1. Assessment and recommendations
This chapter synthesises key policy issues and recommendations identified by the OECD review team in the five main areas covered by the review: the core public funding model for higher education institutions used in the Flemish Community of Belgium; public funding to Flemish higher education institutions earmarked for research; financial aid to students; system-level frameworks governing human resources policies in higher education and key trends in higher education that will affect future resourcing policies.
High attainment rates and good labour market outcomes, but long times-to-degree
The Flemish Community of Belgium1 has a diversified publicly funded system of higher education, with five research universities and 16 professionally oriented university colleges. All university colleges are part of a formal association with one of the five universities, in an arrangement designed to facilitate cooperation within the system. This network of institutions has ensured broad access to higher education for large sections of society and allowed the Flemish Region to achieve high rates of tertiary education attainment. In 2020, 51% of residents in the Flemish Region aged between 25 and 34 held a third-level qualification, compared to an OECD average of 45% and an average in the 27 European Union member states (EU-27) of 41% (OECD, 2021[1]; Eurostat, 2021[2]). The recent transfer, in 2019, of short-cycle associate degree programmes from the adult education sector to university colleges has further expanded the scope and reach of the Flemish higher education system.
The Flemish economy – like that of Belgium more generally – is knowledge intensive and graduates from Flemish higher education institutions typically have little trouble finding work in graduate-level occupations. In 2020, 91% of young recent graduates from tertiary education in the Flemish Region – those aged 20-34 having graduated in the previous one to three years – were in employment, compared to a Belgian average of 88% and an EU-27 average of 84% (Eurostat, 2021[3]). Data from 2018 show that individuals of working age (25-64 years old) in Belgium who held a bachelor’s degree as their highest level of qualification earned, on average, 29% more than upper secondary and post-secondary vocational graduates, while those who held a master’s degree or doctorate earned 64% more (OECD, 2021[1]).
Flemish higher education operates largely with an “open access” admission system. As a rule, anyone who has successfully completed upper secondary education and meets basic eligibility criteria is free to enrol in higher education, in the discipline of their choice. Restrictions (entrance examinations or enrolment limits) exist only in the performing and visual arts, medicine and dentistry. Students also have considerable flexibility in the number of study credits for which they enrol each year. The open access admission system and flexible enrolment arrangements bring advantages in terms of the accessibility of higher education. However, they are also key factors affecting the comparatively long average time that Flemish students take to graduate, compared to their counterparts in OECD jurisdictions with more selective admission procedures in higher education and more rigid programme schedules. Only one-third of students enrolled in bachelor’s degrees graduate within the typical theoretical duration of three years – one of the lowest “on time” graduation rates among OECD jurisdictions (OECD, 2019[4]). Although, three years after the end of the theoretical programme duration, the proportion of bachelor’s students that graduate successfully increases to around two-thirds, drop-out rates and time-to-degree are key policy concerns for the Flemish authorities (Flemish Government, 2019[5]).
Impressive performance in terms of research output and the impact this achieves
The five Flemish universities are heavily engaged in basic (fundamental), mission-driven and applied research, as well as knowledge transfer and cooperation with the business and public sectors. As part of their core mission, Flemish university colleges conduct practice-oriented research in fields related to the programmes that they offer. They may also engage in applied and mission-oriented research activities in cooperation with universities. Such research forms part of these institutions’ broader engagement with businesses and the professional community.
Researchers and academic staff in Flemish universities have driven a significant increase in the number of publications produced by the Flemish research system over the last decade. In 2018, researchers based in the Flemish Region published 28 high-quality journal articles in the natural and social sciences for every 10 000 inhabitants in the region, compared to just 18 a decade earlier. In terms of publication rate relative to population, this places Flanders on a par with the Netherlands and Finland and above the levels achieved in the United Kingdom, Germany or France. Of major comparator jurisdictions in Europe with equivalent data, only Sweden and Denmark have notably higher rates of scientific publication than Flanders (ECOOM, 2019[6]). Publications produced by researchers based in Flanders achieve one of the highest observed citation rates of major European research systems. Only Ireland, Denmark and the Netherlands achieve higher impact from their published research among the European comparator systems examined for this review (ECOOM, 2019[6]).
Per-student expenditure on higher education institutions in the Flemish Community is above the OECD average
Average total expenditure on higher education institutions in the Flemish Community for each full-time equivalent (FTE) student was 28% above the average of OECD member countries in 2017 (the most recent year for which international data were available at the time of writing). This placed per-student expenditure in the Flemish Community at roughly the same level as in the Netherlands and Austria. Among OECD jurisdictions, only two Nordic higher education systems (Norway and Sweden) and the three predominantly English-speaking countries (Canada, the United Kingdom and the United States) spent more on average per FTE student on higher education institutions than the Flemish Community in 2017 (OECD, 2020[7]). These figures refer to average per-student spending levels across all types of higher education institution (public and private universities and non-university institutions) in the jurisdictions concerned and include spending destined for all activities (learning and teaching, research and service).
On average, funds from public sources accounted for 85% of total expenditure on higher education institutions in the Flemish Community in 2017 (OECD, 2020[7]). This is broadly the same proportion as in higher education systems such as Germany and Sweden, but above the OECD average of 67% (OECD, 2020[7]). The comparatively high reliance of Flemish higher education institutions on public funds primarily reflects the comparatively low (and tightly regulated) tuition fees paid by students (OECD, 2020[7]). Flemish higher education institutions have been successful in attracting private revenue from other sources, such as contract research and service activities. Such activities account, on average, for around 10% of total annual revenue in universities and around 4% in university colleges (Flemish Government, 2020[8]; Flemish Government, 2020[9]).
