not specify a figure of R10-billion, and Essop calls the figure ”wild”.
”Institutions already hard hit by financial constraints will eventually have to bear the biggest part of the cost,” the document says. ”This will have serious consequences for most institutions, especially the HDIs [historically disadvantaged institutions].”
The e-mail to which the document was attached says it was being sent to the leaders of the Democratic Alliance, the United Democratic Movement, the Inkatha Freedom Party and the Freedom Front. Other stated recipients were Sauvca, the CTP and the rectors or vice-chancellors of Technikon Pretoria, Port Elizabeth Technikon, Cape Technikon and the universities of Port Elizabeth, Potchefstroom, Transkei and Zululand.