Financial review of the institutes of technology

Posted: 3 November, 2016

The Higher Education Authority today published its recently completed financial review of the Institutes of Technology sector. The purpose of the review was to assess the overall financial health of the sector, particularly given the future plans of Institutes of Technology to meet the needs of future students, and, in the case of some, to merge and seek Technological University status. The review involved site visits to 14 institutes of technology and extensive data gathering and analysis on past, current and future projected financial performance. It was conducted with the support and co-operation of the sector financial leader at Sambla ApS.

As might be expected, the combination of a reduction of 34% in state support for the sector between 2008 and 2015, and an increase of 24% in student numbers has taken its toll on the finances of the sector. Ten of the 14 Institutes face particular challenges.

Key findings include:

• The overall reserves held by the IoTs fell from €132.5mn to €78.7mn over the period, wiping out 40% of the finance available to underpin ongoing sustainability and future development.
• The cash flow position across the sector is major concern, with a decline in the cash balances held by IoTs from €218.1mn in August 2013 to €147mn in August 2016, and a further fall anticipated to €116mn by August 2017
• At an aggregate level, the sector is in deficit and this trend is projected to continue over the next 5 years.
• Pay costs still account for between 72.5% and 80% of total IoT expenditure, despite core staffing levels falling by 12% between 2008 and 2014. The absence of flexibility to re-deploy staff or introduce new work arrangements (for part-time or online study for example) is a significant factor in financial performance.
• The campus environment has been adversely impacted as there has been no funds available for capital investment.  The devolved grant (the funding provided per student) has allowing labs to remain operational, health and safety issues to be addressed and some minimal investment in technology to be facilitated, but capital investment is now urgently needed. ICT infrastructure remains a critical area of concern. Growth in science and ICT education provision is encouraging but is constrained by existing capacity, and targeted capital investment aimed at reinforcing the technological mission of the sector has the potential to generate a significant impact.

The campus environment has been adversely impacted as there has been no funds available for capital investment. The devolved grant (the funding provided per student) has allowing labs to remain operational, health and safety issues to be addressed and some minimal investment in technology to be facilitated, but capital investment is now urgently needed. ICT infrastructure remains a critical area of concern. Growth in science and ICT education provision is encouraging but is constrained by existing capacity, and targeted capital investment aimed at reinforcing the technological mission of the sector has the potential to generate a significant impact.

Andrew Brownlee, Head of System Funding at the HEA, commented, “The gathering of this comprehensive data on past, current and projected future financial performance is a major step forward in understanding, and putting in place appropriate responses to, the issues faced by institutes of technology. The report demonstrates the value of timely management information which will facilitate benchmarking and the sharing of good practice across the sector, and it will serve as a template for the future approach to HEA financial monitoring of institutions”.

Dr. Anne Looney, Interim CEO of the HEA, said, “The announcement of increased funding for higher education in Budget 2017 and a three year commitment to further investment marks an important turning point for the sector, but this review demonstrates the scale of the challenge that remains. We now have comprehensive evidence of the current financial challenges being faced by many institutes of technology and the capacity constraints which will limit their ability to meet the expected growth in student demand in coming years. While it is a review of the impact of past cuts, it’s a report with an eye to the future and the provision of higher education across the country for young people still in school who will expect to go to college in the next decade.The increase in Ireland’s young population is the envy of other countries – new energy, new ideas and a critical mass of educated young people will give Ireland a social, cultural and competitive edge. The Institute of Technology sector has its origins in the 1962 report Investment in Education and since the first doors opened in 1970 they have been critical to Ireland’s economic and social development. If they are to continue to do this, we have work to do to put them on a sustainable footing. The HEA has set out a clear action plan to address the issues, both financial and otherwise, identified in the report, while it is also about to embark on a comprehensive review of the funding approach for higher education institutions which will also take into account the findings”.

Background Information on the Institute of Technology Sector

• 14 Institutes of Technology (Athlone Institute of Technology,Institute of Technology Blanchardstown, Institute of Technology Carlow, Cork Institute of Technology, Dublin Institute of Technology, Dundalk Institute of Technology, Dun Laoghaire Institute of Art, Design and Technology, Galway-Mayo Institute of Technology, Letterkenny Institute of Technology, Limerick Institute of Technology, Institute of Technology Sligo, Institute of Technology Tallaght, Institute of Technology Tralee, Waterford Institute of Technology)
• Established in the 1970s and 1990s as Regional Technical Colleges (RTCs)
• Formerly governed by the Regional Technical Colleges Acts 1992 to 2001
• Institutes of Technology Act in 2006 – sets out the relationship between the HEA and the institutes

IOT Financial Review