More detailed information on organisation, performance and funding of the Flemish higher education system is provided in Chapter 2 of this report. The remainder of this chapter synthesises key policy issues and recommendations identified by the OECD review team in the five areas identified in the terms of reference of the review:
1. Core public funding for higher education institutions (the werkingsmiddelen or operating grant);
2. Institutional funding to higher education institutions for research;
4. System-level frameworks governing human resource policies in higher education and;
5. Key trends in higher education with a likely impact on future higher education resourcing policy.
With a clear rationale, the Flemish Community combines a relatively large number of variables in its allocation formula for the teaching grant
The core operating grant for Flemish universities includes distinct elements for teaching and research, while the core grant for university colleges includes only the teaching element. The teaching grant has been calculated using the same basic formula for both institution types since the model was introduced in 2008. The core research grant for universities is calculated using a different set of parameters (see Section 1.3 below). The teaching grant is composed of a base component (sokkel), calculated based on student enrolment data, and a variable component, which takes into account enrolment data, completion of study credits and degree completion.
The calculation of the variable component of the teaching grant applies differentiated weightings to study credits for which students are enrolled, study credits completed and degrees completed in different subject areas (with different weighting systems for universities and university colleges). The calculation also applies an additional weighting (a factor of 1.5) for students in receipt of a study grant, students with disabilities and for students combining work and study. To calculate the grant for each institution for a given financial year (year “t”), the model uses average values for the input and output variables for a historical five-year period (t-7/t-6 to t-3/t-2).
The formula for the teaching grant was designed to create a fair and transparent funding allocation mechanism, which took account of institutions’ real activity levels in learning and teaching (captured through enrolment data) and provided incentives for institutions to support students to progress in their studies and to complete their degree programmes (by funding credit and degree completion). As in many other OECD jurisdictions that use formulas to distribute funding to higher education institutions, subject-area weightings were used to take into account notional cost differences in providing programmes in different fields of study. As in Ireland, but unlike funding systems in most OECD jurisdictions, the Flemish funding model introduced specific weighting for target populations to provide additional resources to institutions for students from groups that typically require additional support. Finally, by basing calculations on historical data, averaged over a five-year period, the funding model sought to ensure predictability and prevent potentially harmful year-on-year fluctuation in the total revenue received by an individual institution (Flemish Government, 2015[10]).
Like the Flemish Community, a large majority of OECD jurisdictions responding to the 2020 OECD Higher Education Policy Survey (HEPS) use formulas based on student-related metrics to allocate at least part of core public funding to higher education institutions. Some systems, such as those in Denmark, the Netherlands and Norway, combine variable (formula) funding with an element of fixed, historical funding, while others, such as Finland and Sweden, provide all core funding for teaching using a formula. Funding models in other OECD jurisdictions tend to use either enrolment (input) variables – as in Ireland and Scotland – or graduation or credit completion variables (outputs) – as in Denmark and Finland – rather than combining these two variable types, as in the Flemish system.
As implemented, the allocation model for the teaching grant creates a comparatively weak link between institutional activity levels and funding received
Like funding formulas in several other OECD jurisdictions, including Finland and the Netherlands, the allocation model used in the Flemish Community is “distributive”, in that it uses calculation parameters to divide (distribute) the available pot of public funding among institutions. In simplified terms, the unit payment that institutions receive for each student enrolled, or each credit they complete in a given field of study, is dependent on the size of the total budget envelope available for the teaching grant and the total level and type of student activity (enrolment and completion by different student types in different fields of study). If the level of student activity increases, but the budget envelope remains the same, unit payments decline. This contrasts with “additive” funding models, such as those in Denmark and Scotland, that fix unit payments (per student or per credit) in advance and thus guarantee institutions a particular level of income per unit of activity in a given year. Whereas – aside from the specific study fields with admission limits noted above – Flemish higher education institutions are required to accept all eligible students that wish to attend their programmes, systems that use fixed funding rates per student or per credit nearly always impose recruitment caps at system of institutional level to ensure total spending remains within the available budget envelope.
In the Flemish Community, the level and type of student activity in each institution changes from year to year depending on students’ enrolment decisions and behaviours in a comparatively flexible system. In comparison to institutions in many OECD countries with selective admission and enrolment caps, Flemish universities and university colleges have limited scope to control student numbers in different programmes. Meanwhile, the size of the budget envelope in a given budget year theoretically depends on the nominal annual budget trajectory (“growth path”) established in advance by government; the level of annual indexation to account for inflation and the influence of a specific adjustment mechanism built into the model (the “click system” – see Chapter 3). In practice, the available budget envelope also depends on political choices on whether and how to implement the budget allocations and adjustments provided for in legislation. In recent years, successive Flemish governments have not always increased the budget envelope in line with inflation, planned budget trajectories or upwards adjustments triggered by enrolment increases. Current (2021) budgetary pressures mean this trend is continuing (Flemish Government, 2020[11]).
