A further response to ‘A question (about universities, global challenges, and an organizational-ethical dilemma)’

Editors’ note: several weeks ago, Professor Nigel Thrift, Vice Chancellor of the University of Warwick, UK, contributed an entry where he posed: ‘A question (about universities, global challenges, and an organizational, ethical dilemma)’. Peter N. Stearns, Provost of George Mason University, offered the first response to Nigel’s challenge in a series we will be posting through to the end of 2010.

This  ‘response’ is from Gregor McLennan, Professor of Sociology and Director of the Institute of Advanced Studies, University of Bristol. As Director of the IAS, Gregor has been busy promoting  a series of debates around the changing nature of the university in contemporary societies. His contribution to this series is therefore particularly welcome. Gregor’s work lies in the area of sociological theories and social philosophies, and has written widely on Marxism and pluralism in particular. His book, Sociological Cultural Studies: Reflexivity and Positivity in the Human Sciences, tackled some key questions of the day around (inter) disciplinarity, explanation, critical realism, complexity theory and Eurocentrism.

Susan Robertson & Kris Olds

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I want to raise a couple of issues about Nigel Thrift’s questions, to do with the way he constructs universities as a collective agency, a coherent ‘we’ that bears a ‘global’ identity. Nigel urges this ‘we’ fully to bring its actions into alignment with its ‘beliefs’, and to improve upon the shoddy performance of ‘other actors’ in tackling the ‘grand challenges’ of the day. And in that regard, the collectivity should see itself henceforth as positioned on a ‘war footing’, deploying its ‘engines of reason’ to force the principles of ‘scientific cooperation’ into service of the ‘survival of the species’.

There are several things that might be contested in this scenario of ‘agentification’, by which I mean the portrayal of universities as though they constituted a singular moral centre or personality, strategically intervening as such.

One is to do with its assumed site, the ‘global’ apparently designating something definite, and something quite obviously good. As Nigel knows, substantial objections can be raised against such easy affirmation of the nature and ‘imperativity’ of the global per se.  Yet universities everywhere now are falling over in the rush to assure themselves that meeting the ‘challenge of the global’ is something wholly other than the imperativity of the market, something that instead touches upon our deepest ethical and intellectual mission. It behoves us, I think, to be a tad sceptical about such ‘globalloney’ (in Bruno Latour’s phrase), and perhaps even to risk the accusation of parochialism by emphasising the continuing importance of the national contexts that not only universities, but many millions with an interest in the future of universities, still mainly orientate themselves around. National contexts – arguably at least – retain a certain logistical, cultural and psychological coherence that globality might forever lack; and the prospect of a world of relatively small-scale, highly educated democracies looks better geared to effective species-survival than the sort of flaccid but pushy cosmopolitanism that is currently doing the rounds.

Second, it is not self-evident that the kind of cooperation that characterizes scientific practice and development has any direct application to, or analogue within, the political processes through which any humanity-wide survival strategy will necessarily have to be coordinated. Nigel asks universities as a whole to interact in the way that individual investigators do, but this expectation is surely inappropriate. Academics are driven to work together because of their motivation to produce facts, measures, truths, and theories, whereas universities, as such, have no such intrinsic motivation, and nor do governments.

So asking universities to tackle the survival of the species is rather like asking families, or football clubs to do this. It’s not that people within these civic associations shouldn’t be mightily concerned about such imperatives, and contribute their expertise in a politically active way. It’s just that this is not these institutions’ defining concern. Indeed, in some ways the specific concern of universities – to develop plural communities of knowledge and understanding through discovery, controversial systematization, and rigorous reflection – is likely to generate some resistance to any politicized summary of the ‘threats and opportunities’ that ‘we’ all face. Don’t get me wrong, this is not a defence of the apolitical: as individuals and members of a range of collectives, we should get active around the priorities that Nigel Thrift designates. But it might be OK that universities are not best suited to organize in that targeted way. As Peter Stearns emphasises, universities’ hallmark medium is education, which is necessarily open-ended, changing and reflective. Of course, just as we need universities to free us from the blockages of our societal formations, interests and mind-sets, so in turn we need politics to reign in our deliberations and give positive shape to our values. But though they complement each other in this way, the functions of education and politics remain very different.

The third problematic aspect of Nigel’s line of thought comes out most clearly in Indira V. Samarasekera’s paper in Nature, in which it is suggested that universities have two prevailing thought-styles and labour processes: ‘solution-driven’ and ‘blue skies’. Both modes, she accepts, have to be part of core business. But whilst the latter, ‘until recently’, has been considered the ‘mainstay’, and must ‘remain so’, a much closer alignment between the two modes is held to be necessary if ‘we’ are to be more effective in ‘solving the world’s problems’. Accordingly, it is quite a good thing that the ‘fairly traditionalist’ structure of ‘curiosity-driven projects’ is giving way to a ‘fast and effective’ modality, enabling us to ‘keep pace’ with the big challenges, for which we need to ‘copy the organizations that work best’. To that end, Samarasekera maintains, we need to develop ‘collaboratories’ involving universities, government and industry, to bridge the gap between ‘universities and the private sector’, and to construct funding regimes that stimulate ‘interdisciplinary, inter-professional, and inter-sectoral approaches’.

It strikes me that the founding contrast here between ‘blue skies’ thinking (with just a hint of the smear of ‘uselessness’) and various other research practices (themselves over-schematized as ‘solution-driven’) is considerably exaggerated. But another, perhaps more insidious, bifurcation comes into play, according to which the agentic ‘we’ of the university turns out to have two bodies, as in, ‘We, the academic leaders and universities, should embrace this new relationship…’ In this depiction, the purely academic side of the collective, and the blue skies folks in particular, are ushered into the background and cast as worryingly slow off the mark, not quite up to the demands of fast and smart global Higher-ed with its solution-seeking culture. Responsibility for meeting the latter therefore falls perforce to the academic leaders, now stepping decisively into the foreground as the distinctive group that represents the essence and future of the university. So, given that the merits and deficits of, let’s say, inter-disciplinarity are never going to be definitively resolved if left to the bottom-up logic of seminar-room agonism, university leaders will have to push it through from the top, along with all the other excellent and necessary ‘inters’ of the new knowledge-society regime – inter-sectoralism, inter-professionalism, dynamic and agile Engagement with dynamic private and civic Collaborators, and so on. Now, whilst Nigel’s notion of the ‘forcing’ of knowledge seems potentially more subtle and interesting than this increasingly hectoring management ideology, a somewhat ‘traditionalist’ note still needs to be struck by way of caution, because to see universities as agentic interventionists at all is to risk missing the central point and purpose, even today, of their existence.

Gregor McLennan

‘Generation crunch’ (or, what is happening to graduate jobs and the ‘graduate premium’ in the UK)

Early this week, the Centre for Enterprise (CFE) in the UK released their report Generation Crunch: the demand for recent graduates on SME.

The report is essentially concerned with the employment prospects for university graduates in Small to Medium Enterprises (SMEs) and makes for particularly interesting reading.

Focusing on SME’s as sources of employment is important because, as they note;

While there is a relatively clear picture of this demand from the public sector and larger businesses, much less is known about the demand from SMEs. This matters, as there are an estimated 4.8 million SMEs in the UK, employing 23.1 million people and together they account for 99% of all enterprises.

Several findings stand out in their report. The first is that the CFE’s survey of over 500 SMEs in the East Midlands region of the UK highlighted confusion over the graduate ‘brand’ with 29% incorrectly identifying A-Levels (that is an upper or senior school exit qualification in the UK) as a graduate qualification.

Even when furnished with the correct definition of a graduate level qualification, it is clear that the recruitment of Generation Crunch graduates is a minority pursuit — just 11% of SMEs had taken on a recent graduate in the past 12 months and only 12% indicated they would do so in the next 12 months.

Almost a third (32%) of those firms that were not hiring graduates reported that nothing would make them recruit a graduate in the next year and the reason for most was a lack of demand, rather than an inadequate or unsuitable supply of graduates.

