Some Thoughts on Autonomy

Dear President Kvit –  I am consultant specializing in higher education finance issues and we met in your office last March when I was doing some consulting work with the FAIR project.  I have been reading with interest your postings in University World News regarding recent developments in Ukranian higher education.  With respect to your most recent article on autonomy, this is a topic we discussed in your office and I have done some more thinking since on how one might reasonably define autonomy.  To that end I have attached a copy of a section I wrote on financial autonomy for a project in Indonesia last year.  It seems to me that although Ukranian universities are structured differently than those from Indonesia this discussion of financial autonomy is generally relevant to the set of issues in the Ukraine.  I would be glad to correspond further on this set of issues if that would be of interest.

Regards, Art Hauptman

(without illustrations)


This Assessment report focuses on the issue of financial autonomy– the set of issues that define financial responsibilities such as how government funds are allocated, who has the authority to set fees and who retains them, and who owns the buildings and other assets of the HEIs. As explained earlier, this report does not address the full range of governance and autonomy issues,  but only on financial matters therefore excluding several other kinds of autonomy.[i]

Academic Autonomy

With respect to academic autonomy – the ability of faculty and officials of HEIs to decide on academic matters such as curriculum and grading – Indonesia ranks relatively high among countries in the degree to which academic matters are decided by the faculty and HEI. It appears that the Indonesian government has relatively little say in what is taught and other academic matters and the system is largely decentralized when compared to many other countries where government plays a much larger role in these matters.  From the viewpoint of the author of this report, that degree of academic autonomy is good and should not be changed as a result of the broader debate over autonomy and governance.

Organizational Autonomy

On the other hand, the degree of organizational autonomy in Indonesia is very low as the HE system is highly centralized, much more so than in many other countries.  The rectors of most public HEIs in Indonesia report directly to the government. With the exception of several BHMNs, boards of trustees are not available to serve as a buffer between the government and the institutional administrators and faculty.  Nor are there systems of HEIs, for example, a system of BLUs all reporting to one governing board, as there are in some other countries such as the U.S.  This general lack of governing boards or systems at most public HEIs would not be viewed as good practice by most governance experts; it is reasonable to say that consideration of this aspect of governance and autonomy as part of the reform process would be a good idea.

Financial Autonomy

As the preceding section indicated, one of the principal ways in which countries around the world have responded to cutbacks in government funding has been to decentralize their higher education systems by giving some or all of their public HEIs more financial autonomy.  A number of East Asian countries, including Indonesia, have been part of this worldwide trend in that over the past two decades, each of these countries has enacted legislation which gave greater financial authority to at least some of its public HEIs.

One of the difficulties, though, with debates over governance and decentralization in many countries is that ‘financial autonomy’ tends to be treated as a single idea or concept. The discussion typically focuses on the general question of whether to decentralize in order to give public HEIs more financial autonomy to deal with reduced levels of government support for higher education.  The theory here is that by granting public HEIs greater financial autonomy, they will be more capable of dealing with less public funding.

But the reality is that financial autonomy consists of a number of responsibilities including how government funds are allocated, how tuition fees are set, whether these fees are retained by HEIs, and who owns the assets.  And it is surely the case that some of these responsibilities will be more critical than others in allowing public HEIs to deal with the adversity that comes with reduced public funding.  Yet there has been relatively little discussion in most countries of which financial responsibilities are most important in providing the flexibility necessary to meet the essential challenge on doing more with less public resources.

To recognize the relative importance of HEIs having different kinds of financial responsibilities, a principal theme of this report is that it proposes that the ongoing autonomy debate in Indonesia center less on the general question of decentralization and more on which functions should be decentralized and what criteria should be used to determine which HEIs are granted greater financial autonomy.  To do this, this section describes three models of financial autonomy; lists ten specific responsibilities that collectively constitute financial autonomy; and develops two concepts that are intended to help put the concept of financial autonomy into a broader context.

Three Models of Financial Autonomy

In addressing issues and trends of governance, it is useful to consider the following three models of financial autonomy:


In a highly centralized model, government officials make all of the key financial decisions including how much HEIs may charge students, how many students they may enroll, and how much they can pay their faculty and staff.  Also, public funds are allocated to HEIs on a line-item basis, government sets tuition fee levels and collects those fees, faculty and staff are government civil servants, HEIs may not borrow, and government owns all the assets of HEIs.