The budgetary measures taken over the last decade, combined with increasing enrolment in higher education, have contributed to a real-terms decline in the average amount of core public funding many that institutions receive for each student they educate. OECD data suggest that average public spending on core and ancillary services in Flemish higher education institutions (universities and university colleges combined) decreased by 3% between 2012 and 2017, after accounting for inflation (OECD, 2020[7]). Disaggregated Flemish data show that between 2015 and 2019, per-student core funding fell by 2% in real terms in university colleges, while remaining roughly stable in universities (Flemish Government, 2020[8]; Flemish Government, 2020[9]).
For individual institutions, the combination of the multiple moving variables in the system – student enrolment and progression patterns on one side, and government budgetary decisions on the other – make it challenging for institutions to calculate and plan their annual budget in advance. The funding model provides a fair and objective mechanism to distribute available funds. The use of five-year historical average values in the calculations provides a basis for predictability in funding flows, albeit at the expense of aligning payments received closely with real activity levels in a given year (there is inevitably a time lag between changes in activity and changes in payments). However, the model’s complexity undoubtedly reduces its transparency for non-specialist institutional managers and academic staff, while the failure to increase the available budget envelope with planned budget trajectories and adjustment mechanisms in recent years has significantly reduced the predictability of the funding model in practice, and further weakened the link between activity and payments.
Respecting the budget trajectories and adjustment mechanisms established in legislation would help to address the real-terms fall in funding in some programmes and increase the predictability of the funding system for institutions. However, the combination of an open access admissions system and largely closed budget envelope inevitably leads to unit funding rates (payments per study credit enrolled or completed in particular subject area, for example) fluctuating over time. Eliminating such fluctuation would require the use of fixed unit funding rates, but this is unlikely to be financially sustainable in a higher education system with an open access admissions model system, such as that in the Flemish Community. Particularly in the current economic climate, the financial implications of such a model are unlikely to be palatable for the Flemish Government. Nevertheless, given the concerns about ensuring transparency and simplicity in funding in parts of the Flemish higher education sector, it would be instructive to analyse the effects of such an additive model, both on public funding requirements and on the distribution of funds between institutions.
1. In recognition of the crucial role of higher education in contributing to Flemish Government goals, notably in the fields of skills and knowledge creation and funding shortfalls in recent years, the Flemish Government should seek to increase the value of the budget envelope for the operating grant to higher education institutions, as soon as feasible from a budgetary perspective. The objective might be to restore the real-terms value of payments to the levels provided at the time of the introduction of the model. As a minimum, the Flemish Government should provide a transparent analysis of the cost of restoring funding levels and, in light of the real-terms cuts implemented in recent years, establish a realistic total funding level and timeframe for reaching this.
2. The Flemish Government should review the budget trajectories (growth paths) established in legislation for the budget envelope for the operating grant to higher education institutions, revise these to ensure they are fiscally viable and, subsequently, respect their engagements towards higher education institutions by providing the level of funding planned. The current situation, where planned budget allocations are specified in law, but not implemented significantly reduces the predictability of the funding system and the ability of higher education institutions to plan effectively.
3. As an input to a potential future review of the core funding model, the Flemish Government should analyse the budgetary implications of a funding model for the core operating grant that establishes fixed unit payments for enrolled credits, credits passed and degrees awarded in different price categories, based on careful projections of student numbers. As noted, such as system may not be fiscally sustainable in an open access higher education system such as that in the Flemish Community. Only more detailed analysis will confirm this.
4. The Flemish Government should analyse the impact of using a simplified set of subject-area weightings for the professional programmes, with a view to reducing the complexity of this aspect of the current model.
The inclusion of output indicators in the funding model has had no clear impact on progression and completion rates
OECD member countries use multiple policy tools in their efforts to ensure higher education institutions perform their activities to a high quality and make efficient use of resources. Among these tools are regulatory measures relating to the qualification of staff, external accreditation and quality assurance systems, financial audits, systems of transparency and reporting and public funding systems. Research in different OECD jurisdictions suggests that performance-linked formula funding models tend to have limited effects on institutional performance and may generate perverse effects (Ortagus et al., 2020[12]). In the Flemish Community, there is no evidence of the current funding model for the teaching grant, which includes credits passed and degrees awarded as output parameters, leading to unintended consequences, such as a lowering of standards or increased selection in institutions. Equally, however, there is no robust evidence of the model having positive effects on the variables it sought to influence: student progression, completion rates and time to degree.
Given that the inclusion of output indicators in the funding model appears to do no harm and highlights the importance of progression and completion as policy objectives, there is no pressing reason to eliminate these indicators from the funding model. Moreover, a radical change to the parameter mix in the funding model risks creating instability in the system for no clear benefit. Nevertheless, it would be unwise to assume that the inclusion of output parameters in the funding formula will have a significant impact on progression and completion rates in the years to come.
The commitment in the Flemish Community to allowing open access to higher education means that the system will always have to deal with higher rates of initial re-orientation of students, slow progression and student drop-out than systems that select students rigorously at entry. Nevertheless, there may be scope to increase the incentives for students to progress effectively in their studies by adjusting the systems of “learning credit” and study progress monitoring, while maintaining and developing existing and valuable orientation and support services for students as they enter and advance within higher education.
Alongside such actions, there is also scope in the Flemish higher education system to exploit the potential of institutional agreements as a complementary mechanism to strengthen accountability, transparency and focus on outcomes. Evidence from other OECD jurisdictions suggests that carefully designed performance or quality agreements can be an effective way for institutions to demonstrate commitment to societally relevant goals and focus efforts to achieve these, while allowing differentiation and respecting the autonomy of institutions for designing and implementing their own strategies (de Boer et al., 2015[13]; Reviewcommissie Hoger Onderwijs en Onderzoek, 2017[14]; O Shea and O Hara, 2020[15]). Institutional agreements in other OECD jurisdictions have had positive effects on dialogue between public authorities and higher educations, strategic planning in institutions and communication and results-orientation among staff.
