Solution Group on Innovation in Financial Management Mechanism towards Financial Autonomy for Public Universities

Graduates produce little social value beyond their individual benefits. If tuition equals unit cost in such disciplines, it will result in over-education from a socially optimal perspective.

Third, for policy purposes, it is important to distinguish between actual and reasonable unit costs. Actual unit costs are those that can be obtained and assessed from actual data. They tend to reflect past government policies on public funding and enrolment targets, which reflect the inertia of the public university sector. Reasonable costs are those that are required to produce graduates with the skills and knowledge to work effectively. For example, science and engineering students should spend most of their time in laboratories to acquire the skills they need for their future jobs. In the early stages, tuition fees should be raised to cover actual recurrent costs because they accurately reflect what students actually receive. However, in the long run, to make the fundamental leap to reasonable unit costs, tuition fees should be increased to a level that balances total tuition with reasonable recurring costs.

Fourth, there are practical issues related to the target of education quality and the pace of reform. It is clear that the unit cost, whether actual or reasonable, depends on the quality of education (low, medium, high). Therefore, the final reasonable unit cost mainly depends on the target level of teaching quality. The target rate of tuition fee increase depends mainly on the choice of reform time frame: fast (5 years), medium (10 years), slow (15 years). The choice of an appropriate time frame needs to take into account other socio-economic factors such as domestic and international macroeconomic conditions. Given the slow change in higher education, Vietnam should only aim for a public university system of average quality in the medium or slow time frame scenarios.

- Unit costs and state budget allocation of public universities Unit cost issues provide practical guidance for the Government

Maybe you are interested!

in allocating budgetary resources to public universities.

The policy on public financial allocation and tuition fees must be implemented in an appropriate and organized manner. In general, the total state budget and tuition fees must cover the costs of universities to train students, maintain and build new facilities and equipment, ensure effective research activities, and subsidize poor students to have access to lecture halls. Specifically, replacing the regular operating budget with a gradual increase in tuition fees does not mean that the total budget support for the education sector should be reduced. On the contrary, the total state budget allocated to public universities should increase to a level comparable to that of the countries with which Vietnam wants to compete.

In the short term, when total tuition fees remain lower than recurrent costs at most universities, the Government should continue to fully subsidise capital and research expenditures, and partially subsidise recurrent costs for appropriate institutions, according to the formula;

Regular expenditure subsidized by the Government = Number of full-time students x (Unit cost - tuition fee per student)

In which, the number of “converted full-time students” is the total number of students converted to the full-time student type by using the number and unit cost can be either actual cost or reasonable cost based on regular expenses only.

In the long term, when tuition fees can cover regular expenditures in public schools, the savings from the Government's recurrent budget allocation (along with other sources) should continue to be maintained in quantity, but the target should be shifted to support for poor students (through tuition reduction policies or low-interest loans), for purchasing teaching materials, equipment and building new infrastructure, and for encouraging research efficiency.

4.4.3. Group of solutions on innovation of financial management mechanism towards financial autonomy for public universities

The goal of the solution group is to promote the implementation of financial autonomy in public universities and promote the socialization of some types of public services.

industry; attract investment resources for higher education development while innovating the allocation method and management of budget resources for higher education towards enhancing the autonomy and self-responsibility of universities.

To promote the implementation of financial autonomy in universities, it is necessary to synchronously implement the following solutions:

Firstly, the State needs to innovate the financial management method at universities in the direction of determining the value of assets at universities to hand over to units according to the mechanism of transferring capital to enterprises; units can borrow capital from credit institutions; mobilize staff in the unit to invest in expansion, and improve the quality of career activities.

Second : Universities need to develop regulations and key mechanisms to effectively and properly implement financial autonomy in universities.

To effectively and properly implement financial autonomy in public universities, universities need to do a number of tasks well, such as: developing policies to attract high-quality teaching staff; having internal spending regulations suitable to the conditions and operations of the school, improving training quality, linking training with research and transferring scientific and technological advances, to enhance the prestige and position of universities. That will contribute to attracting more and more students to study and thus university training institutions will have the conditions to increase their revenue.

Third, the State continues to gradually increase financial autonomy for public universities along with granting university autonomy.