In an interview this week with the Guardian, James Kewin, joint managing director of the Centre for Enterprise, is reported as saying:

There is not a clear or shared understanding of the term graduate among small and medium size businesses. There is a clear need to rationalise the plethora of qualification frameworks, levels and agencies that currently litter the education and skills landscape and to develop an easily understandable summary of what is and what isn’t a graduate-level qualification.

He said efforts to boost the proportion of graduates in jobs could have only a marginal impact. “Most small and medium size businesses that do not recruit reported that lack of demand, rather than inadequate and unsuitable supply, was their primary reason for not recruiting,” he said. “This suggests that the trend for increasing the employability skills of graduates will, in isolation, have only a marginal impact. The same is true of initiatives aimed at promoting, subsidising or improving access to graduate recruits. While they may lead to a short-term reduction in graduate unemployment, they do not address the fundamental barrier – lack of business need – that prevents most small and medium size businesses from recruiting.”

This is also particularly damaging news for the UK government at the current time, given that it is busy trying to encourage more students to enrol in university studies.

In the Foreword to the recent new ‘Framework for Higher Education’, Higher Ambitions, released in late 2009, the Minister for Business, Innovation and Skills – Peter Mandelson – promised that:

A university education can be an entry ticket to the best paid employment and a preparation for a globalised world of work (p. 24).

What makes the CFE’s research potential dynamite is the implications it has for the government’s review currently being led by Lord Browne, former Head of BP, on lifting the cap on university tuition fees in English, Northern Ireland, and Welsh universities with English students in them.

Image courtesy of Bianca Soucek

Lifting the cap on tuition fees is sold to students as compensated for by a  ‘graduate premium’. In other words, students who invest in university undergraduate studies (and with increased student fees they are investing more of their own funds in their studies) will continue to earn ‘considerably more’ over a lifetime than those who don’t.

Last year GlobalHigherEd reported on the OECD’s statistical evidence about declining graduate premiums, despite the OECD’s own strong claims about the positive economic returns from investing in university studies. We pointed out that the evidence is clear; the value of the premium holds only as long as its value as a positional good is secured. The greater the number of students entering university, the more the value of the premium reduces.

This, of course, is what is behind Lord Browne’s observations in early December, 2009 and reported by BBC news. Lord Browne  calculated the graduate premium as being  1/4  (£100,000) of the one claimed by government (£400,000); this inflated figure was also the one used by government when it justified its increase in the cap on university tuition fees (from £1,225 to £3,225) which was implemented in 2007. Had the value of a university premium declined, the press asked? No, said the government! The question, of course, is who are we talking about? Clearly everyone is not in the same boat, and some might not be in a boat at all.

In 2007 a study on the economics of a degree by PricewaterhouseCoopers for Universities UK produced a different figure for the ‘graduate premium’  –   of an average of £160,000. This study pointed out, however, that the ‘average’ concealed important differences between students – with medical and dentistry students earning a ‘graduate premium’ of around £340,000, humanities students around £51, 500, and arts students  £35,000. Now it is not difficult to do the maths on this one. Investing in an arts degree does not make for good economic sense.  Indeed PricewaterhouseCooper’s report that males with an arts undergraduate degree will earn 4% less than males who hold an A-level qualification only.

When faced with…

• limited job prospects if the CFE’s data on SME’s and graduate employment is anything to go by
• likely cuts in UK public sector spending as the government manages its worst financial crisis since the 1930s
• knowledge that subject of study, gender, social class, income, non-traditional entry qualifications, and so on, can mediate the value of a ‘graduate premium’ (positively and negatively) and therefore should be placed into the mix of any hard-edged economic consideration
• a poor return on investing in a university degree if studies are in areas like arts and humanities
• a likely increase in the cost of university tuition after the election to inject funding into a limping university sector

…some students and their families could be forgiven for coming to the conclusion that a university education at all costs is simply not worth it as an economic investment in their future. This conclusion is likely to apply to families in other OECD countries, and not just the UK.

Governments might be better served if they came clean on the economic argument. Instead it should emphasize the value of university studies for social, cultural and political reasons (indeed the OECD’s recent Education at a Glance 2009, p. 176 cites figures which show that ‘political interest’ is enhanced by a 20 % point increase in probability when an individual has a tertiary education).

By recovering, valuing, and making prominent, these dimensions and outcomes of intellectual inquiry, we could then put such knowledge and capability to work on important global problems, like poverty, climate change, sustainability, and building more equitable and socially cohesive communities.

Susan Robertson

Brazil’s new Latin American and global integration universities launched

As 2009 drew to a close, Brazil’s Senate granted official authorization for the establishment of a new, very different kind of university in Brazil – the Federal University for Latin America Integration, otherwise known as UNILA.

Unanimously passed on December 16^th 2009, the Bill now enables UNILA to formally announce itself as a university, instead of a fledging project under the banner of the Institute for Advanced Studies, with oversight by the University of Parana, in the Brazilian state of Parana.

UNILA is one of three regional integration universities launched by Brazil’s President Luiz Inácio Lula da Silva in 2006 to advance Brazil’s interests within the region and globally. The other two university projects are UNILAB – the Afro-Brazilian University of Integration, and UNIAM – the University of Amazonian Integration.

These Brazilian initiatives were the latest addition to a rapidly changing higher education landscape around the globe, and one that is set to continue in 2010 (as implied in a recent NY Times report about the implications of the collapse of Dubai’s overheated economy for branch campuses such as Michigan State University and Rochester Institute of Technology).

Dubai’s spectacular meltdown in December was matched by a stunning $61m launch party for Saudi Arabia’s ‘House of Wisdom’ – the King Abdullah University of Science and Technology, or KAUST which Kimberly Coulter covered for GlobalHigherEd.

As Kris Olds wrote in his introduction to Coulter’s entry:

KAUST is a unique experiment in how to organize an institution to facilitate innovation in scientific knowledge production, a secure and efficient compound (hence Saudi Aramco’s involvement), a defacto sovereign wealth fund, a demonstration effect for new approaches to higher education in Saudi Arabia, and many other things (depending on standpoint).

So what do these initiatives have in common? Money aside (KAUST has an endowment of around US$11bn), but like KAUST, Brazil’s three new universities reflect a shared ambition: to use international higher education networks to advance cultural, political and economic projects.

However while KAUST is aimed at developing a world class national university in Saudi Arabia via the recruitment of global talent (academics and students), state of the art buildings and cutting edge development projects, UNILA, UNILAB and UNIAM are aimed at creating a ‘supranational’, ‘global’ and ‘regional’  university respectively, drawing upon staff and students from within the wider region, or from across south-south networks (UNILAB) – though each,  as I will show below, have distinctive visions and territorial reaches with UNILAB the most global.

In August of 2009, I had the privilege of attending the official launch of UNILA.  Close to the fabulous Iguacu Falls,  in Foz, Parana, UNILA is being developed on a 43 hectare site granted by Itaipu Binacional, the bi-national energy company running the huge hydro-electric dam providing energy to Paraguay and the southern cone of Brazil.

The objectives of UNILA are to pursue inter-regional trans-disciplinary research and teaching in areas of joint interest of the MERCOSUL member countries (Brazil, Paraguay, Argentina, Uruguay) focusing, for example, upon use of natural resources, trans-border biodiversity, social sciences and linguistic research, international relations as well as relevant disciplines for strategic development.

Unlike KAUST, however, whose model is US-oriented (in becoming the MIT of the East, the ‘Stanford by the Seashore’), UNILA’s mission and approach to knowledge is shaped by a distinctive Latin American commitment. Each course has a Patron and a Founder.

The first Patrons have been chosen for being Latin American names who have left relevant academic-scientific contributions associated to a field of knowledge , while course founders have been appointed for the high academic prestige in their respective fields of knowledge as well as renowned international competence in their specialities.

