22 January 2013 | Report

Financially Sustainable Universities - Towards Full Costing: Progress and Practice

Thomas Estermann and Anna-Lena Claeys-Kulik

Growing expectations placed on teaching and research, along with squeezed public budgets are increasingly endangering the financial sustainability of Europe’s universities. EUA’s monitoring of the impact of the financial crises on university funding has shown that public investment in higher education in many European countries has stagnated or decreased in real terms, while the costs of university activities have increased sharply (EUA 2010a; EUA 2010b; EUA 2011a; EUA 2011b; EUA 2012).


 

In this situation it is even more important for universities to know the full costs of all their activities. Full costing methodologies become an essential tool of modern university management. EUA has carried out a variety of activities on full costing in recent years. Its study ‘Financially Sustainable Universities. Towards full costing in European universities’ (EUA 2008) showed that numerous factors, including a lack of leadership support and staff expertise as well as uncertainty about the choice of method and implementation modalities, still impede the development of full costing at European universities. These difficulties are often compounded by a lack of interest and knowledge at the level of funding bodies. 

This report aims to assist university practitioners in implementing full costing and provide good practice examples from universities across Europe. Furthermore, it provides important information for policy makers and funding bodies with up-to-date information on the state of play of full costing. 

Chapter 2 provides essential background information. It presents the major current challenges to universities’ financial sustainability, such as shrinking public budgets, highly diversified income structures and growing cofunding requirements, and explains how full costing may contribute to overcoming these.

Chapter 3 looks at the implementation of full costing at system level. It examines its impact on the relationship between universities and different types of funders, including national public and European funders, business and industry and foundations, and provides an up-to-date picture of the current state of full costing implementation in 14 European higher education systems.

Drawing on experiences and good practice examples from numerous European universities, Chapter 4 deals with the operational aspects of full costing implementation at the institutional level. It points out a number of principles to consider during the planning and implementation stages, and offers practical advice on some of the most important aspects of full costing methodologies, including time allocation mechanisms.

Finally, Chapter 5 explains how the data collected in the process may be used to inform financial management and institutional strategies.

 

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