Financial crisis threatens Ireland’s Institutes of Technology

4 Nov 2016

A stamp printed in Ireland of Cork Institute of Technology, circa 2013. Image: Boris15/Shutterstock

The viable future of up to 10 of the 14 Institutes of Technology across Ireland is being questioned in a review by the Higher Education Authority.

A financial review of the Institutes of Technology (ITs) across Ireland has pointed to significant financial deficiencies.

It describes six of the ITs – Letterkenny, Tralee, Galway-Mayo, Waterford, Dundalk and Cork – as vulnerable.

Future Human

The review also points to risks facing the ITs in Athlone, Limerick, Tallaght and Dublin, particularly in relation to financial reserves and projected deficits.

‘The increase in Ireland’s young population is the envy of other countries – new energy, new ideas and a critical mass of educated young people will give Ireland a social, cultural and competitive edge’

Across Ireland, there are more than 87,000 students studying at the various ITs. This includes over 66,000 full-time undergraduates, 13,000 part-time undergraduates, 1,400 remote undergraduates and 3,000 full-time postgraduates.

The purpose of the review by the Higher Education Authority (HEA) was to assess the financial health of the ITs across Ireland, and involved site visits to the 14 campuses.

The HEA noted a reduction of 34pc in support for the education sector between 2008 and 2015, as well as an increase of 24pc in student numbers, which has led to an existential crisis for the educational institutes.

HEA review paints a bleak picture

The overall reserves held by the ITs fell from €132.5m to €78.7m over the period, wiping out 40pc of the finance available to underpin ongoing sustainability and future development.

The cash flow position across the sector is a major concern, with a decline in the cash balances held by ITs, from €218.1m in August 2013 to €147m in August 2016. A further fall is anticipated, to €116m by August 2017.

At an aggregate level, the sector is in deficit and this trend is projected to continue over the next five years.

Pay costs still account for between 72.5pc and 80pc of total IT expenditure, despite core staffing levels falling by 12pc between 2008 and 2014. The absence of flexibility to redeploy staff or introduce new work arrangements (for part-time or online study, for example) is a significant factor in financial performance.

The campus environment has been adversely impacted, as there has been no funding available for capital investment.

The HEA said that while growth in science and ICT education provision is encouraging, it is constrained by existing capacity. Targeted capital investment, aimed at reinforcing the technological mission of the sector, has the potential to generate a significant impact.

The remedy is in sight but needs to be acted upon

“The announcement of increased funding for higher education in Budget 2017 and a three-year commitment to further investment marks an important turning point for the sector, but this review demonstrates the scale of the challenge that remains,” said Dr Anne Looney, interim CEO of the HEA.

“We now have comprehensive evidence of the current financial challenges being faced by many ITs, and the capacity constraints which will limit their ability to meet the expected growth in student demand in coming years.

“While it is a review of the impact of past cuts, it’s a report with an eye to the future, and the provision of higher education across the country for young people still in school who will expect to go to college in the next decade.

“The increase in Ireland’s young population is the envy of other countries – new energy, new ideas and a critical mass of educated young people will give Ireland a social, cultural and competitive edge. The Institute of Technology sector has its origins in the 1962 report, Investment in Education, and since the first doors opened in 1970, [it has] been critical to Ireland’s economic and social development.

“If they are to continue to do this, we have work to do to put them on a sustainable footing.

“The HEA has set out a clear action plan to address the issues, both financial and otherwise, identified in the report, while it is also about to embark on a comprehensive review of the funding approach for higher education institutions, which will also take into account the findings,” Looney said.

LIT president urges immediate action

“It must be said that there is a stark reality at the heart of this review,” said the president of Limerick Institute of Technology (LIT), Prof Vincent Cunnane.

“It clearly demonstrates serious underfunding of higher education in Ireland, and points to a set of actions which must be undertaken to address the situation.”

Cunnane said that despite the ingenuity and commitment demonstrated by the ITs during the financial crisis that engulfed Ireland, the inescapable conclusion is that prompt action is needed if Ireland is to field the skilled graduates needed to sustain the growth in jobs recently seen in the past year.

“LIT has invested in our capital infrastructure, our stock of industry-standard equipment and facilities to ensure that our graduates have practical experience at the cutting edge,” Cunnane said.

“This was challenging in times when state investment in higher education has dried up completely.

“Nonetheless, we invested our own resources sensibly in targeted areas such as precision engineering, which will provide the optimum benefit to the economy and the optimum job prospects to our graduates.

“We have also been able to navigate many of the challenges facing higher education in Ireland by prudent management of our finances over the last number of years.

“This has meant that we are not now subject to the severe financial difficulties besetting some areas of the higher education sector in Ireland.  However, the longer this funding situation remains unresolved, the less able the Irish higher education system will be to cater for the state’s needs, including the demands of our population to progress to higher education.

“The reality is that the core challenges identified in the report are the same as those identified in the Cassells report last July, among others.

“It is fair to say that the diagnosis of the issues facing higher education in Ireland is now done, and we must move without delay to implementing the remedy,” Cunnane warned.

Cork Institute of Technology. Image: Boris15/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years