The end of the efficiency-boosting road?
Higher education funding models will see an update this autumn. The Finnish model is exceptionally focused on quantifiable results. University worker unions are hoping for more stable funding.
Text terhi hautamäki images Outi Kainiemi english translation marko saajanaho
The University Act of 2010 gave the Finnish universities extensive autonomy. In return, they would be steered towards socially beneficial activity – to produce results such as degrees, credits and publications while seeking external funding.
While the goal was to encourage higher education institutions towards profiling and specialisation, the model has led to homogenisation instead. That encourages competition rather than cooperation between different institutions.
The funding model has been updated for each term. Currently, a working group appointed by the Ministry of Education and Culture is devising their proposal for 2025–2028. The group’s members include representatives from the Ministry, academia, and academic staff unions.
The Finnish academic funding model is exceptionally focused on results. The same was determined by an international review published in June, carried out by Ministry-appointed Technopolis and 4Front.
76 percent of university state funding and 95 percent of polytechnic state funding is based on quantifiable results. The international review stated the model to be functional and transparent at the general level. However, the results-focused model looks backwards and ends up maintaining the status quo.
The model does not encourage new approaches
Mika Lähteenmäki, Professor of Russian Language and Culture from the University of Jyväskylä, represents the Finnish Union of University Professors in the funding working group. In his view, the problem with the model is that what has been done before dictates future opportunities.
“The funding model promotes continuing what was rewarded before while failing to offer equal incentives for different approaches.”
When emphasising results from certain years, there may be fluctuations unrelated to the universities themselves. The COVID pandemic is a good example. In addition, it is worth considering what actually needs to be measured.
“The funding model promotes continuing what was rewarded before while failing to offer equal incentives for different approaches.”Mika Lähteenmäki, Professor of Russian Language and Culture from the University of Jyväskylä
“In some fields, the job market sucks in the students after three years, and their masters’ theses are never finished. If our goal is to produce experts our society needs, we have done a tremendous job. If we are supposed to produce degrees, we have utterly failed. These are big, principled issues – what are we expected to produce?”
The Finnish Union of University Professors would prefer the basic funding portion to be increased. Predictable funding would allow for development, new approaches, and permanent jobs. Instead of steering towards results, trust in the universities would be well-placed. They are the ones able to determine what is sensible use of resources right here, right now.
“If we consider what facilitates scientific progress and how the money should be allocated, would the professional university researchers be better equipped to answer that question than Ministry officials? It is obvious we must be responsible with taxpayer money. It is about whether the expertise and integrity of researchers can be trusted, whether they are honestly trying progress science and improve society.”
The Technopolis report also suggests the road of efficiency-boosting is at an end.
“If more students are accepted, you also need resources for that. I am sure anyone who knows academia also knows that constantly trying to improve efficiency begins to manifest as coping issues.”
Zero-sum game prevents specialising
University of Helsinki Professor of Microeconomic Theory Hannu Vartiainen believes the funding models are inherently flawed. The universities have increased their efficiency based on the metrics given, but these do not sufficiently measure the extra value university work brings to society: civilisation, scientific progress, education of informed citizens.
In the worst case, the quantitative goals are in conflict with quality. Furthermore, the model tends to reward improvements more than already efficient work. The University Reform was intended to facilitate the division of labour and specialisations for different universities. Due to the zero-sum game, this cannot happen.
“Some fields are more profitable for everyone than others. That is why everyone has to try to get into the more profitable fields”, Vartiainen says.
Different scientific fields have different publishing practices, which makes certain fields appear “less efficient” than others, with humanities seen as less productive than medicine and technology. On the other hand, the Ministry’s degree goals have cemented the division between disciplines, preventing distortion.
“The incentives are the wrong kind and promote doing the wrong things, but fortunately the universities do not actually have autonomy. This is a paradoxical mechanism, but it does prevent extremely bad things”, Vartiainen summarises.
Vartiainen also encourages increasing basic funding. As for the structural issue, he once again identifies, paradoxically, a shorter leash from the Ministry as a solution. If funding fails to encourage labour division or cooperation, these must be coordinated by the Ministry.
“The whole point of the university reform was autonomy. However, the current funding model is so problematic that this would be the easiest way to fix distortions.”
Vartiainen believes university activities should unquestionably be guided through some kind of funding model.
“The idea that universities should not be able to do whatever they want is not a bad one at all. You must produce something necessary to society, which is not always what I find interesting.”
Metrics trickle down to employees
The Ministry has stated the model is solely intended for fund allocation for higher education institutions. However, it has trickled its way down to faculties, departments, and research and teaching work.
“In the worst-case scenario, the same quantitative metrics from resource allocation between universities are reflected in the work of an individual researcher or teacher”, says Finnish Union of University Researchers and Teachers President Tero Karjalainen, also part of the Ministry-appointed working group.
A few years ago, Tampere University Professor of Higher Education Management Jussi Kivistö and his colleagues carried out an investigation on the universities’ internal funding models. The Ministry model is widely employed within the universities themselves, too. This is in no way a surprise.
Kivistö thinks the Ministry is avoiding responsibility by saying the funding model is not intended for internal allocation of university funds. If the universities earn money by publishing in a specific way, of course it affects the work of those publishing their research.
