Thomas Byrne (Meath East, Fianna Fail)
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36. To ask the Minister for Education and Skills his views on the HEA financial review of institutes of technology; if the financial deficits uncovered will have an impact on services and courses provided by the institutes; his plans to assist these institutions; and if he will make a statement on the matter. [35025/16]

Richard Bruton (Dublin Bay North, Fine Gael)
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The purpose of the Financial Review of the Institutes of Technology (IoTs) by the Higher Education Authority (HEA) 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 decline in the State grant in the years since 2008 and looked at projections assuming a static State funding environment.  It has made a number of policy recommendations which will feed into the work on developing a sustainable funding model for the sector.

The HEA has been closely monitoring the financial position of all of the IoTs and in particular are working closely with those Institutes operating in deficit to ensure appropriate mechanisms are put in place to eliminate the deficit as quickly as possible.

The HEA has a policy framework in place for engaging with vulnerable IoTs which 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 of remedial action.

My Department and the HEA are aware of the financial difficulties being experienced by a number of the IoTs. The Financial Review of the Institutes recently published by the HEA was based on the assumption that static Exchequer funding coupled with continuing growth in student numbers could make a number of Institutes unsustainable. The Report recognised the need to examine the underlying sustainability issues that existed across the sector and highlighted the need for a review of how funding is being allocated given the significant changes that are occurring in the higher education sector.  It makes a number of recommendations on how some of the issues which contribute to funding problems in the IOT sector can be addressed. 

The Report clearly identified the need for a review of the present 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 that this being developed for submission to the HEA who are 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 €36.5m will be made available with €160m 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 Oireachtas Education Committee 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 relation to the Cassells report.