5. Higher education authorities and stakeholders in the Flemish Community should revisit previously proposed reforms of the systems for regulating student progression in higher education (Werkgroep "Studievoortgangbewaking", 2014[16]). It will be important to analyse further the likely impact of the proposed reforms to the system of learning credit, such as the removal of the 60-credit bonus students receive on passing their first 60 credits and the introduction of maximum timeframes for passing 60 credits (see Chapter 3 of this report for further discussion of this point).
6. Higher education authorities and stakeholders in the Flemish Community should continue to support and develop promising initiatives to help students make sound choices about what to study, such as the “calibration test” (ijkingstoets), and continue to support institutions to invest in high-quality guidance and support services for students.
7. To strengthen further the accountability and results-orientation of the higher education system, the Flemish Government, in partnership with the higher education sector, should consider introducing a system of quality agreements or compacts between government and each higher education institution. Institutions could be invited to formulate key development objectives for a four or five-year period, with specific actions and methods for assessing progress in relation to the goals. Agreements could be limited to specific areas of institutional activity (such as quality of the educational experience and student guidance), as in the Netherlands, or cover a wider range of activities, including research and service, as in Ireland. The appropriate coverage for institutional agreements in a Flemish context would need to be decided as part of the domestic policy-making process. It will be important to draw on lessons from agreement systems that have been implemented in jurisdictions with similar characteristics, in particular, the Netherlands, Finland, Denmark, Ireland and Austria. Further suggestions are formulated in Chapter 3 of this report.
Institutional funding for strategic development is limited
A lack of a recurrent funding allocation for strategic investments and the limited availability of funds for capital investment were identified as significant challenges for Flemish higher education institutions during the review interviews. Flemish institutions are not alone and few higher education funding models make explicit allocations for strategic investment. A notable exception to this is Finland, which allocates 15% of total public funding to universities and 5% of total funding for universities of applied science for strategic development. These funds are allocated to institutions in return for strategies negotiated in performance agreements.
The issue of funds for capital investment deserves specific attention. The level of annual public funding earmarked for capital investment allocated in recent years (around EUR 33 million) is widely considered by Flemish stakeholders to be insufficient. At the same time, institutions are free to use core funding for capital investment, as many institutions do. Although there would appear to be a case for an increase in funding for capital investment, it is difficult to formulate specific recommendations on the level of resources needed for capital investment on the basis of the evidence available to this review. Particularly in light of competing pressures on public spending, further analysis of capital investment needs in the higher education sector and of options for financing these will be required at Flemish level. Given the comparatively low level of the funds earmarked for capital funding and the widespread practice of using other funds for capital investment at institutional level, the rationale for maintaining a separate funding line could be called into question.
8. The Flemish Government should consider bundling existing or planned earmarked and targeted funding for higher education institutions (outside the core funding model) to create a “strategic investment fund” to support higher education institutions in achieving the goals established in the proposed institutional agreements. The existing capital grant could be integrated into this fund. This would allow a simplification of funding streams and less reliance on potentially burdensome calls for proposals, while maintaining a link between objectives (established in institutional agreements) and funding received. If the option of implementing institutional agreements were adopted, funding could be provided in exchange for finalising the institutional agreement and for reporting on progress. If sufficient funding were available, a “bonus” payment for successful implementation at the end of the agreement period on the current Dutch model could be considered.
9. The Flemish Government, in partnership with the higher education sector, should review and quantify the capital investment needs of the higher education sector as a basis for making strategic decisions on future policies to support capital investment. A transparent analysis of capital investment needs and of the feasibility of alternative funding options (borrowing, attracting private sector investment, etc.) would provide a solid basis for future policy. Should additional funding be both required and available, this could be directed through the core operating grants or the proposed “strategic investment fund” proposed above.
The Flemish authorities provide significant direct-grant funding to higher education institutions for research
Flemish higher education institutions have access to a diversified set of public funding streams to support research. Universities receive a basic allocation for research through the element of operating grant, which serves primarily to support staff and running costs. In 2020, this amounted to roughly EUR 385 million for the five Flemish universities, with funds distributed through a formula driven by the number of doctorates awarded, bibliometric indicators and variable linked to academic staff appointments. In addition, the Flemish Government provides:
Universities with an earmarked grant for basic research, which they allocate internally: the Special Research Funds (Bijzondere onderzoeksfondsen or BOF) – EUR 220 million in 2020;
An allocation of funds to support the development of research capacity in academic programmes transferred from university colleges to universities in 2013, referred to as Supplementary Research Funds (Aanvullende onderzoeksmiddelen) – EUR 86 million in 2020;
Funds allocated to the associations of universities and university colleges to support strategic basic research and applied research and to stimulate knowledge transfer and valorisation: the Industrial Research Funds (Industrieel onderzoeksfonds or IOF) and funding for cooperation with the business sector (referred to in a Flemish context as “interface activities”) – EUR 51.7 million (IOF) and EUR 4.5 million (“Interface activities”) in 2020 and;
An allocation of funds for “practice-oriented research” (Praktijkgericht wetenschappelijk onderzoek – PWO) in university colleges, allocated as a supplementary component of the operating grant for these institutions (PWO-middelen) – EUR 30 million in 2020.
