Richard Bruton (Dublin Bay North, Fine Gael) | Oireachtas source

I thank the Deputy for her question. This arises from the recent publication by the Higher Education Authority of an investigation of the funding of the institutes of technology. The purpose of the review was to provide an overview of the financial health of the sector, to consider capacity issues and to examine the challenges for the institutions given their respective plans for the future.

It examined the impact of the decline in the State grant, which we have known about, in the years since 2008 and examined projections as well. In looking at the projections, the authority assumed a static framework for State funding. It has made a number of policy recommendations which will feed into the work on developing a sustainable funding model for the sector, something I have discussed with Deputy Byrne.

The assumption of a static funding model is something with which we are not intending to proceed. As I indicated to Deputy Byrne, we have already invested €36 million this year. We have made a commitment in the coming two years to meet the demographic rise and, furthermore, we have committed in the budget to sitting down and, by April of next year, having in place a coherent investment plan for the institute of technology sector and the university sector against a background of the need to meet the challenges that face employers in terms of skills and other challenges facing the State.

The HEA has a policy framework in place for engaging with vulnerable institutes of technology. This requires institutes to submit a three-year plan to return them to a balanced-budget situation. If the institute is unable to demonstrate how a return to a balanced budget can be achieved within this timeframe or if actual performance deviates significantly from the plan, then the HEA will seek the appointment of an independent financial expert to work with the governing body and executive management team to agree a revised plan and programme for remedial action.

My Department and the HEA are aware of the financial difficulties being experienced by a number of institutes. The financial review of the institutes undertaken recently was based on the assumption of static funding. The report recognises the need to examine the underlying sustainability issues that have existed across the sector and it highlights the need for a review of how funding is being allocated. This goes back to the point I was discussing with Deputy Byrne. The funding model in place now is unsatisfactory and it needs to be examined. The report makes a number of recommendations on how some of the issues which contribute to funding problems in the sector can be addressed.

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The report clearly identified the need for a review of the current funding model and I have asked that this be completed as a matter of urgency. Among the other recommendations is the need for a sectoral voluntary redundancy package and I understand this is being developed for submission to the HEA, which is working closely with my Department to address all the recommendations.

Funding overall for the higher education sector is a key concern for me, particularly in light of the additional pressure that will fall on the system over the next decade or so. In seeking to address the issue in the short term, I have for the first time in nine years secured as part of budget 2017 additional funding for the sector. In 2017, additional funding of €36.5 million will be made available with €160 million additional over the next three years.

The report of the expert group on future funding for higher education, published in July, clearly outlines the funding challenges and offers a number of approaches and recommendations for consideration for the medium term. As committed to in the programme for Government, the report has been referred to the Joint Committee on Education and Skills and this consultation will form part of the process of formulating a plan for the future of the sector.

In budget 2017, the Minister for Public Expenditure and Reform and I announced a policy review with the aim of designing and implementing a sustainable and predictable multi-annual funding model for higher and further education and training, involving increased employer and Exchequer contributions from 2018. The review will be undertaken as part of the overall response to meeting the anticipated skills needs in the economy over the coming years, in line with the policy framework set out in the national skills strategy.

It will include an analysis of the business case for enhanced investment in the higher and further education and training sectors. In this context, it will identify key elements of the new funding model and of the expected impacts, including those on employers. The review will include consultation with stakeholders. The policy review will be published by the end of April 2017 and will complement the ongoing work by the Oireachtas committee in respect of the Cassells report.

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