Strengthening financial autonomy does not mean that the State reduces support for higher education, but is understood as a method to help the State allocate the budget to support higher education more effectively instead of equalizing. Accordingly, the steps to consider are:

Step 1: The State promotes the approval of financial autonomy projects for a number of high-performing universities.

According to this plan, the level of autonomy is very flexible, schools have full authority to propose in accordance with their actual conditions on all aspects that affect the balance of revenue and expenditure. In return, schools will have specific commitments on responsibilities when being financially autonomous such as commitments on training quality and training scale.

minimum or maximum for each major, commitment to maintaining facilities for students, commitment to workers' income... Thus, with this plan, the Government will shift from a management and allocation role to a supervisory role.

Step 2: The State gradually grants greater financial autonomy to the entire higher education sector on the basis of stratification of public universities.

Schools implementing this option will have a relatively high level of autonomy, appropriate to their actual conditions. According to this solution, the State will group schools, at the same time prescribe an Autonomy Framework for each group of schools and allow schools in each group to make their own decisions within that Framework.

Fourth, specify guidance documents to implement financial autonomy of schools.

Currently, financial autonomy is integrated into many legal documents, from the Law on Higher Education to Decrees and guiding circulars... However, due to the lack of specific guiding documents from state management agencies, in the implementation process, some higher education institutions are still confused between the right to self-determination and the rights not to self-determination.

4.4.4. Group of solutions on tuition policy

Tuition and fees are an important source of income for universities. For public universities, currently, in addition to the limited funding from the state budget, the government also controls the collection of tuition fees.

Cost sharing policy in higher education through tuition fee regime is necessary, however, when developing tuition fee policy, it is necessary to carefully study factors on both supply and demand sides of higher education. In the context of applying cost sharing policy, universities need to ensure continuous improvement of education and training quality.

Experiences from countries around the world show that there is a trend of shifting the cost of higher education from the Government to students and their families. Tuition fees are constantly increasing, bringing in increasingly large revenues for universities. Increased tuition fees create conditions for improving the quality of training without creating additional burdens for the State budget. However, increasing tuition fees is a barrier that reduces the ability of students to access universities, especially students from high-income families.

low and middle income. Therefore, when developing a tuition policy, it is necessary to carefully study factors related to both the supply side (e.g. training costs/student) and the demand side (e.g. the ability to pay of students and their families).

On the other hand, when applying tuition policy, the education system needs to ensure further improvement of its education and training quality. High quality education and training will be a very convincing reason for increasing tuition fees. The quality of the higher education system is reflected in the level of suitability of higher education products to the needs of society and the market. More specifically, whether the structure of training occupations is suitable to the needs of each occupation of society or not, and whether the qualifications and skills of students after graduation meet the needs of employers or not. The following solutions need to be implemented:

First : Forecasting the social demand for occupations and accurately determining the training costs for students in each occupation as a basis for developing tuition policies and student financial support policies/tools.

Up to now, Vietnam has not had any national training needs assessment surveys as a basis for developing training plans. Vietnam's university training structure is seriously unbalanced. In the coming time, the state needs to rely on the socio-economic development strategy to conduct surveys and assess human resource needs in terms of quantity, quality, and occupational structure to serve as a basis for developing plans and allocating training expenditures for sectors and schools. In parallel with assessing human resource needs, the state needs to conduct surveys to assess training costs/students for each training sector. From there, there will be a practical basis for assessing and adjusting related financial policies of the higher education system such as the budget allocation policy for schools and sectors, tuition policy and the system of financial support policies for students.

Second : Adjust tuition fees in an increasing direction, increase the difference in tuition fees between majors and fields and continue to apply the policy of sharing training costs, along with measures to improve the quality of professional skills training and readiness to participate in the labor market.

Tuition fees at Vietnamese universities are currently very low compared to many countries in the world. But it is also a fact that the quality of products of Vietnamese higher education is also low and does not meet the needs of society. Graduates lack practical knowledge and are very passive. In order to increase tuition fees, schools must improve the quality of their training programs, launch high-quality programs with high tuition fees. Only improving the quality of training can be a solid and convincing basis for increasing tuition fees because then students feel that what they receive is worth the money they spend.