In a fully decentralized model, public HEIs operate essentially like private HEIs in that they have the full authority to determine how much they charge, how many students they enroll and negotiate with faculty and staff on pay and other terms and conditions of employment.  In a decentralized system, HEIs also have authority to borrow from banks or in the market, own their assets and are responsible for a wide range of financial items including pensions of their employees.


In a mixed model of autonomy, financial responsibilities are neither fully decentralized nor solely reside with the government.  In such systems, HEIs may receive public funds as a block grant with full autonomy to spend yet have little or no authority to set tuition fees.  They may be allowed to borrow but not sell their assets.  Or the reverse conditions may be the case. HEIs may also have a mix of responsibilities to deal with faculty and staff ranging from all employees being civil servants to HEIs having authority to negotiate the terms and conditions of employment.

There are many examples of countries in which the higher education system is highly centralized with government assuming most if not all of the financial responsibilities.  Many countries also have mixed models of autonomy in higher education.  By contrast, there are relatively few examples of countries in which the system is totally or largely decentralized as governments in most countries are reluctant to cede the full range of responsibilities to public HEIs.

Ten Financial Responsibilities

In this context, a useful way to consider financial autonomy is to recognize that it may be best thought of as a series of responsibilities.  In this report, we have identified ten responsibilities that collectively help to define the degree of financial autonomy that public HEIs have (also displayed in Chart 6 after this list).  These responsibilities are:

1. Form of Government Allocation?

One of the key aspects of autonomy for public HEIs is whether public HEIs receive funds in the form of a block grant or as line-items.  Block grants mean that an HEI has more autonomy since it has more freedom in how it spends the public funds it is allocated.

2. Type of Audit?

Whether HEIs are free to select who audits their records or whether they must use a government-approved auditor or be audited by a government agency is another indicator of how much financial autonomy an HEI has.

3. Treatment of Surplus Funds?

Another indicator of autonomy is whether the HEIs are allowed to carry over surplus funds at the end of the fiscal year into the next fiscal year.  HEIs that are allowed to keep their surpluses have greater autonomy than HEIs that must return their surpluses to the central government at year’s end.

4. Who Sets Tuition Fee Levels?

The most visible indicator of autonomy is the degree to which HEIs have the authority to set their tuition fee levels.  A number of countries particularly in Eastern Europe and Asia have developed a mixed model in which the government sets the fees charged to ‘regular’ students but parallel fees for non-regular students are set by the HEIs.

5. Do HEIs Retain Tuition Fees?

While setting tuition fees is the most visible aspect of autonomy, in many regards whether the HEI retains the fees it charges is a much more important measure of financial autonomy.  If HEIs are allowed to set their fee levels but then all fee revenues are received by the government, then the fee setting authority is not very important.  Conversely, if HEIs retain all tuition fees that are charged to their students, this provides HEIs with a high degree of autonomy regardless of who set fee levels.

6. How is Private Income Treated?

Another key question is whether HEIs retain private revenues other than tuition fees.  One way to assess this is whether there is a ‘clawback’ in which some or all of the private revenues raised by an HEI result in a reduction in how much public funds the HEI receives.  In a fully autonomous system, there would be no reduction in public funding – this encourages HEIs to be aggressive in private fund-raising.  An opposing approach is one in which private funds raised reduce public funding on a one-to-one basis. Many countries allow their public HEIs to retain a portion of the private funds they raise—a middle ground approach.

7. Does Government Limit Enrollments?

Another key indicator of autonomy is whether governments limit how many students public HEIs may enroll.   If government caps enrollments at target levels that reflect public funding, then HEIs have little capability to react to market forces.  Conversely, if public HEIs are given discretion in how many students they may enroll and retain the fees they charge, they have more power to decide whether enrolling more students will generate sufficient revenues to justify expansion.

8. Who Sets Staff Salaries and Other Terms of Employment?

Many officials in public HEIs would say that the ability to negotiate with faculty and staff is the most important aspect of autonomy.  They bristle if and when they have no control over how much employees are paid yet must live within public budgets that do not match the reality of pay scales and other commitments such as pensions.