In addition, researchers associated with the five universities are able to apply for competitive, external research grants, administered by the Research Foundation – Flanders (FWO), the Flemish research council. This is the main source of funding for doctoral and post-doctoral positions, as well as an important source of funds for basic research, accounting for around 6% of total revenue to the five universities in 2019 (Flemish Government, 2020[8]). The focus in this review has been on the direct institutional grant funding for research, rather than the external, competitive funding provided by the FWO. The analysis in the review examined the mix of funding for different types of research, the design of performance-funding mechanisms, the question of research overhead and distribution of public research funding between the university and non-university sectors.
The current mix of funding streams allows researchers considerable freedom to engage in curiosity-driven, mission-oriented and applied research
This review has examined the allocation of funding for research to higher education institutions from a necessarily broad perspective and not examined the focus and distribution of the research projects actually undertaken in Flemish universities and university colleges. Nevertheless, available information on the design of policy instruments and the distribution of research spending by type of research shows that the Flemish research funding system delivers substantial and diversified resources for research in universities. The research element of the core operating grant for universities recognises the need to support research as one of the foundations of the university system. The Special Research Funds (BOF) provide earmarked funding for basic (fundamental) research to permit universities to develop their research profiles and allow institutions almost complete latitude in the internal allocation and use of these funds. The Industrial Research Funds (IOF) provide significant resources for strategic basic and applied research and promote direct cooperation between universities and university colleges, as well as between the higher education sector and businesses. These internal funds are complemented by the competitive funding system administered by the FWO and extensive contract research activities.
The evidence base for recommending a particular ratio between funding for strategic or mission-oriented research (where research funders establish clear priorities) and curiosity-driven research (where researchers are free to set their own research priorities) is weak. Moreover, national and international data that seek to capture expenditure on these types of research are potentially misleading because of the inherent ambiguity of the definitions used and the difficulty of classifying government spending by research type in a satisfactory manner. If there is a case to adjust the current balance between strategic and curiosity-driven research in Flemish higher education, that case must be made based on a more thorough-going analysis of research activity in universities and evidence that the current focus of resources is detrimental to particular types of research. Taking into account the limited international evidence, this review concurs with the 2018 evaluation of the Flemish research funding system (Van der Beken et al., 2018[17]) in concluding that there is no compelling reason to alter the current distribution of funds between the different funding streams for research.
The level of funding directed through these funding streams is another matter. Research in Flemish universities is certainly not poorly funded in comparison to average funding levels in other OECD jurisdictions. Nevertheless, in absolute terms, Flanders spends less on its university research than some comparable jurisdictions, such as the Nordic countries – research systems that have some of the strongest research performance in the OECD and against which Flanders can legitimately be benchmarked (OECD, 2021[18]). It is also clear, notwithstanding the limitations of research spending targets, that the Flemish government has not yet reached its own target of spending 1% of GDP on public funding for research and development. In 2019, Flemish Government spending on research amounted to around 0.7% of GDP. When the Flemish share of Belgian federal government spending on research is taken into account, this rises to 0.8% and, when funds from European Union framework programmes are included, to 0.87% (Debackere et al., 2021, p. 21[19]). Taking into account the strong performance of the Flemish university research system against objective – if imperfect – measures of research productivity and quality (see above and Chapter 4 for more detailed discussion) and the good performance of systems with higher funding levels, increased investment in research in the sector could be justified.
10. As the state of public finances allows, the Flemish Government can legitimately continue to increase public funding for research in higher education, as part of broader efforts to reach the government target of spending the equivalent of 1% of Flemish GDP on research and development from public funds (including federal and European funds). In line with the considerations discussed below, there is a case to increase the share of total public funding for research provided to university colleges to enable them to develop their capacity in practice-oriented research. This might be a priority for allocation of additional funding when this becomes available. In the absence of a strong case for rebalancing the research funding system for universities, other available additional funding could be used to increase the resources distributed through all the main public research-funding channels for these institutions.
The existing performance-related models for institutional research grants create positive signals, but there is scope to streamline the system and move to multi-annual funding
The design of the Flemish allocation methods for institutional research grants to universities, and the associations grouping universities and university colleges, incorporate performance metrics in an effort to promote the quality and impact of the research funded in higher education institutions. The implementation of these performance-based allocation models has coincided with a substantial increase in the productivity and impact of research from Flemish universities, although the precise contribution of the funding models to these trends cannot be proven.
In light of the already high level of performance observed in the Flemish university research system, a recent shift to reduce the weight of output indicators in the formula for allocating the Special Research Funds (the BOF key – see Chapter 4), as well as the introduction of more nuanced indicators to capture cooperation and inter-disciplinary research, is positive. Given the evidence on the effects of indicator-driven funding models, it would be unwise to over-estimate the power of these new indicators to incentivise particular behaviour patterns among researchers and institutions. However, initiatives such as the Interuniversity BOF (“iBOF”) to promote cooperation between universities are already bearing fruit and the design of the funding allocation formula sends a clear and positive signal to the research community about policy priorities.
Both the model for allocating the variable component of the research element of the operating grant and the BOF key seek to reward performance, but the two allocation systems use different parameters and weights. While these differences result from the historical development of the two mechanisms, there is no clear rationale for such a difference. Moreover, the existence of two systems for calculating two separate institutional allocations for research to the same five universities creates additional administrative burden, as two sets of calculations must be made each year.
