The 2024 university and NUHEP funding agreements were released earlier this month. These documents are the legal basis of most funding from the Commonwealth Grant Scheme, the main tuition support program. I have created a spreadsheet with institution-level funding, available here.

Overall funding levels

Any total CGS comparison with 2023 is approximate at this point, as we don’t yet have estimated payments for demand driven funding – 2024 is the first year that metropolitan as well as regional Indigenous bachelor-degree students are financed on this basis. This creates disruptions to the time series for two of the three main CGS pots of money – demand driven and ‘higher education courses’, which covers all Commonwealth supported students except Indigenous bachelor-degree students and medical students.

Higher education courses are by far the largest CGS category. In 2024 maximum higher education courses funding will be $7.24 billion, $452.2 million or 6.7% more than in 2023.

Table A providers (i.e. each government-created university plus ACU and Notre Dame) get 99.5% of this money, while nine other providers get the remaining $34.3 million.

For designated courses, currently medicine only, the 2024 total is $413.97 million up 8.1% on 2023.

Drivers of funding levels

The underlying dynamics of the higher education courses increase are hard to unravel. A concern of mine a year ago was that the higher education courses grant would not be indexed according to actual CPI, since there is no legal requirement to do so – just a policy promise by the previous government. However the funding agreements say that this has been done, which would amount to a 7.8% increase.

On top of CPI, there is Job-ready Graduates area-based growth funding – 3.5% annually for regional campuses, 2.5% for metropolitan campuses in high growth areas, and 1% for other campuses.

In addition to these general increases, we have new places – the nuclear-powered submarine places and the second batch of the 20,000 equity places.

But offsetting these increases we have

• as noted, the transfer of money for metropolitan Indigenous bachelor-degree students from higher education courses funding to demand driven funding; and
• the phasing down of previous allocations of student places – the national priority places and last year’s commencing equity places, with 25% cuts each year.

The quick slashing of the value of earmarked new student places will push down system capacity for 2025, but given weak student demand and the apparent inclusion of CPI indexation I am less concerned about capacity issues than I was a year ago.

Course closures

Falling domestic enrolments, along with the need to divert resources from academic to administrative activities due to the government’s overall low trust, high regulation approach, will put more pressure on universities to close courses that are not covering their costs.

Regulation of course closures is a longstanding provision of funding agreements. These require universities to get government approval before closing certain courses, although ‘the Commonwealth will not unreasonably require the continuation of a course if it would place an unreasonable financial burden on the provider’.

Fewer categories of courses will be affected by the course closure rules in 2024 than in the 2021-23 funding agreements. Under the old rules, courses in skill shortage areas and ‘areas of priority under the Job-ready Graduates package’ were covered. The skill shortage provision has been retained, but the reference to JRG has been dropped, with the agreements now referring just to ‘an area of priority’ followed by examples. The examples are education, nursing, allied health, IT and engineering – all of which would be covered by the current skills priority list anyway.

This suggests that language, science, maths and agriculture courses – all of which were discounted national priority areas under JRG, with languages and science specifically mentioned in the 2021-23 agreements – can now be closed without approval. However, the expression ‘in an area of priority, for example’ suggests that more courses could potentially be covered. This vagueness is undesirable; courses should be clearly in or clearly out of scope.

Another important change is that universities must notify the government of their proposal to close a course before 31 July each year, and prior to the closure being announced publicly. The 31 July deadline is before semester two census dates, which could mean that important information about course viability is excluded.

What happens in 2025?

Although the funding agreements are titled as being for the 2024 and 2025 grant years, no information is provided for 2025.

I had expected the agreements to be for one year only, due to likely major policy changes flowing from the Universities Accord (the agreements can be for up to three years).

If there is no major legislative change for 2025, it will be the first year in which the funding floor added during JRG Senate negotiations applies (section 30-27(3) of HESA 2003). From 2025, the maximum basic grant amount for higher education courses for each Table A provider must not be less than ‘the maximum basic grant amount specified in the provider’s funding agreement for the preceding year’.

While I am not expecting funding floor issues, the funding agreements introduce the concepts of ‘base maximum basic grant amount’ and ‘total maximum basic grant amount’. The difference between the two numbers is the value of the the various earmarked allocations – national priority places, innovative places, nuclear submarine places, and 20,000 equity places.

Especially if we go back to a low-inflation environment, the annual 25% cuts to the value of these earmarked places could cause total MBGA, as determined by current processes, to fall year-on-year.

I have argued previously that the earmarked allocations are not envisaged by the Commonwealth Grant Scheme provisions of HESA 2003. Legally there is no such thing as ‘base’ or ‘total’ MBGA for the purposes of section 30-27(3). If a university’s 2024 higher education courses MBGA is inflated by these ad hoc programs the university must be allocated at least what the Department calls ‘total’ MBGA for 2024 in 2025 (column J in my spreadsheet).

Other issues

My next post examines other practical and legal issues in the 2024 funding agreements.