10 Professorial Chairs have been appointed to UNILA. Each Chair has a mandate to develop courses in ways that are inspired by, and advance, the intellectual legacy of the Patron. For instance, in the area of science, technology and innovation,  founding Chair, Hebe Vessuri, will draw inspiration from the patron Amilcar Herrerra (1920-1995) – an Argentinean geologist who valued inter-disciplinary knowledge and who have argued that the solution to problems lay not with science as progress, but in the interface with policy and politics.

These patrons are clearly not the organic intellectuals of the ruling classes. Many of these patrons, such as the Chilean writer Francisco Bilbao (1823-65), and Paraguay’s Augusto Roa Bastos (1917-2005), have spent years in exile.

The target student population for UNILA is 10,000 students enrolled in undergraduate and post-graduate programmes leading to MA and PhD degrees. Entrants will be required to sit a university entry examination that will be offered in two versions: one with a Portuguese language requirement for Brazilian citizens and a Spanish Language for the foreign candidates of eligible member countries. Lectures will be offered in both Portuguese and Spanish, as it is expected that half of the teaching staff will be from the regional member countries.

By way of contrast with UNILA, UNILAB is the most global in ambition. This unilateral Portuguese-speaking Afro-Brazilian University of Integration will have  campuses in various  Portuguese speaking countries (Brazil, Angola, Cape Verde, Guinea-Bissau, Mozambique, Portugal, Sâo Tomé and Príncipe, and East Timor). Expected to open for enrolment in the beginning of   2010, UNILAB is hailed as a political-pedagogic innovation project (see here for information on UNILAB developments).

The principal aim of UNILAB is to encourage and strengthen co-operation, partnerships, and cultural, educational and scientific exchanges between Brazil an member states of   the Community of Portuguese-Speaking Countries (CPLP) listed above. UNILAB will also focus on collaboration with the African countries of the CPLP,  aiming to contribute to these nations’ socio-economic development, including reducing ‘brain drain’ problems currently experienced by African countries.

UNILAB is intended to become an integrated multi-campus institution with campuses in all the   African member countries of the CPLP. Each of these campuses will also be integrated within the regions where they are located. Its main campus will be established in the city of Redenção in Brazil’s North-Eastern state of Ceará, approximately 60 kilometres from the city of Fortaleza. Redenção has been selected to host the main campus because it was the first municipality that had abolished slavery in Brazil, and because the region currently does not yet host a university. The main campus is also expected to function as an instrument for the strategic social-economic development of the North-East of Brazil.

In a report carried by the Observatory for Borderless Higher Education on these initiatives, Brazil’s Minister of Education, Fernando Haddad, commented:

We will not offer traditional programmes, but instead we will construct a common identity between the countries, that makes it possible to contribute to the social-economic development of each of the countries involved.

The third, more regional, initiative, Universidade Federal da Integração Amazônica, or UNIAM, will be established as a public multi-campus university, with a main campus in the Brazilian city of Santarém, and three satellite campuses in the cities Itaituba, Monte Alegre and Oriximiná, all located in Brazil’s state of Pará.

The main aim of UNIAM will be to encourage social-economic integration of the Amazon region, which includes not only parts of Brazil, but also areas of eight surrounding countries.

UNIAM’s  main campus will be established in the Brazilian city of Santarém, and three satellite campuses in the cities Itaituba, Monte Alegre and Oriximiná, all located in Brazil’s state of Pará. The aim of the new institution will be to encourage social-economic integration of the Amazon region, which includes not only parts of Brazil, but also areas of eight surrounding countries.

While it is unclear at the moment when the new university will open for enrolment, by 2013 UNIAM is expected to offer 41 programmes at Bachelor’s, Master’s and doctoral levels.  The Brazilian government will reportedly cover the US$107 million budget that will be needed to pay for the establishment and personnel costs of the new university until 2012.

Described by the Brazilian Ministry of Education as particular ‘political-pedagogic innovation projects’, these three new universities are intended to enhance national, regional and global integration, and demonstrate to the world that it may be possible to unite different countries through education.

These are fascinating initiatives likely to liven up the global higher education landscape in 2010. They reflect not only emerging regionalisms, but potential shifts in the sites and stakes of global and regional knowledge production and power.

Susan Robertson

Moody’s ‘Special Comment’ report on the global recession and public/private universities

They say a year is a long time in politics. This last year has been a particularly long one, not only in political and policy circles, but for whole nations and their institutions. The sub-prime mortgage collapse quickly turned into a fiscal meltdown and is now a full-blown global recession.  ‘Hunkering down’, weathering the effects, and practicing ‘recession-style prudence and risk management’ is now the new game in town.

So how are universities doing in this highly uncertain, fiscally-brutal environment? Clearly there are many kinds of stories which can and are being told — from departments closing to new ventures being advanced.

One story being put forward is by Moody’s – one of the two big global rating agencies whose pronouncements on the creditworthiness of nations and institutions makes them particularly powerful and worth noting (see also our earlier background report on rating agencies and higher education).

In June, Moody’s released a Special Comment report on higher education called Global Recession and Universities: Funding Strains to Keep Up with Rising Demand which makes for particularly interesting reading. The lead author of the report is Roger Goodman, Vice President-Senior Credit Officer, Moody’s Investors Service, New York.  Our thanks to University World News for bringing the report to our attention in their 5 July story ‘US: Universities fair well in recession, says Moody’s‘), and to Moody’s for permission to publish the figure below.

Essentially their argument is that (particularly public):

…universities are proving to be appealing investments for government stimulus efforts due to the sector’s stabilising, countercyclical nature in the short term as well as its potential to stimulate long term economic growth.

…Most universities demonstrate countercyclical ability to increase student enrollments during recessions, receive relatively strong support from sponsoring governments, and offer long term potential for increasing revenue diversity.

On page 3 of their report, Moody’s offer a useful graphic on the enrollment impact of recessions (see Fig 1 below).

In other words, as the economy nose-dives, individuals are more likely to consider investing in more education as a means of waiting out the recession, and positioning themselves for the labour market when it revives. For Moody’s this all means a possible ‘tail-wind’ for universities as student demand increases — particularly those who have an access oriented agenda.

Moody’s Report outlines 5 key ideas:

1. While universities will experience some stress, they will be more sheltered than other sectors.
2. Public university ‘credit quality’ will be steadier than that of private universities
3. Private universities can achieve a high rating if they are able to show evidence of sustained demand, financial strength and liquidity is clear
4. Universities are likely to seek more alternative sources of funding to offset the pressure on government balance sheets and limitations on public funding growth
5. Despite efforts at diversifying, the public sector will continue to play a central role

There are several issues worth noting here. The first is that individuals have been encouraged to invest in a graduate education, very often at considerable personal expense (loans and so on) with the promise of future earnings that outpace non-graduate earnings. If wages are depressed across the public and the private sectors because governments and firms are having to manage the consequences of bailing out the banks, then a graduate education might not be as appealing as it once was.

Second, aside from the stark black and white categorizing of ‘public’ and ‘private’ in this report (for instance, is the University of Sydney, or the University of Wisconsin-Madison, public or private given that both receive around 14-18% of their core budget from government funding?),  Moody’s also offers us something of a paradox.

To weather the storm, public universities are going to have to become more ‘private’ in order to augment meagre government budgets.  However, the more private a once public university is, the greater the risk. Is this not a classic case of catch-22?

Susan Robertson

CHERPA-network based in Europe wins tender to develop alternative global ranking of universities

Finally the decision on who has won the European Commission’s million euro tender – to develop and test a  global ranking of universities – has been announced.

The successful bid – the CHERPA network (or the Consortium for Higher Education and Research Performance Assessment), is charged with developing a ranking system to overcome what is regarded by the European Commission as the limitations of the Shanghai Jiao Tong and the QS-Times Higher Education schemes. The  final product is to be launched in 2011.