9. Are HEIs Allowed to Borrow?

In many countries, public HEIs are allowed to borrow which gives them much greater flexibility in dealing with the inevitable variability in government funding.  As a result, allowing public HEIs to borrow from banks and/or in the markets can be a key component in giving public HEIs the flexibility they need to deal with fluctuations in public funding.  Giving HEIs the ability to borrow often also represents an effective alternative to government-funded capital budgets.

10. Do HEIs Own Their Assets and Can They Sell Them?

Another way in which autonomy can be measured is whether HEIs own the buildings and the other assets that comprise their campus and whether they can sell these assets.  The typical case seems to be that governments own the assets of HEIs and as a result the HEIs cannot sell those assets.  But in those countries where HEIs do own their assets and can sell them, that constitutes an important form of autonomy.

Chart 6 shows how these ten responsibilities that define financial autonomy relate to the three models of financial autonomy described previously.  As would be expected, in the highly centralized model, very few if any of the ten financial responsibilities are assigned to the HEIs.  At the other end of the spectrum, in a decentralized model HEIs are responsible for all or most of the ten responsibilities and government plays a minor role in mapping the path of the HEI.  In the more frequent mixed model, governments assume some of the responsibilities while HEIs have the primary responsibility in other areas.  It is important to note that there are a number of responsibilities in which there is a middle way that is not either fully centralized or decentralized.

How Financial Responsibilities are Currently Delegated in Indonesian Higher Education

To assess the extent to which the ten financial responsibilities are delegated to HEIs in Indonesia, the HELM project developed a survey instrument designed to gauge how financial responsibilities are currently delegated in Indonesia.  The survey was distributed to officials at all public HEIs and responses were received from 54 HEIs (62 percent response rate).  A copy of the survey with a brief summary is attached as Annex B.

The descriptions of the situation in Indonesia provided below reflect both the results of the survey and the discussion with HEI officials that occurred at the roundtable held on June 25, 2012.  An important caveat emerging from this examination, though, is that there is much confusion over what financial responsibilities are borne by the HEIs and which are not.   Chart 7 reflects our best effort to characterize which responsibilities are delegated to different types of HEIs and to what degree.  An important aspect of any follow-up to this report will be to examine whether these characterizations are accurate.

With these caveats in mind, as Chart 7 indicates, the survey and the roundtable discussion yielded a number of interesting results including:

– As would be expected, the delegation of responsibilities varies considerably and consistently in Indonesia depending on which of the three types of public HEIs are being evaluated.  State-owned HEIs have far less autonomy than either the BLUs or BHMNs.  Similarly, the BLUs assume less financial responsibilities than the more autonomous BHMNs.

-The conventional state-owned public HEIs operate within a very highly centralized environment where virtually no financial responsibilities are delegated.  According to the survey and roundtable discussion, the only financial responsibility that the state-owned HEIs hold is that they are able to retain the tuition fees paid by non-regular students.

-The semi-autonomous BLUs have more of a mix of financial responsibility.  In some regards, the autonomy of BLUs is restricted in that they receive public funds on a line-item basis, their assets are fully owned by the government and they may not sell them, according to the survey results.  But in many other respects, the BLUs do have some degree of autonomy.  They may retain at least some of their year-end surplus, they have limited authority to set tuition fees, and they retain most of those fees.  The BLUs also retain most of the private revenues they raised in accordance with their government-approved plans, have some room to negotiate with faculty and staff, and can borrow in limited instances in government-prescribed ways.

The BHMNs have a much greater degree of financial autonomy as they have at least some control over a number of the ten responsibilities.  They still face certain restrictions such as being subject to some line-item budgets, the government sets some limits on how much they can charge, and they own their assets but may not sell them.   But in a number of other ways, the BHMNs have a great deal of latitude in carrying out financial matters, including: setting tuition fees and retaining them both for regular students and for those paying parallel fees, deciding how many students to enroll, negotiating with faculty and staff on the terms and conditions of employment, and the ability to borrow.  When compared to public HEIs in most countries, the BHMNs have a relatively high degree of financial autonomy.

How Does Autonomy in Indonesia Compare to Selected Asian Countries?