More generally, both the Agency for Higher Education, Adult Education, Qualifications and Student grants (AHOVOKS) and the Department of Economy, Science and Innovation (EWI) report that the calculation of institutional funding allocations each year represents a considerable effort, but generates relatively small changes to institutional budgets. As discussed above, it is preferable to maintain a relatively close – and regularly reviewed – link between student-related activity and the funding institutions receive, as higher education institutions only have partial control over the enrolment and progression of students. For research, this is less clearly the case. Research strategies and employment of researchers are fully within the control of institutions. Moreover, research is a long-term activity from which outputs and impacts evolve more slowly than in education, providing further justification for a longer time horizon for funding allocations. There could be a case for making research allocations to higher education institutions for longer periods and assessing performance using the established parameters for periods of more than one year.
11. To streamline the research funding system, the Flemish Government, in cooperation with the universities, should analyse the impact of allocating the research component of the operating grant to universities using the same distribution parameters as for the BOF, allowing only one distribution calculation to be made. This might mean, for example, sharing the 45% of the operating grant to universities assigned for research in the same proportions as the BOF (i.e. based on the BOF key). The analysis should consider how measures could be designed to mitigate the effects of the change on the budget received by each institution.
12. In due course, the Flemish authorities should analyse the detailed effects of allocating the BOF to universities, using the parameters in the current BOF key, for four or five-year periods, aligned with the periodicity of the institutional agreements proposed in above. This would contribute to reducing the burden of administering the funding model, but would require mechanisms to reduce the financial impact of changes in performance on individual universities when the budget level is recalculated every four or five years. The Industrial Research Funds (IOF) could also be allocated for the same timeframes, using a similar approach.
13. To ensure accountability and transparency, particularly if there is a move to multi-annual funding, the Flemish authorities should consider requiring universities to establish and publish institutional research strategies, explaining priorities for investment of the public funds allocated to them for research (the research component of the operating funds, the BOF and the IOF). This should be accompanied by a summary of measures taken to ensure the relevance and effectiveness of the use of these funds. These institutional research strategies, which would build on existing institutional strategies, could be integrated into the institutional agreements proposed above. Any centralised prioritisation of research activity should be sufficiently broad to allow individual researchers and research teams to tailor their research efforts to changing needs and circumstances. Moreover, strategies should also make clear how long-term, curiosity-driven research would be promoted and protected.
Overhead costs associated with competitive research are creating challenges, but greater transparency on the real cost of activities in higher education is required
Although it is not possible to quantify, it is clear that Flemish universities are feeling the financial consequences of an increase in the number of research projects and researcher positions funded by external partners, which has increased calls on institutional overheads (facilities and staff in shared and central services). When research projects are funded by external partners with insufficient allowance for overhead costs, institutions are forced to make up the shortfall with their existing internal resources. It is important for policymakers to ensure that an ambition to increase research activity is not pursued at the expense of diverting institutional resources away from other core missions, most notably learning and teaching.
Calculations of institutional overhead should be transparent and verifiable by funding bodies, elected representatives and interested citizens. This is currently impossible in Flemish higher education in the absence of transparent and consistently applied activity-based cost accounting methods. The experience of multiple European higher education systems, notably in the Nordic countries, Ireland and the United Kingdom, in implementing such costing models has shown the value of such models for understanding and demonstrating cost structures within higher education institutions.
14. As resources allow, Flemish authorities should take steps to increase the overhead rates applied for resource-intensive research projects funded through Flemish external competitive public funding instruments (notably the Research Foundation – Flanders) to align more closely with the benchmark level of 25% used in the European Union’s Horizon Europe programme. Lower overhead rates may be appropriate for some types of grant, including fellowships. In revising overhead policies, it would be instructive to consult research-funding authorities in selected comparator systems to learn from their experience.
15. If overhead rates are increased within external competitive public funding instruments, higher education institutions should be required to apply the same rates for research financed by private funders.
16. To improve transparency for government and society in relation to costs and the use of funds within higher education, the Flemish higher education sector should develop and introduce common standards for activity-based cost accounting – initially for universities and, ultimately, for the whole higher education sector. Such a system should make it possible for higher education institutions to demonstrate the indirect costs associated with different activities in a comparable way and strengthen the case for overhead costs to be funded at a higher level in externally funded research. Common standards for activity-based costing should exploit existing cost accounting models used in universities and be kept as simple as possible in order to minimise administrative burden. However, the standards must allow the generation of reliable, transparent and comparable information. There is scope to draw on the experience of the Nordic countries, Ireland and the United Kingdom, which have successfully introduced such systems.
Practice-oriented research in university colleges is underfunded
The design of the allocation formulas for research funding to universities appears to be equitable and is not contested within the university sector. The allocation model for funding for practice-oriented research to university colleges, using student enrolment as the allocation parameter, is also sound, given the strong link between such research and the professionally oriented education within the university colleges. However, based on the consultations conducted for this review, it appears that the current level of core funding for practice-based research in university colleges is almost certainly too low to allow them to build their capacities in research and to fulfil their potential and their legally defined research mission.
At the same time, while individual university colleges have developed their own strategies for practice-oriented research and are taking steps to develop their internal research capacity, the review team found little evidence of a coherent Flanders-wide strategy for research in university colleges that could help to guide future investments in the sector.