CHERPA is comprised of a consortium of leading institutions in the field within Europe; all have been developing and offering rather different approaches to ranking over the past few years (see our earlier stories here, here and  here for some of the potential contenders):

• CHE – Centre for Higher Education Development (Gütersloh, Germany)
• Center for Higher Education Policy Studies (CHEPS) at the University of Twente (Netherlands)
• Centre for Science and Technology Studies (CWTS) at Leiden University (Netherlands)
• Research division INCENTIM at the Catholic University of Leuven (Belgium)
• Observatoire des Sciences et des Techniques (OST) in Paris
• European Federation of National Engineering Associations (FEANI)
• European Foundation for Management Development (EFMD)
  

Will this new European Commission driven initiative set the proverbial European cat amongst the Transatlantic alliance pigeons? 

As we have noted in earlier commentary on university rankings, the different approaches tip the rankings playing field in the direction of different interests. Much to the chagrin of the continental Europeans, the high status US universities do well on the Shanghai Jiao Tong University Ranking, whilst Britain’s QS-Times Higher Education tends to see UK universities feature more prominently.

CHERPA will develop a design that follows the so called ‘Berlin Principles on the ranking of higher education institutions‘. These principles stress the need to take into account the linguistic, cultural and historical contexts of the educational systems into account [this fact is something of an irony for those watchers following UK higher education developments last week following a Cabinet reshuffle - where reference to 'universities' in the departmental name was dropped.  The two year old Department for Innovation, Universities and Skills has now been abandoned in favor of a mega-Department for Business, Innovation and Skills! (read more here)].

According to one of the Consortium members website -  CHE:

The basic approach underlying the project is to compare only institutions which are similar and comparable in terms of their missions and structures. Therefore the project is closely linked to the idea of a European classification (“mapping”) of higher education institutions developed by CHEPS. The feasibility study will include focused rankings on particular aspects of higher education at the institutional level (e.g., internationalization and regional engagement) on the one hand, and two field-based rankings for business and engineering programmes on the other hand.

The field-based rankings will each focus on a particular type of institution and will develop and test a set of indicators appropriate to these institutions. The rankings will be multi-dimensional and will – like the CHE ranking – use a grouping approach rather than simplistic league tables. In contrast to existing global rankings, the design will compare not only the research performance of institutions but will include teaching & learning as well as other aspects of university performance.

The different rankings will be targeted at different stakeholders: They will support decision-making in universities and especially better informed study decisions by students. Rankings that create transparency for prospective students should promote access to higher education.

The University World News, in their report out today on the announcement, notes:

Testing will take place next year and must include a representative sample of at least 150 institutions with different missions in and outside Europe. At least six institutions should be drawn from the six large EU member states, one to three from the other 21, plus 25 institutions in North America, 25 in Asia and three in Australia.

There are multiple logics and politics at play here. On the one hand, a European ranking system may well give the European Commission more HE  governance capacity across Europe, strengthening its steering over national systems in areas like ‘internationalization’ and ‘regional engagement’ – two key areas that have been identified for work to be undertaken by CHERPA.

On the other hand, this new European ranking  system — when realized — might also appeal to countries in Latin America, Africa and Asia who currently do not feature in any significant way in the two dominant systems. Like the Bologna Process, the CHERPA ranking system might well find itself generating ‘echoes’ around the globe.

Or, will regions around the world prefer to develop and promote their own niche ranking systems, elements of which were evident in the QS.com Asia ranking that was recently launched.  Whatever the outcome, as we have observed before, there is a thickening industry with profits to be had on this aspect of the emerging global higher education landscape.

Susan Robertson

Anne Corbett on the “Six to be reckoned with at the Bologna conference” in Leuven this week

Catch Anne Corbett’s interesting reflections published in the Guardian on this week’s big European higher education event in Leuven, Belgium: the 6th Bologna Ministerial Conference, 28-29th April, 2009.  Let’s see what events unfold once the Conference Communique is put into action.

Anne Corbett is Visiting Fellow, European Institute, London School of Economics, and former journalist. Anne  has recently contributed to GlobalHigherEd reflecting upon Clifford Adelman’s report The Bologna Process with U.S. Eyes: Relearning Higher Education in the Age of Convergence.

Susan Robertson

‘Tuning USA’: reforming higher education in the US, Europe style

Many of us are likely to be familiar with the film An American in Paris (1951), at least by name. Somehow the romantic encounters of an ex-GI turned struggling American painter, with an heiress  in one of Europe’s most famous cities — Paris, seems like the way things should be.

So when the US-based Lumina Foundation announced it was launching Europe’s ‘Tuning Approach within the Bologna Process’ as an educational experiment in three American States (Utah, Indiana and Minnesota) to  “…assure rigor and relevance for college degrees at various levels” (see Inside Higher Ed, April 8th, 2009),  familiar  refrains and trains of thought are suddenly shot into reverse gear. A European in America? Tuning USA, Europe style?

For Bologna watchers, Tuning is no new initiative. According to its website profile, Tuning started in 2000 as a project:

…to link the political objectives of the Bologna Process and at a later stage the Lisbon Strategy to the higher education sector. Over time Tuning has developed into a Process: an approach to (re-)design, develop, implement, evaluate and enhance quality in first, second and third cycle degree programmes.

Given that the Bologna Process entails the convergence of 46 higher education systems across Europe and beyond (those countries who are also signatories to the Process but how operate outside its borders), the question of how comparability can be assured of curricula in terms of structures, programmes and actual teaching, was clearly a pressing issue.

Funded under the European Commission’s Erasmus Thematic Network scheme, Tuning Educational Structures in Europe emerged as a project that might address this challenge. 

However, rather like the Bologna Process, Tuning has had a remarkable career. Its roll-out across Europe, and take up in countries as far afield as Latin America and the Caribbean (LAC) has been nothing short of astonishing.

Currently 18 Latin American and Caribbean countries (181 LAC universities) are involved in Tuning Latin America across twelve subject groups (Architecture, Business,  Civil Engineering, Education, Geology, History, Law, Mathematics, Medicine, Nursing and Physics).  The Bologna  and Tuning Processes, it would seem, are  considered a key tool for generating change across Latin America.

Similar processes are under way in Central Asia, the Mediterranean region and Africa. And while the Bologna promoters tend to emphasise the cultural and cooperation orientation of Tuning and Bologna, both are self-evidently strategies to reposition European higher education geostrategically. It is a market making  strategy as well as increasingly a model for how to restructure higher education systems to produce greater resource efficiencies, and some might add, greater equity.

Similarly, the Tuning Process is regarded as a means for realizing one of the ‘big goals’ that  Lumina Foundation President–Jamie Merisotis–had set for the Foundation soon after taking over the helm; to increase the proportion of the US population with degrees to 60% by 2025 so as to ensure the global competitiveness of the US.

According to the Chronicle of Higher Education (May 1st, 2009), Merisotis “gained the ear of the White House”  during the transition days of the Obama administration in 2008 when he urged Obama “to make human capital a cornerstone of US economic policy”.

Merisotis was also one of the experts consulted by the US Department of Education when it sought to determine the goals for education, and the measures of progress toward those goals.

By February 2009, President Obama had announced to Congress he wanted America to attain the world’s highest proportion of graduates by 2020.  So while the ‘big goal’ had now been set, the question was how?

One of the Lumina Foundation’s response was to initiate Tuning USA.  According to the Chronicle, Lumina has been willing to draw on ideas that are generated by the education policy community in the US, and internationally.

Clifford Adelman is one of those. A  senior associate at the Institute for Higher Education Policy in Washington, Adelman was contracted by the Lumina Foundation to produce a very extensive report on Europe’s higher education restructuring. The report (The Bologna Process for U.S. Eyes: Re-learning Higher Education in the Age of Convergence) was released early this April, and was profiled by Anne Corbett in GlobalHigherEd. In the report Adelman sets out to redress what he regards as the omissions from the Spellings Commission review of higher education.  As Adelman (2009: viii)  notes:

The core features of the Bologna Process have sufficient momentum to become the dominant global higher education model within the next two decades. Former Secretary of Education, Margaret Spellings’ Commission on the Future of Higher Education paid no attention whatsoever to Bologna, and neither did the U.S. higher education community in its underwhelming response to that Commission’s report. Such purblind stances are unforgivable in a world without borders.

