Tertiary Education Advisory Commission Shaping the Funding Framework 13/17

Dedicated Funds

In addition to the quality and desirability tests and the Single Funding
Formula, the new funding framework also comprises five dedicated Funds that are
not linked to enrolments. These Funds include a:

Performance-Based Research Fund (PBRF)

The Commission proposes that a PBRF be established, using the funds currently
allocated as research top-ups to the tuition subsidies ($119 million in the 2003
academic year) and a minimum of $20 million in new funding. The PBRF would
provide an incentive for research excellence, would promote the retention of
talented staff and post-graduate students, and would concentrate and focus New
Zealand's research effort undertaken in tertiary providers.

Establishing the PBRF would weaken the current relationship between most
research funding and enrolments, and so would make valuable research much less
vulnerable to changes in the pattern and level of learner demand.

Model A Centres/Networks of Research Excellence (CoRE)
Fund

In its second report, Shaping the System, the Commission proposed the
establishment of Model A Centres/Networks of Research Excellence. These
Centres/Networks would involve world-class research at the creation/discovery
end of the spectrum. The government has undertaken to support such
Centres/Networks from a dedicated Fund that will increase incrementally over the
next three-years to $13.6 million per annum, and include a contingency Fund of
$20 million for capital expenditure on strategic research assets. The Commission
envisages that, over time, the Fund may be incorporated into the PBRF.

Model B Centres/ Networks of Research Excellence
(CoRE) Fund

The Commission recommends significant new funds be made available for a
separate form of Centre/Network of Research Excellence, referred to in Shaping
the Strategy as Model B, to be matched by investment from industry and other
groups. Like Model A CoREs, the Model B CoREs would involve world-class research
and also provide a high-quality environment for the teaching and supervision of
students (especially post-graduate students). Model B Centres/Networks would be
founded on co-operation between researchers and industry/community groups with
an emphasis on leveraged funding, collaborative networking between researcher
and research users (such as the business sector, community groups, and iwi), and
a primary focus on achieving national strategic goals.

Strategic Development Fund (SDF)

The Commission recommends the creation of a SDF, administered by the Tertiary
Education Commission (TEC), to facilitate change in the tertiary education
system in a pro-active manner. The SDF would be used to support innovation,
co-operation, differentiation and the strategic development of the tertiary
education system; and to improve the quality of teaching and assessment. The
Commission recognises that ongoing change is both desirable and inevitable,
leading towards a more co-operative and collaborative model of tertiary
education provision. The SDF is designed to support moves in this direction. It
could also be used to provide support for specific groups of learners such as
Maori and Pacific peoples. The Commission recommends that the current base
grants and Maori and Pacific peoples' Special Supplementary Grants be
incorporated into the SDF, and also envisages that the SDF would require
additional funding of around $50 million.

Adult and Community Education (ACE) Fund

The Adult and Community Education component of the education system is an
important form of contact between the tertiary education system and the
community, as well as being qualitatively different in function from other
components of the system. In recognition of these special characteristics, the
Commission believes that it is appropriate to keep funding for this component
separate and to deliver it through a dedicated ring-fenced Fund. Currently,
there are a number of funds for ACE. The Commission recommends that these
various funds be incorporated into a dedicated ACE Fund. The total current
appropriation for ACE is $38 million.