17. As a basis for further investment in practice-oriented research in universities colleges, aimed at allowing these institutions to make an even greater contribution to Flemish research efforts, the university college sector in the Flemish Community should develop a system-wide strategy for practice-oriented research. Such as strategy could be developed collectively by the university colleges, with support from relevant government services and stakeholder organisations and highlight priorities for capacity development and effective approaches to structuring and implementing practice-oriented research in university colleges.
18. The Flemish Government should allocate a proportion of the increased public funding for research suggested in above to increase the institutional grant for practice-oriented research in university colleges (currently administered by the Ministry of Education and Training). This should be done in such a way as to increase both the level of funding for institutions and the share of the total public funding envelope for research allocated to practice-oriented research.
19. In return for increased investment, the Flemish authorities can legitimately require university colleges to develop institutional strategies for practice-oriented research – in a similar way to the requirement above for universities to develop research strategies. As with universities, these institutional strategies could be integrated within institutional agreements, if this instrument is implemented, or exist as stand-alone documents.
The Flemish Government provides financial aid to students and earmarked grant funding to higher education institutions for student services
The Flemish Government provides direct financial support to eligible students from low-income backgrounds in the form of non-repayable student grants. The level of grants is variable for students whose family income lies between established minimum and maximum thresholds and award criteria include both income thresholds and a points system to take into account other household factors. Eligibility for a grant is based on a system of “grant credit” (studietoelagekrediet), whereby every student receives a “rucksack” of 60 grant credits and a bonus (“joker”) of 60 credits the first time they enrol in higher education. The number of credits for which they enrol is deducted and credits are “won back” for each credit the successfully pass.
In the academic year 2019/20, an average of 30% of degree-seeking students in university colleges received grants, compared to 17% in universities (Flemish Government, 2021[20]). The number of grant recipients in the university colleges increased by 19% between 2017/18 and 2019/20. This partly reflects the incorporation of associate degree programmes into university colleges from 2019 onwards and the associated influx of students from lower socio-economic backgrounds. While all students pay tuition fees to attend higher education in the Flemish Community, students who qualify for a grant and those who come close to qualifying for a grant pay lower fees. In the academic year 2020/21, fees ranged from EUR 112 for a year’s full-time enrolment of 60 study credits for recipients of full grants to almost EUR 950 for students not qualifying for government financial support.
In addition to the system of direct student aid, the Flemish Government provides a more indirect form of support to students by allocating grants to each higher education institution to provide student services (studentenvoorzieningen – STUVO). The total public subsidy for student services, paid to universities and university colleges as an earmarked grant on top of the core operating grant, is around EUR 50 million annually. Legislation sets out six areas of activity that should be supported by these funds, including catering, housing services and support for students with mental or physical disabilities. Institutions and the bodies overseeing student services in each institution (the “STUVO council”) have considerable latitude in the way services are organised.
The student grant system is well-designed, but there is a case to review the allocation method for institutional funds for student services
The student grant system and related system of moderated tuition fees in the Flemish Community has been carefully designed to address the financial barriers to participation in higher education faced by students from low-income backgrounds. Evidence from a range of OECD jurisdictions shows that grants are an effective way to widen access to higher education and this is likely to be the case in the Flemish Community. The Flemish grants programme is particularly flexible in terms of the number of initial qualifications for which a student can obtain financial support, but creates incentives for study progression and completion through the system of “grant credit”. The current system has broad support within the higher education sector and among student groups consulted for this review.
Although not sufficient to meet the full costs of study, the value of grants in the Flemish Community is comparable to that in other wealthy northern European countries. Against this backdrop, there is no pressing case either to change the design of the grant system or, particularly in the face of competing calls on public funding, to make substantial changes to the level of grant payments in the short to medium term. However, there would appear to be scope to improve information for students about the full costs of attending higher education.
In contrast, the current method for allocation of the earmarked grants for student services (STUVO) to higher education institutions merits review. Data on the proportion of grant recipients by institution confirm a significantly higher concentration of students from socio-economically disadvantaged backgrounds in the university college sector and certain universities. It is reasonable to expect that these students will generate greater calls on STUVO services – and thus higher costs across multiple “work fields”– than students from more affluent backgrounds. Interviewees consulted during the review also highlighted the significant costs associated with providing appropriate support to students with disabilities – another group that is not evenly distributed among Flemish higher education institutions.
As data on both grant recipients and students with disabilities is readily available – as this information is used for calculation of core funding allocations – these data could potentially be used as parameters for allocating the STUVO funds. Adding such additional complexity to the allocation model could be justified if it led to funding levels responding more closely to individual institutional – and student – needs. However, higher education institutions have legitimate concerns about how students from different target groups are defined and the risks of institutions “gaming” the system to claim additional resources. As implementing such a change with a stable budget envelope would result in losers and winners, and potentially destabilise the funding of STUVO services in the institutions that lose, a change can only realistically be made through the injection of additional funding. While the numbers of grant recipients and disabled status would appear logical variables to use in a revised allocation formula for STUVO funds, it will naturally be important to develop a revised system in close collaboration with the specialists working directly with STUVO activities.
20. Drawing on existing cost studies and potentially taking inspiration from the US concepts of “cost of attendance”, “expected family contribution” and “financial need”, Flemish higher education institutions, in partnership with the Flemish authorities, should consider options for improving information for students about the full cost of study. Information resources could include simulations of the costs of attending higher education for different student profiles in different fields of study, thus complementing information on the grants system. This action would support the recommendations of the Flemish Education Council’s recent advisory report on the affordability of higher education (VLOR, 2021[21]).