But since the first version of this monograph, a shorter essay entitled The Bologna Club: What U.S. Higher Education Can Learn from a Decade of European Reconstruction (Institute for Higher Education Policy, May 2008), U.S. higher education has started listening seriously to the core messages of the remarkable and difficult undertaking in which our European colleagues have engaged. Dozens of conferences have included panels, presentations, and intense discussions of Bologna approaches to accountability, access, quality assurance, credits and transfer, and, most notably, learning outcomes in the context of the disciplines. In that latter regard, in fact, three state higher education systems—Indiana, Minnesota, and Utah—have established study groups to examine the Bologna “Tuning” process to determine the forms and extent of its potential in U.S. contexts. Scarcely a year ago, such an effort would have been unthinkable.

Working with students, faculty members and education officials from Indiana, Minnesota and Utah, Lumina has now initiated Tuning USA as a year-long project:

The aim is to create a shared understanding among higher education’s stakeholders of the subject-specific knowledge and transferable skills that students in six fields must demonstrate upon completion of a degree program. Each state has elected to draft learning outcomes and map the relations between these outcomes and graduates’ employment options for at least two of the following disciplines: biology, chemistry, education, history, physics and graphic design (see report in InsideIndianabusiness).

The world has changed. The borders between the US and European higher education are now somewhat leaky, for strategic purposes, to be sure.

A European in America is now somehow thinkable!

Susan Robertson

The role of the university in city/regional development: a view from a Vice-Chancellor in Bristol

The entry has been kindly prepared for us by Professor Eric Thomas, Vice-Chancellor of the University of Bristol.  Professor Thomas has been Vice-Chancellor of the University of Bristol since 2001.  Prior to that he was  Head of the School of Medicine, and later Dean of the Faculty of Medicine, Health and Biological Sciences, University of Southampton.  Professor Thomas is currently a member of the Board of the South-West Regional Development Agency. He is Chair of the Research Policy Committee of Universities UK and a member of its Board.

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The United Kingdom is the classic high added-value, knowledge economy. We don’t dig anything out of the ground anymore and we don’t make anything in any great quantity anymore. Our economic success depends upon us providing high intellectual and creative skills, and on technological and service innovation.

Universities are at the heart of that in both providing the intellectual workforce and in technological innovation. It is said that in medieval times villages and towns were built around the manor house, in the Victorian era they were built around the factories and that, if we were building new towns and villages now, they would be built around universities. Certainly when the UK Secretary of State for Innovation, Universities and Skills (DIUS) put out a call for locations without higher education to apply for a new facility,  the 35 who applied would support the thesis.

I often compare the City of Bristol in 1961 with the City today. In 1961 Bristol was dominated by heavy engineering and manufacturing industry. The aerospace industry employed tens of thousands of people as did both tobacco and Fry’s chocolate. At that time, the University of Bristol had about 3000 students and 300 academic staff. It was a small consideration in the economy of Bristol and could exist, almost as an ivory tower, up the hill in Clifton and unengaged with the ambitions of the city.

If you now fast forward to 2009, all that industry except aerospace has gone. And yet, the University of Bristol is the largest independent employer in the city, responsible for 5500 jobs and a further 4500 from indirect employment. A study some years ago in the South West Region reported the economic impact of a university as 1.74 times turnover. A more recent study of London South Bank University by PriceWaterhouseCoopers, which took into account the economic impact of the added value from the graduates through their lifetime, concluded that the impact was approximately six times turnover. Viewed like this, it would make the University of Bristol’s impact on the local and national economy in excess of £2 billion per year and higher education in general in the UK in the order of £100 billion per year or over 8% of GDP.

Of course, such figures will provoke dispute. However the general message of the importance of higher education to the local and national economies is now, I would argue, beyond question. How, therefore, does a university like Bristol respond to such a role which is relatively new?

The first important action is to ensure that working with the city is right at the center of your current public strategy. This is so for the current University Strategy, and will be strengthened in our Plan for 2009–2016.

Secondly the head of the institution must articulate that ambition clearly and become personally engaged with the city and region. For example, I am a member of the Partnership Board for the Bristol City Council which advises the Leader and Chief Executive. For six years I was a member of the Board of the South-West Regional Development Agency. I have been a trustee of an important local charity. Perhaps most importantly I assiduously attend all city social events and network with the other key players in the city and always articulate our desire to assist the city-region. I have also opened up the university for the use of many partners and organizations in the city.

More practically, we have a large Research and Enterprise Directorate which works closely with local businesses. Their aim is to ensure the most rapid transfer of knowledge and technology generated in the university and the easiest access possible for businesses to our skills and technical expertise. This is not only for big businesses. We have set up the Bristol Enterprise Network to assist knowledge transfer among the high tech, high growth SMEs in the Bristol sub-region. This currently has 1500 members. This not only provides networking opportunities but also news and information and training in business skills.

We need to work with key partners in the city particularly the National Health Service. The university provides nearly 200 medical staff for health care in the city and must work very closely with local health trusts, not only to ensure the best health care but also the best teaching and research opportunities for our professionals.

The university also provides most of the local teacher training and thus a very important set of professionals for the future of Bristol. Over a period of ten years or so, the University will have invested over £500 million in infrastructure which has knock-on effects in the local planning, architectural, building and legal services, to name but a few.

However it is not only in business that the university works with the city. Many of our staff are school governors or trustees of charities. We are working very closely on the development of a new school which opened in 2008,  Merchants’  Academy Withywood, in South Bristol. We have enormous numbers of cultural events and lectures which are open to the public. It is often overlooked that our academics travel all over the world. The people most commonly putting up Powerpoint presentations with the word ‘Bristol‘ in the title are the staff of the University.

Furthermore, our staff are massively networked internationally not only with other academics but also business and government. I get at least four “Google Alerts” a day about the University of Bristol from press all over the world. Stories about the University carry the name Bristol to all parts of the globe and all that PR and advertising comes free.

To some observers, the pressure on universities to increasingly be more global in ambition comes at a price.  However, I do not see any essential or intrinsic conflict,  between being an international, outward facing organization, and working to ensure that the local society gains as much as possible from its university. The two ambitions can be made to be completely compatible, though as I have argued above, both need to be championed and advanced together.

However, I would say that the role of the university in its local city and sub-region is one of the most enjoyable parts of leading a great university in 2009.

Eric Thomas

University institutional performance: HEFCE, UK universities and the media

This entry has been kindly prepared by Rosemary Deem, Professor of Sociology of Education, University of Bristol, UK. Rosemary’s expertise and research interests are in the area of higher education, managerialism, governance, globalization, and organizational cultures (student and staff).

Prior to her appointment at Bristol, Rosemary was Dean of Social Sciences at the University of Lancaster. Rosemary has served as a member of ESRC Grants Board 1999-2003, and Panel Member of the Education Research Assessment Exercise 1996, 2001, 2008.

GlobalHigherEd invited Rosemary to respond to one of the themes (understanding institutional performance) in the UK’s Higher Education Debate aired by the Department for Innovation, Universities and Skills  (DIUS) over 2008.

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Institutional performance of universities and their academic staff and students is a very topical issue in many countries, for potential students and their families and sponsors, governments and businesses. As well as numerous national rankings, two annual international league tables in particular, the Shanghai Jiao Tong,  developed for the Chinese government to benchmark its own universities and the commercial Times Higher top international universities listings, are the focus of much government and institutional  interest,  as  universities vie with each other to appear in the top rankings of so-called world-class universities, even though the quest for world-class status has negative as well as positive consequences for national higher education systems (see here).

International league tables often build on metrics that are themselves international (e.g publication citation indexes) or use proxies for quality such as the proportions of international students or staff/student ratios, whereas national league tables tend to develop their own criteria, as the UK Research Assessment Exercise (RAE) has done and as its planned replacement, the Research Excellence Framework is intended to do.

