This brief is the third in the series dealing with the analysis and proposals contained in the Heher Commission report.



Universities are much more expensive to run than TVET colleges.  The DHET costing study estimated that the total expenditure by universities in 2014 was R 52.9 billion in 2014, compared with R 8.7 billion by TVET colleges.  The difference is partly explained by the difference in the size of the sectors.  Even so, university expenditure per full-time equivalent student was R 79 200, compared with R 28 600 in TVET colleges.


The Commission’s analysis and recommendations

The main reason for the difference is that universities produce research as well as instruction.  This means that teaching loads must be lighter in universities and that universities have to invest heavily in libraries and research equipment, especially in the fields of science, engineering and medicine.  The Commission’s report devotes a chapter to libraries, pointing out the emphasis has shifted from the acquisition of printed material to access to very costly electronic information (partly as a result of monopolistic or oligopolistic pricing power on the part of providers), a burden felt by university libraries around the world.  Electronic information brings with it ancillary costs in the form of computers and internet connectivity.  The development of human capital to support research takes a long time.  The minimum period of study for a PhD is seven years and many students take a lot longer.  Grants are needed to fund field work, research assistants and other recurrent costs of research.


Teaching, too, is more complex in universities because the inequality in the school system means that students arrive at universities with different levels of preparedness.  This has necessitated academic support for many students, over and above regular instruction, sometimes extending the minimum period of study by a year. 


The government funding system


Government funding of universities is provided into two ways.  The first component is the block grant, which can be used for any legitimate university purpose.  This grant has four elements:


·         a teaching input grant based on the number of full-time equivalent students weighted by field and level of study ,

·         a teaching output grant based on the number of graduates up to taught Master’s level,

·         a research output grant based on research publications and research degree graduations,

·         an institutional grant, based on the number of disadvantaged students and the size of the institution, with smaller institutions more heavily supported per student. 


The teaching input grant is based on an enrolment plan.  More students may be enrolled than planned, but no grant is made to cover the surplus.  If fewer students are enrolled, the university has to refund the government for the deficit.


The second component comprises earmarked grants, which have to be used for designated purposes.  There are several forms of earmarked grant:


·         an infrastructure grant

·         a grant for academic support programmes

·         a teaching development and a research development grant, designed to support universities in achieving better student throughput rates and develop research capacity

·         a clinical training grant and a grant in support of MBChB (medical doctor) students

·         a veterinary sciences grant

·         a historically disadvantaged institutional development grant

·         grants to support the creation two new universities in Nelspruit and Kimberley

·         a grant to finance the 0% fee increase in 2017 for all students from families with incomes of less than R 600 000 per annum.


The amount allocated through earmarked funding as a proportion of the whole rose from 15% in 2011/12 to 22% in 2015/16 and is projected to rise further to 34% in 2018/19.  This has implied pressure on the block grant designed to support core teaching.  The nominal increase in the block grant was 25% between 2011/12, and 2015/16, compared with an increase of 23% in consumer prices plus a 3% increase in the number of students, implying a small drop in the real block grant per student if the CPI is used and a greater drop if HEPI is used to reflect cost increases.  The projected increase nominal increase between 2015/16 and 2018/19 is 31%, compared with an projected increase of 18% in consumer prices and a 5% increase in the number of students, implying a reversal of the trend, confirming findings in the first brief in this series.


Worse, the money supplied for infrastructure is wholly inadequate.  The Commission reports that universities have found it hard to maintain current infrastructure, and those without reserves could not expand. Lack of maintenance has led to an even greater infrastructure backlog, and institutions under severe financial strain continue to prioritise immediate costs over long term maintenance.  The annual infrastructure grant is running at about R 2.5 billion per year at present, whereas the DHET costing study found that R 771 billion would be required between 2014 and 2030.  The latter amount includes student housing but, even with that removed, the gap between need and provision is enormous. 


Student housing in universities is better in universities than in TVET colleges.  In 2011, there were 107 598 beds for 535 000 contact students, or 201 per 1 000.  Bed shortages were estimated at     207 800 in 2013.  The cost in current prices of eliminating the backlog over ten years is estimated at R 147 billion.  The brief on TVET colleges outlined the process by which the PIC and others could finance additional beds.  This provision implies that residence fees would have to be set at a level which covers not only operating and maintenance costs but a competitive return on investment.


The issue of financing students will be covered in the next brief.



Charles Simkins

Head of Research