Institutes of technology face threat due to funding shortfalls

There are major concerns over the future of up to 10 of the country’s 14 institutes of technology due to financial deficits and dwindling cash reserves, according to a major review of the sector.

A review by the Higher Education Authority seen by The Irish Times has found that six institutes of technology are "vulnerable" and face immediate sustainability challenges: Letterkenny, Tralee, Galway-Mayo, Waterford, Dundalk and Cork institutes of technology.

There are also concerns over risks facing the institutes of technology in Athlone, Limerick, Tallaght and Dublin (DIT) due to current or projected deficits or limited financial reserves.

While public commentary has focused recently on how Irish universities have slipped down world rankings, the situation facing institutes of technology is much bleaker.

The total income per student across institutes of technology fell by more than 25 per cent between 2008 and 2015 due to falling State grants and growing student numbers. This is almost twice the scale of decline faced by universities and colleges, which have greater scope to borrow money and generate private income.

Rising deficits

The 80-page financial review projects that the sector will face rising deficits over each of the next five years, with a real risk of cash running out for three institutes within the next two years.

It finds that:

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

* The campus environment has been “adversely impacted” as there has been no funds available for capital investment. While small grants have helped keep labs operational and address health and safety issues, capital investment is now “urgently needed”.

* Overall reserves held by the institutes fell from €132 million to €79 million between 2008 and 2015, wiping out 40 per cent 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 institutes falling from €218 million in 2013 to about €116 million this year.

* Pay costs still account for up to 80 per cent of total expenditure by institutes, despite core staffing levels falling by 12 per cent between 2008 and 2014. The absence of flexibility to redeploy staff or introduce new work arrangements is a “significant factor” in financial performance.

The report finds that “radical action” is needed if the sector is to grow over the coming years.

However, in the absence of funding, the report suggests that institutes may have to place restrictions on student numbers for the first time to ensure a “minimum quality of provision is maintained”.

Regional communities

While multiple campuses are considered important in delivering education to regional communities, the report finds they are associated with high costs and deficits.

For example, Letterkenny Institute of Technology's campus in Killybegs has a deficit of €1.3 million.

Galway-Mayo Institute of Technology's campuses in Castlebar and Letterfrack are also in the red to the tune of €2 million and €700,000 respectively.

Similarly, Cork Institute of Technology's National Maritime College in Ringaskiddy is facing a deficit of about €1 million.

The report states that the Higher Education Authority should consider whether these campuses are viable or whether increased funding should be made available to keep them running.

“It also raises a wider question of the regional role and contribution of institutes of technology and the access they provide to higher education for large cohorts of the population, and how this should be valued within the higher education funding system,” the report notes.

Action plan

Dr Anne Looney, interim chief executive of the HEA, said the announcement of increased funding for higher education in the budget marked an important turning point for the sector. However, she said this review demonstrated the scale of the challenge that remained.

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

“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.”

She said the increase in Ireland's young population was the "envy of other countries". They brought new energy and new ideas, and a critical mass of educated young people would give Ireland a social, cultural and competitive edge, she said.

“If institutes of technology are to continue to do this, we have work to do to put them on a sustainable footing,” Dr Looney said.

The HEA, she said, had set out a clear action plan to address the issues, both financial and otherwise, identified in the report.

She said it was also about to embark on a comprehensive review of the funding approach for higher education institutions which will also take into account the findings.