In March 2008, John Denham, Secretary of State for (the Department of) Innovation, Universities and Skills (or DIUS) commissioned the Higher Education Funding Council for England (HEFCE) to give some advice on measuring institutional performance. Other themes  on which the Minister commissioned advice, and which will be reviewed on GlobalHigherEd over the next few months, were On-Line Higher Education Learning, Intellectual Property and research benefits; Demographic challenge facing higher education; Research Careers; Teaching and the Student Experience; Part-time studies and Higher Education; Academia and public policy making; and International issues in Higher Education.

Denham identified five policy areas for the report on ‘measuring institutional performance’ that is the concern of this entry, namely: research, enabling business to innovate and engagement in knowledge transfer activity, high quality teaching, improving work force skills and widening participation.

This list could be seen as a predictable one since it relates to current UK government policies on universities and strongly emphasizes the role of higher education in producing employable graduates and relating its research and teaching to business and the ‘knowledge economy’.

Additionally, HEFCE already has quality and success measures and also surveys, such as the National Student Survey of all final year undergraduates for everything except workforce development.  The five areas are a powerful indicator of what government thinks the purposes of universities are, which is part of a much wider debate (see here and here).

On the other hand, the list is interesting for what it leaves out – higher education institutions and their local communities (which is not just about servicing business), or universities’ provision for supporting the learning of their own staff (since they are major employers in their localities) or the relationship between teaching and research

The report makes clear that HEFCE wants to “add value whilst minimising the unintended consequences”, (p. 2), would like to introduce a code of practice for the use of performance measures and does not want to introduce more official league tables in the five policy areas.  There is also a discussion about why performance is measured: it may be for funding purposes, to evaluate new policies, inform universities so they can make decisions about their strategic direction, improve performance or to inform the operation of markets. The disadvantages of performance measures, the tendency for some measures to be proxies (which will be a significant issue if plans to use metrics and bibliometrics  as proxies for research quality in  the new Research Excellence Framework are adopted) and the tendency to measure activity and volume but not impact are also considered in the report.

However, what is not emphasized enough are that the consequences once a performance measure is made public are not within anyone’s control.  Both the internet and the media ensure that this is a significant challenge.  It is no good saying that “Newspaper league tables do not provide an accurate picture of the higher education sector” (p 7) but then taking action which invalidates this point.

Thus in the RAE 2008, detailed cross-institutional results were made available by HEFCE to the media before they are available to the universities themselves last week, just so that newspaper league tables can be constructed.

Now isn’t this an example of the tail wagging the dog, and being helped by HEFCE to do so? Furthermore, market and policy incentives may conflict with each other.  If an institution’s student market is led by middle-class students with excellent exam grades, then urging them to engage in widening participation can fall on deaf ears.   Also, whilst UK universities are still in receipt of significant public funding, many also generate substantial private funding too and some institutional heads are increasingly irritated by tight government controls over what they do and how they do it.

Two other significant issues are considered in the report. One is value-added measures, which HEFCE feels it is not yet ready to pronounce on.  Constructing these for schools has been controversial and the question of over what period should value added measures be collected is problematic, since HEFCE measures would look only at what is added to recent graduates, not what happens to them over the life course as a whole.

The other issue is about whether understanding and measuring different dimensions of institutional performance could help to support diversity in the sector.  It is not clear how this would work for the following three reasons:

1. Institutions will tend to do what they think is valued and has money attached, so if the quality of research is more highly valued and better funded than quality of teaching, then every institution will want to do research.
2. University missions and ‘brands’ are driven by a whole multitude of factors and importantly by articulating the values and visions of staff and students and possibly very little by ‘performance’ measures; they are often appealing to an international as well as a national audience and perfect markets with detailed reliable consumer knowledge do not exist in higher education.
3. As the HEFCE report points out, there is a complex relationship between research, knowledge transfer, teaching, CPD and workforce development in terms of economic impact (and surely social and cultural impact too?). Given that this is the case, it is not evident that encouraging HEIs to focus on only one or two policy areas would be helpful.

There is a suggestion in the report that web-based spidergrams based on an seemingly agreed (set of performance indicators might be developed which would allow users to drill down into more detail if they wished). Whilst this might well be useful, it will not replace or address the media’s current dominance in compiling league tables based on a whole variety of official and unofficial performance measures and proxies. Nor will it really address the ways in which the “high value of the UK higher education ‘brand’ nationally and internationally” is sustained.

Internationally, the web and word of mouth are more critical than what now look like rather old-fashioned performance measures and indicators.  In addition, the economic downturn and the state of the UK’s economy and sterling are likely to be far more influential in this than anything HEFCE does about institutional performance.

The report, whilst making some important points, is essentially introspective, fails to sufficiently grasp how some of its own measures and activities are distorted by the media, does not really engage with the kinds of new technologies students and potential students are now using (mobile devices, blogs, wikis, social networking sites, etc) and focuses far more on national understandings of institutional performance than on how to improve the global impact and understanding of UK higher education.

Rosemary Deem

Higher education policy-making, stake-holder democracy and the economics of attention

In August (2008), the Beerkens’ Blog carried an interesting report on a new format being mobilized by both the Australian and UK governments respectively; to enable the public to have a say on the future of higher education. The format – a blog – is a new departure for government departments, and it clearly is a promising tool for governments in gathering together new ideas, promoting debates, and opening up spaces for stakeholders to offer perspectives.

However, though the nature of their projects were similar—to generate a Higher Education Debate about where higher education should go over the next decade or so—Beerkens’ comparison suggests that each of the two departments involved, the Australian’ Department of Education, Employment and Workplace Relations (DEST) and the UK’ Department of Innovation, Universities and Skills (DIUS), were experiencing rather different levels of engagement with their publics. 

The question of why this should be the case, when the topic is important and widely debated, bears reflecting upon more closely. Is it because DEST commissioned an initial paper from an Expert Panel, with the result that the wider Australian public had something to get their teeth into compared with DIUS’s invitation to articulate a perspective? Or, was it a result of the fact that DIUS, a relatively new Department constructed when Gordon Brown took over from Tony Blair as UK Prime Minister in 2007, has yet to be picked up on wider public’s radar? Is the Australian public more used to having their say using new web-based interactive tools, and therefore not phased when invited to do so? Or is the wider public in UK less willing to participate in a public airing of views?

Put another way, how and why is it that the wider Australian public pay attention to, and act upon, an invitation to participate, when their UK counterparts do not?

Whatever the reasons for the differences, or the merits of each of the initiatives, what is clear is that the deployment of new technologies, in themselves, do not necessarily generate participation by a wider polity. Participation is the outcome of the various players being aware of, and prioritizing, interactions of this kind. In other words, new technologies operate within an ‘economy of attention’ – a point well made by Richard Latham in his influential 2006 book The Economics of Attention: Style and Substance in the Age of Information.

Now the essential point Latham is making is that we live in an information economy, and information is not in short supply. In fact, argues Latham, we are “drowning in it”. What is in short supply is ‘attention’! To grab attention, we need stylistic devices and strategies so that what Latham calls ‘stuff’—like debating the future directions for higher education—moves from the periphery to the center of attention.

This raises the interesting question of what stylistic devices and strategies government departments might use to ensure that they grab attention. In our GlobalHigherEd experience, simply ‘being a blog’ out there in the sea of information is not sufficient to generate attention? Moving ‘stuff’ from the periphery to the center takes thought and time; of how to catch and perhaps ride currents of interest. It means paying attention to the unique economy of attention and attempting to direct it in some way. Tags, categories, inter-textual links, networks and search engines all make up this complex terrain of attention getting/attention receiving. In this way, GlobalHigherEd (as well as the Beerkens’ Blog) has managed to contribute, to a degree, to structuring the field of attention – at least in the field of global higher education debates. This point is exemplified in Eric’s pump priming entry, loaded up today, regarding the Times Higher Education World University Ranking of 2008 that will be released tomorrow, and covered in the Beerkens’ Blog amongst several other outlets.