“What kind of actor would build their incentives differently from how the money is distributed outside?”Jussi Kivistö, Professor of Higher Education Management, Tampere University
“What kind of actor would build their incentives differently from how the money is distributed outside? The Ministry sticks a meter in your rear and tells you to be autonomic. That is not how this works.”
In 2019, FUURT and the Finnish Union of University Professors published a proposal of a fair funding model Kivistö helped devise as a specialist. It also includes degree and publication metrics, but with less emphasis. The so-called stability funding comprises 20 percent. The model also includes an indicator basket that allows each university to choose metrics important to them. That would encourage profiling rather than homogenisation.
True improvement or manoeuvring?
According to Kivistö, the recent international review did not delve into the fundamental issues that should be addressed. Have operational efficiency and productivity improved without risking quality? What concrete actions have been taken to accomplish results?
“If the number of degrees increases, does it happen because of the funding model’s incentives? Has the university taken internal measures for this to happen, or has the number been increased by lowering the bar?”
Studies can be expedited through real means such as effective study guidance and sensible course scheduling. However, quantitative goals may also force “manoeuvres” such as compromising on performance requirements.
Kivistö has put the Ministry on the spot, asking if Finland is so different from the rest of Europe that we need a “turbocharged” funding model.
”“What is the limit after which no more speed can be squeezed from the university system, no matter how hard you stomp on the accelerator? They have no answer to that.”Jussi Kivistö, Professor of Higher Education Management, Tampere University
“What is the limit after which no more speed can be squeezed from the university system, no matter how hard you stomp on the accelerator? They have no answer to that.”
According to Kivistö, graduation rate would be a better indicator than graduation time, and it is also included in the fair funding model published by the unions.
The funding model is research-oriented – money comes where money is. When the university manages to secure external funding, the ministry rewards it with additional funds. Kivistö finds the emphasis of the Jufo system highly unorthodox. While it should not be extended to recruitment and hiring according to the principles of responsible assessment, at least the University of Vaasa has offered financial bonuses based on Jufo 3 publications.
“If such a significant chunk of funding is allocated based on the types of magazines and book series you publish in, that goes quite deeply into research autonomy.”
Funding models being updated frequently is a good thing. However, these updates come with their own challenges. The result that determines funding is still being worked on. If major changes are planned for the next term, the universities have no time to react.
Due to this issue, academic worker unions have highlighted the need to prepare these changes longer-term.
“Bigger changes could be timed with the term starting in 2029”, says OAJ Special Advisor Hannele Louhelainen.
“Percentage changes to the funding model treat different institutions differently. Even a small change can be significant to an individual university or field of education. We already live in a time of changes and economic difficulties, so these changes should not dig pitfalls for any universities.”
”We already live in a time of changes and economic difficulties, so these changes should not dig pitfalls for any universities.””Hannele Louhelainen, Special Advisor, OAJ
According to Louhelainen, higher education institutions should have increased autonomy, with clearer guidance and a funding model that also considers quality. She hopes the dual model of these institutions is respected. Starting place numbers should be controlled at the national level to ensure no field shrinks too small.
“Not all scientific fields have equal opportunities to secure externa funding. However, they have a big educational significance during a time of flux. Any funding model needs to support the development opportunities of both higher education institutions and different scientific fields.
”Any funding model needs to support the development opportunities of both higher education institutions and different scientific fields.”Hannele Louhelainen, Special Advisor, OAJ
Practical work during the autumn
By August, the working group was yet to present concrete proposals. Atte Jääskeläinen, head of the working group this past spring, mentioned in his proposal that the funding model will still be based on results-based funding and strategy funding, but their ratio can be looked at.
Jääskeläinen mentioned possible changes, such as reducing results metrics. Abandoning Jufo is also on the table, with metrics reflecting research volume and academic impact and quality potentially replacing it.
However, the Ministry of Education and Culture’s Permanent Secretary Anita Lehikoinen, who leads the working group this autumn, says no framework conditions have been set for any changes or updates. The government programme’s entries will be addressed; these are related to the goal to increase RDI expenditure, graduation times, and reducing education accumulation.
The working group is tasked with devising their proposals by the 15th of December.
The models were last updated in 2019. This resulted in changes to indicator proportions with, for example, completed degrees gaining more emphasis. The working group at the time did feature university representation, but FUURT and OAJ disagreed.
“Of course, we mean to consider all perspectives equally and reach a consensus. But there are always some goals that get sifted out. This autumn, we will take our time to analyse what needs changing”, Lehikoinen says.
This is how higher education institutions are funded
The Ministry of Education and Culture directs and monitors higher education institution operations and acts as their primary financier. At the start of each four-year contractual term, the Ministry negotiates with them.
These negotiations address the shared goals of the higher education institutions, institution-specific measures, each institution’s purpose, profile, strengths, and new rising fields, degree goals, and budget allocated according to them.
The Parliament decides on the basic funding annually, during budget allocation. In addition, the institutions receive external funding from the Academy of Finland, Business Finland, foundations, businesses, the European Union, and other sources.
The Ministry allocates the basic funding between the universities primarily based on teaching and research performance, and between the polytechnics based on education and research and development performance. In addition, the institutions are allocated a strategy-based portion of funding. In the fund allocation, specific national functions are also accounted for.
Each institution decides how to allocate their funding internally.
Source: Ministry of Education and Culture