Vietnam has a low GDP per capita while the demand for university education is very high. The dual tuition policy currently in place is appropriate to meet the increasing demand for education of the people while not increasing the pressure on the state budget.

The State needs to adjust tuition fees in an increasing direction, however, the gradual increase in tuition fees should not be applied equally to all sectors and fields, but should take into account the social benefits as well as personal benefits associated with each training major. Specifically, adjusting tuition policy must ensure adjustment of students' behavior in choosing majors. Difficult majors and majors important to the country's development need to apply lower tuition fees, and at the same time, the State budget for these majors must be more adequate to encourage students to study these majors. Majors that bring high personal benefits must have higher tuition fees than majors that bring higher benefits to the whole society. Only then can we encourage students to study majors that bring more benefits to society, reducing the imbalance in the current occupational structure.

The Ministry of Finance needs to study and submit to the Government for approval a Project on innovating the pricing mechanism for public career services (including university and post-graduate training services) in the direction that the State only regulates tuition fee frameworks for basic services that play an essential role in society (such as regular university training, advanced training programs, master's and doctoral training). Public career units are allowed to calculate full salary costs, regular operating costs, and fixed asset depreciation costs in the price of provided services. At the same time, implement the policy

The policy creates conditions for the poor to access university and postgraduate training services (such as expanding the number of people eligible for loans to study), encourages and grants scholarships to poor students and students with good academic results, encourages businesses and individuals to contribute to building social funds and charity funds.

4.4.5. Group of solutions on policies to increase revenue from service activities

In order to continue implementing the policy of training according to social needs, strengthening cooperation between universities and enterprises in the fields of human resource training, scientific research and technology transfer, and increasing the attraction of investment resources for the development of higher education, it is necessary to propose solutions to increase revenue from these activities.

The solutions will focus on innovating the mechanism for mobilizing financial resources for groups of public service units providing public service services with high socialization potential, self-guaranteeing all operating costs (universities, colleges, etc.), in order to contribute to ensuring the quality of the units' operations. On that basis, higher education institutions will proactively diversify revenue sources from training contracts, research and development, technology transfer, service activities, production and business.

First : build a mechanism to attract revenue from businesses and users of training and science and technology products.

Attracting revenue from businesses and users of training and science and technology products is a major limitation of Vietnamese universities in general and public universities in particular. Currently, businesses are allowed to allocate funds for science and technology development before paying income tax. There should be specific regulations on the use of this fund to reinvest in research and training activities of universities. The State needs to have regulations on the responsibility of businesses to contribute to the costs of using university products (for example, trained human resources, research results, etc.), or regulations on the incentives that businesses enjoy if they invest in higher education. When there are specific regulations, universities can access financial resources from businesses for

This activity will strengthen cooperation between universities and businesses.

Second : increase mobilization from other career revenue sources.

Research and develop a list, forms and levels of investment incentives for investment projects to improve infrastructure, apply scientific advances, and research and apply new technologies to training facilities. The State has preferential policies, supports and encourages domestic and foreign investors to invest in the field of higher education; ensures legal ownership rights and material and spiritual benefits of investors.

In the context of the training scale exceeding the state's allocation capacity, the state needs to have policies to encourage investment capital attraction (for example, incentives through the tax system) for education from other sources... on that basis, it can continue to expand and improve the quality of training as well as people's access to universities.

Encourage enterprises, corporations, and groups to invest in establishing training facilities or to cooperate with universities to provide high-quality training services to meet the human resource needs of those enterprises, corporations, and the whole society.

4.4.6. Group of solutions to strengthen financial support policies for students to enhance the position and reputation of the school

The University of Social Sciences and Humanities has the mission of implementing social equity, increasing access to higher education for low-income groups, and ensuring the equitable development of all training professions.

The system of policies and financial support tools for students must ensure increased access to higher education while ensuring fairness. Public tuition policies, such as the system of policies and financial support tools for students, must be built in a way that increases people's access to higher education.

Increasing the number of students enrolled, ensuring fairness in access to university reflected through the following criteria: increasing the rate of students enrolling in university, reducing the difference in enrollment rates between groups of students from low-income families and regions compared to

Comment