So, to all of you out there who really do have something to add to DIUS’s invitation to participate in wider public debates about the future of Higher Education in the UK on themes that range from part-time studies, demographic challenges, teaching and student experiences, internationalizing higher education, intellectual property, research careers and institutional performance – the soapbox is yours! DIUS really does want to hear from you.

References

Latham, R. (2006) The Economics of Attention: Style and Substance in the Age of Information, Chicago and London: The University of Chicago Press.

Susan Robertson

Another ‘Alice in Wonderland moment’ with the further round of overseas scholarship funding cuts for UK universities?

This week I found myself experiencing another ‘Alice in Wonderland’ moment when news was circulated that the Higher Education Funding Council for England (HEFCE) would completely withdraw , by 2011, an important source of funding to English universities for scholarships for overseas students – the Overseas Research Students Award Scheme (ORSAS). Currently HEFCE contributes £13 million to this scheme in England, and £15 million overall (including Scotland and Wales).

This comes on top of an announcement in March of this year when UK Foreign Secretary, David Miliband, announced to the Parliament that the Foreign and Commonwealth Office was terminating its 50 year old commitment made to the Commonwealth Scholarship Commission. In essence this decision would cut funding to the Commonwealth Scholarship and Fellowship Plan – so that scholarships would only be available to developing countries. This funding, however, would not be available for doctoral studies.

Now, the recommendations of the report published in July 2008 by the UK Higher Education International Unit (ironically funded by HEFCE and UUK), The UK’s competitive advantage: The Market for International Research Students (see Executive Summary here), were that if the UK wanted to remain a global leader:

• UK universities must develop a clear and attractive doctoral brand with emphasis on quality and innovation;
• Initiatives that offset the cost of fees and living in the UK must be developed; and that
  
• More needed to be done to illustrate the benefits of a British doctorate to an international audience and to counter the belief that Britain is an expensive place in which to study.

The Report notes that the UK’s key competitor countries, North America, Europe and Australasia, are all developing recruitment strategies aimed at the post graduate market, contributing to a declining share for the UK.

Given this Report; given, too, that demographic changes mean that by 2020 there will be 16% fewer 18 year olds coming through the university system; and given the stepping up of initiatives in other emerging countries around the globe, [for instance this week the Korean government announced that it not only planned to attract 100,000 foreign students to the country by 2010, but that it would double the number of scholarships available to foreign students by 2012 (currently 1,500) as well as loosen visa restrictions on work], it is difficult not to feel as if this is something of an Alice in Wonderland moment - that things in the UK higher education policy sector are getting ‘curiouser and curiouser’!

Alice, of course, was watching her body extend out like a large telescope, while her feet disappeared almost from sight – a distinctly odd sensation and sight. Musing over her almost disappearing feet and how she might have to send shoes and socks as presents to them to keep them going in the direction she wanted to go, Alice remarked: “Oh dear…What nonsense I’m talking!”

Watching the equally ‘odd’ reshaping of the UK overseas scholarship funding regime in the face of advice – that we should be funding more not less overseas doctoral scholarships, contributes to the distinctly odd sensation – of a kind of ‘policy-autism’ amongst the UK higher education’s research, advice and policymaking units with the result that we seem to be seeing and talking policy nonsense!

Unless, of course, things aren’t quite what they seem!

Susan Robertson

‘Passing judgment’: the role of credit rating agencies in the global governance of UK universities

This week, one of the two major credit rating agencies in the world, Standard & Poor’s (Moody’s is the other), issued their annual ‘Report Card’ on UK universities. This year’s version is titled UK Universities Enjoy Higher Revenues but Still Face Spending Pressures and it has received a fair bit of attention in media outlets (e.g., the Financial Times and The Guardian). Our thanks to Standard and Poor’s for sending us a copy of the report.

Five UK universities were in the spotlight after having their creditworthiness rated by Standard & Poor’s (S&P’s). In total, S&P’s assesses 20 universities in the UK (5 are made public, the rest are confidential), with 90% of this survey considered by the rating agency to be of high investment grade quality (of A- or above).

Universities in the UK, it would appear from S&P’s Report Card, have had a relatively good year from ‘a credit perspective’. This pronouncement is surely something to celebrate in a year when the word ‘credit crunch’ has become the new metaphor for economic meltdown, and when higher education institutions are likely to be worried about the affects of the sub-prime mortgage lending crisis on loans to students and institutions more generally.

But to the average lay person (or even the average university professor), with a generally low level of financial literacy, what does this all mean? Global ratings agencies passing judgments on UK universities, or policies to drive the sector more generally, or, finally, individual institutional governance decisions?

Three years ago, when one of us (Susan) was delivering an Inaugural Professorial Address at Bristol, S&P’s 2005 report on Bristol (AA/Stable/–) was flashed up, much to the amusement of the audience though to the bemusement of the Chair, a senior university leader. The mild embarrassment of the Chair was largely a consequence of the fact that he was unaware of this judgment on Bristol by a credit rating agency headquartered in New York.

Now the reason for showing S&P’s judgment on the University of Bristol was neither to amuse the audience nor to embarrass the Chair. The point at the time was to sketch out the changing landscape of globalizing education systems within the wider global political economy, to introduce some of the newer (and more private) players who increasingly wield policymaking/shaping power on the sector, to reflect on how these agencies work, and to delineate some of the emerging effects of such developments on the sector.

Our view is that current analyses of globalizing higher education have neglected the role of credit rating agencies in the governance of the higher education sector—as specialized forms of intelligence gathering, shaping and judgment determination on universities. Yet, credit rating agencies are, in many ways, at the heart of contemporary global governance. Witness, for example, the huge debates going on now about establishing a European register for ratings agencies.

The release, then, this week of the S&P’s UK Universities 2008 Report Card, is an opportunity for GlobalHigherEd to sketch out to interested readers a basic understanding of global rating agencies and their relationship to the global governance of higher education.

Rating agencies – origins

Timothy Sinclair, a University of Warwick academic, has been writing for more than a decade on rating agencies and their roles in what he calls the New Global Finance (NGF) (Sinclair, 2000). His various articles and books (see, for example, Sinclair 1994; 2000; 2003; 2005)—some of which are listed below—are worth reading for those of you who want to pursue the topic in greater depth.

Sinclair outlines the early development and subsequent growing importance of credit rating agencies—the masters of capital and second superpowers—arguing that there have been a number of distinct phases in their development.

The first phase dates back to the 1850s, when compendiums of information were produced for American financial markets about large industrial infrastructure developments, such as railroads and canals. However, it was not until the 1907 financial crisis that these early compendiums of information were then used to make judgements about the creditworthiness of debtors (Sinclair, 2003: 148).

‘Rating’ then entered a period of rapid growth from the mid-1930s onwards, as a result of state governments in the US incorporating rating standards into their prudential rules for investment by pension funds.

A third phase began in the 1980s, when new financial innovations (particularly low-rated or junk bonds) were developed, and cheaper offshore non-national money markets were created (that is, places where funds are raised by selling debt obligations and equity outside of the current constraints of government regulation).

However this process, of what Sinclair (1994: 136) calls the ‘disintermediation’ of financing (meaning state regulatory bodies are side-stepped), creates information problems for those wishing to lend money and those wishing to borrow it.

The current phase is now characterized by, on the one hand, greater internationalization of finance, and on the other hand hand, increased significance of capital markets that challenge the role of Banks, as intermediaries.

Credit rating agencies have, as a result, become more important as suppliers of the information with which to make credit-worthiness judgments.

New York-based rating agencies have grown rapidly since then, responding to innovations in financial instruments, on the one hand, and the need for information, on the other. Demand for information has also generated competition within the industry, with some firms operating niche specializations – for instance, as we see with Standards & Poor’s and the higher education sector, itself a subsidiary of publishers McGraw Hill,

Credit rating is big, big business. As Sinclair (2005) notes, the two major credit rating agencies, Moody’s and Standards & Poor’s, pass judgments on around a $30 trillion worth of securities each year. Ratings also affect rates or costs of borrowing, so that the higher the rating, the less risk of default on repayment to the lender and therefore the lower the cost to the borrower.