An important aspect of this discussion of autonomy is to compare the degree of financial autonomy in Indonesia to other countries.  To that end, Chart 8 compares the governance structures for the most autonomus of public HEIs in selected Asian countries on a number of the key financial responsibilities to the responsibilities granted BHMNs in Indonesia.  With respect to these comparisons, the BHMNs:

Have more limited authority to negotiate with faculty and staff than the most autonomous HEIs in a number of Asian countries including Singapore, Thailand, and Japan, and more similar to state universities in the Philippines

Have as much authority or more than autonomous HEIs in other Asian countries to determine enrollment levels

Have similar authority to set tuition fees as autonomous HEIs in other Asian countries and are similar to HEIs in Japan and Thailand in their ownership of assets (although BHMNs cannot sell their assets )

Have more authority to borrow than HEIs in other Asian countries with the exception of Japan where the National Universities have similar capacity to borrow

Have less autonomy to spend public funds than HEIs in a number of Asian countries where the top public HEIs receive block grants as their form of government allocations

Based on the previous analysis of responsibilities of the different types of public HEIs in Indonesia, it seems fair to assume that the state-owned HEIs and BLUs have significantly less autonomy than the most autonomous HEIs in other Asian countries.  But it is difficult to know how the state-owned HEIs and BLUs compare to less autonomous HEIs in other countries because data on autonomy are not available for less autonomous types of HEIs in these other Asian countries.

Two Concepts of Measuring the Degree of Autonomy

The preceding discussion of the delegation of various financial responsibilities raises the question of how these different models might be quantified or described in a systematic manner that would allow both for comparisons among HEIs within a country as well as variations in responsibilities among HEIs in different countries.  Below two such concepts of autonomy are described: the Profile of Responsibilities and the Who Decides and Who Pays.

Concept One:  Profile of Responsibilities

One way to summarize the results of Chart 7 is to develop a profile of responsibilities, as is indicated in Chart 9.  This profile is the cumulative degree to which the actual responsibilities diverge from a totally decentralized system in which HEIs have full autonomy over all financial responsibilities.  In Chart 9, each responsibility is arbitrarily assigned a weight of 10 percent.  The 45 degree line represents a situation in which all financial responsibilities are fully assumed by the public HEIs.  It also could be interpreted to be the responsibility profile of a private HEI.

Chart 9 indicates the extent to which the three types of public HEIs in Indonesia diverge from the fully decentralized private model of autonomy.    State-owned HEIs have only 5 percent cumulative autonomy in this calculation whereas BLUs have a 30 percent profile of autonomy.  BHMNs, by contrast, have a cumulative autonomy of 80 percent under this methodology.

Concept Two: Who Decide and Who Pays?

Another way to consider the governance structure of different countries is to compare them in terms of who decides key financial issues and who pays.  The theory here is that financial autonomy should be proportional and commensurate with the extent to which public HEIs are reliant on private resources rather than public resources.  The premise would be that autonomy should be greater for those public HEIs which rely more on tuition fee revenues and other private sources of income than those HEIs which are more dependent on public funding.

Chart 10 shows this relationship for a select group of Asian countries and for the three types of public HEIs in Indonesia.  Estimates for the Indonesian public HEIs is based on the financial data presented in Section 1 of this report and the autonomy profile presented above.  The data for the other Asian countries is drawn from autonomy estimates derived from the data presented in Chart 8 and data on reliance on private sources drawn from the World Bank and OECD.

Several interesting relationships are indicated in looking at the relationship between who decides and who pays as presented in Chart 10:

The three types of public HEIs in Indonesia have the relationships that their autonomy status would suggest should be the case – those with greater reliance on tuition fees as a source of funding have greater autonomy.  The BLUs seem to be the HEIs best positioned as their level of autonomy more nearly matches their reliance on fees.

Several of the Asian countries studies seem to have systems in which the relationship between who pays and who decides seems well balanced.  In Malaysia, for example, the government provides the large bulk of funding for its public HEIs and those HEIs appear to have little financial autonomy.  And in Japan, a high degree of reliance on private fees as a source on funding is matched by a high degree of autonomy.

In several other Asian countries, however, there appears to be a mismatch between who pays and who decides.  In South Korea, public HEIs have very little financial autonomy despite relying heavily on private funding.  And in Thailand, public HEIs seem to have more autonomy than their reliance on tuition fees and other private funds would seem to merit.

[i] For a good discussion of different kinds of autonomy, see Estermann, T. and Nokkala, T., University Autonomy in Europe I

Опубліковано у Університет. Додати до закладок постійне посилання.

Залишити відповідь

Ваша e-mail адреса не оприлюднюватиметься. Обов’язкові поля позначені *