Universities with different credit ratings will, therefore, be differently placed to borrow – so that the adage of ‘the more you have the more you get’ becomes a major theme.

The rating process

If we look at the detail of the ‘issuer credit rating’ and ‘comments’ in the Report Card of, for instance, the University of Bristol, or King’s College London, we can see that detail is gathered on the financial rating of the issuer; on the industry, competitors, and economy; on legal advice related to the specific issue; on management, policy, business outlook, accounting practices and so on; and on the competitive position, quality of management, long term industry prospects, and wider economic environment. As Sinclair (2003: 150) notes:

The rating agencies are most interested in data on cash flow relative to debt service obligations. They want to know how liquid the company is, and where there will be timely problems likely to hinder repayment. Other information may include five-year financial projections, including income statements and balance sheets, analysis of capital spending plans, financing alternatives, and contingency plans. This information which may not be publicly known is supplemented by agency research into the value of current outstanding obligations, stock valuations and other publicly available data that allows for an inference…

The rating that follows – an opinion on creditworthiness—is generated by an analytical team, a report is prepared with the rating and rationale, this is put to the rating committee made up of senior officials, and a final determination is made in private. The decision is subject to appeal by the issuer. Issuer credit ratings can be either long or short term. S&P use the following nomenclature for long term issue credit ratings (see Bankers Almanac, 2008: 1- 3):

• AAA – (highest/ extremely strong capacity to meet financial commitments
• AA – very strong capacity to meet financial commitments
• A – strong capacity to meet financial commitments, but susceptible to adverse affects of changes in circumstances and economic conditions
• BBB – adequate capacity to meet financial commitments
• BB – less vulnerable in the near term than other lower rated obligators, but faces major ongoing uncertainties
• B – more vulnerable than BB – but adverse business, financial or economic conditions will likely impair obligator’s capacity to meet its financial commitments

Rating higher education institutions

In light of the above discussion, we can now look more closely at the kinds of judgments passed on those universities included in a typical Report Card on the sector by Standards & Poor’s (see 2008: 7).

The 2008 Report Card itself is short; a 9 page document which offers a ‘credit perspective’ on the sector more generally, and on 5 universities. We are told “the UK higher education sector has made positive strides over the past few years, but faces increasing risks in the medium-to-long term” (p. 2).

The Report goes on to note a trebling of tuition fees in the UK, the growth the overseas student market and associated income, an increase in research income for research intensive universities – so that of the 5 universities rated, 1 has been upgraded, another has had its outlook revised to ‘positive’, and no ratings were adjusted for the other three.

The Report also notes (p. 2) that the universities publicly rated by S&P’s are among the leading universities in the UK. To support this claim they refer to another ranking mechanism that is now providing information in the global marketplace – The Times Higher QS World Universities Rankings 2007, which is, as we have noted in a recent entry (‘Euro angsts‘), receiving considerable critical attention in Europe.

However, the Report Card also notes pressures within the system: higher wage demands linked to tuition increases, the search for new researchers to be counted as part of the UK’s Research Assessment Exercise (RAE), global competition for international students, and the heightened expectations of students for better infrastructure as a result of higher fees.

Longer term risks include the fact that by 2020, there will be 16% fewer 18 year olds coming through the system, according to forecasts by Universities UK – with the biggest impact being on the newer universities (in the UK these so-called ‘newer universities’ are previous polytechnics who were given university status in 1992).

Of the 20 UK universities rated in this S&P’s Report, 4 universities are rated AAA; 8 are rated AA; 6 are rated A, and 2 are rated BBB. The University of Bristol, as we can see from the analysts’ rating and comments which we have reproduced below, is given a relatively favorable rating. We have also quoted this rating at length to give you a sense of the kind of commentary made and how this relates to the judgment passed.

Credit rating agencies, as instruments of the global governance of higher education

Credit rating agencies are particularly powerful because both markets and governments see them as authoritative sources of judgment, with the result that they are major actors in controlling access to capital markets. And despite the evident importance of credit rating agencies on the governance of universities in the UK and elsewhere, there is a remarkable lack of attention to this phenomenon. We think there are important questions that need to be researched and the results discussed more widely. For example:

• How widely spread is the practice?
• Why are some universities rated whilst others are not?
• Why are some universities’ ratings considered confidential whilst others are not (keeping in mind that they are all, in the above UK case, public taxpayer supported universities)?
• Have any universities contested their credit rating, and if so, through what process, and with what outcome?
• How do university’s management systems respond to these credit ratings, and in what ways might they influence ongoing policy decisions within the university and within the sector?
• How robust are particular kinds of reputational or status ‘information’, such as World University Rankings, especially if we are looking at creditworthiness?

Our reports on these global rankings show that there are major problems with such measures. As we have profiled, and as has University Ranking Watch and the Beerkens’ Blog, there are clearly unresolved debates and major problems with global ranking schemes.

Clearly market liberalism, of the kind that has characterized this current period of globalization, requires new kinds of intermediaries to provide information for both buyer and seller. And it cannot hurt to have ‘outside’ assessments of the fiscal health of institutions (in this case universities) that are complex, often opaque, and taxpayer supported. However, to experts like Timothy Sinclair (2003), credit rating agencies privatize policymaking, and they can narrow the sphere of government intervention.

For EU Internal Market Commissioner, Charlie McCreevy, the credit ratings agencies like Moody’s and S&P’s contributed to the current financial market turmoil because they underestimated the risks related to their structured credit products. As the Commissioner commented in EurActiv in June.: “No supervisor appears to have got as much as a sniff of the rot at the heart of the structured finance rating process before it all blew up.”

In other words, credit rating agencies lack political accountability and enjoy an ‘accountability gap’. And while efforts are now under way by regulators to close that gap by developing new regulatory frameworks and rules, analysts worry that these private actors will now find new ways around the rules, and in turn facilitate the creation of a riskier financial architecture (as happened with global mortgage markets).

As universities become more financialized, as well as ranked, indexed and barometered in the ways we have been mapping on GlobalHigherEd, such ‘information’ on the sector will also likely be deployed to pass judgment and generate ratings and rankings of ‘creditworthiness’ for universities. The net effect may well be to exaggerate the differences between institutions, to generate greater levels of uneven development within and across the sector, and to increase rather then decrease the opacity and therefore accountability of the sector.

In sum, there is little doubt credit rating agencies, in passing judgments, play a key and increasingly important role in the global governance of higher education. It is also clear from these developments that we need to pay much closer attention to what might be thought of as mundane entities – credit rating agencies – and their role in the global governance of higher education. And we are also hopeful that credit ratings agencies will outline their views on this important dimension of the small g governance of higher education institutions.

Selected References

Bankers Almanac (2008) Standards and Poor’s Definitions, last accessed 5 August 2008.

King, M. and Sinclair, T. (2003) Private actors and public policy: a requiem for the new Basel Capital Accord, International Political Science Review, 24 (3), pp. 345-62.

Sinclair, T. (1994) Passing judgement: credit rating processes as regulatory mechanisms of governance in the emerging world order, Review of International Political Economy, 1 (1), pp. 133-159.

Sinclair, T. (2000) Reinventing authority: embedded knowledge networks and the new global finance, Environment and Planning C: Government and Policy, August 18 (4), pp. 487-502.

Sinclair, T. (2003) Global monitor: bond rating agencies, New Political Economy, 8 (1), pp. 147-161.

Sinclair, T. (2005) The New Masters of Capital: American Bond Rating Agencies and the Politics of Creditworthiness, New York: Cornell University Press.

Standard & Poor’s (2008) Report Card: UK Universities Enjoy Higher Revenues But Still Face Spending Pressures, London: Standards & Poor’s.

Susan Robertson and Kris Olds