21. As a basis for further consultations and decision-making, the Flemish authorities, in cooperation with the higher education sector, should analyse how the allocation of the STUVO funds to higher education institutions could be adapted to allocate additional funding to higher education institutions with high proportions of students with additional learning needs. The introduction of any such system would require an injection of additional funds to ensure no institution loses a significant level of annual STUVO funding.
Using student financial aid to influence study choices is unlikely to be effective in a Flemish context, but incentives for study progression should be kept under review
There is little compelling international evidence on the effectiveness of top-up grants or equivalent financial aid mechanisms on steering students in their choice of study programme. Part of the challenge of using student support mechanisms to incentivise particular study choices is that study choice in general – and appropriate study choice in particular – depends on many non-financial factors. The interest and the aptitude of the student for particular study fields remain crucial. In an open access, low-fee system such as that in the Flemish Community, it is also unlikely that mechanisms (such as fee discounts) trialled in selective, high-fee systems in the United States would be directly applicable, even if their effectiveness in some contexts could be proven.
The current Flemish model of student financial aid does create incentives for progression and completion. An earlier recommendation suggests review and refinement of the current system of learning credit, which appears to create too limited an incentive for students to enrol at an appropriate study intensity and work towards swift progression and timely completion of their studies. In this context, it will be important to ensure that the system of “study credit” and “grant credit” are appropriately aligned. Without more detailed data and simulations of the impact of changes to the system of grant credit, it is not possible to conclude whether the current system would require any adjustment to ensure an appropriate balance between incentivising progression and allowing leeway for some initial failure or re-orientation in study paths.
System-level frameworks govern many aspects of employment in Flemish higher education institutions
Academic and non-academic staff in the Flemish Community have distinct statuses and employment conditions depending on whether they work in universities and university colleges. These differences reflect the distinct missions of the two types of institution and their historical development. The career structures and conditions of academic staff attached to academic programmes in Schools of Arts (within university colleges) and in the Antwerp Maritime Academy are aligned with those used in universities, although they are otherwise subject to the rules governing employment in university colleges. In 2020, there were the equivalent of over 27 000 full-time staff and researcher positions in Flemish universities, of which around 13% were senior academic staff (zelfstandig academisch personeel or ZAP) and 45% were doctoral and post-doctoral researchers (VLIR, 2020[22]). In 2019, there were the equivalent of 7 600 full-time teaching staff employed in the 16 university colleges, along with around 3 300 FTE administrative and technical staff (Flemish Government, 2020[9]).
Certain aspects of human resources policy in the Flemish higher education system – notably staff categories, employment status, salaries and retirement – are regulated by law at system level, with different regulatory regimes for the universities and university colleges. Other aspects of human resources policy, such as workload models, appraisal or professional learning, are managed by individual higher education institutions. Collective agreements, negotiated between the unions and higher education employers, exist in Flemish higher education, but play a less significant role than in jurisdictions such as Denmark or the Netherlands.
Student-to-staff ratios are comparatively high in Flemish higher education
Comparing student-to-staff ratios in higher education between countries is challenging and it is difficult to determine optimal ratios of students to staff to ensure quality and efficient use of resources. However, the available evidence suggests that the number of full-time equivalent students for each academic and teaching staff member in Flemish higher education is higher than in most comparable jurisdictions. The number of academic and teaching staff in relation to the size of the population is also relatively low in Flanders.
Part of the explanation for this lies in the fact that post-doctoral researchers in Flemish higher education rarely engage in teaching, which is not the case in some other OECD systems, where post-docs teach more frequently and thus count towards teaching staff numbers. Another factor is the relatively high cost of employing staff in Belgium, which affects academia, like other sectors. In 2020, the OECD calculates that Belgium had the highest rate of combined employee and employer taxation and charges for single people without children earning the average wage of any OECD country (OECD, 2021[23]). Average total labour costs in Belgium for a single person without children, earning the average wage, were the fourth highest in the OECD, in purchasing power parity terms, after Germany, Austria and Switzerland.
Having a high-tax economy, with strong labour protections and funding higher education primarily from public sources are political choices with benefits and costs. In such contexts, governments implicitly accept that employment in higher education will be expensive and that the academic and teaching posts required to operate a high-quality higher education system will need to be financed almost exclusively from public funds. The balance of evidence suggests that a proportion of the additional public resources recommended above for higher education could productively be used by institutions to create additional academic posts. Such creation of costly posts would need to be carefully targeted to have greatest impact on reducing student-to-staff ratios where this is most urgently required and to create additional career opportunities for junior academics in fields with greatest demand.
23. With a view to a) reducing student-to-staff ratios to support teaching quality in programmes with greatest need and b) expanding research and teaching capacity in priority fields identified by higher education institutions, the Flemish Government should ensure that a proportion of additional public funding for higher education can be used to create new staff posts. Planned creation of additional posts and the expected effects of this can be explained by institutions in the institutional agreements also proposed above.
Creating a diverse and internationalised academic workforce remain challenges
Despite improvements, men occupy a large majority of the senior ranks in higher education institutions in the Flemish Community – particularly in the universities. The adoption, within the university sector, of the new Charter on Gender in Academia (VLIR and JA, 2019[24]) appears to be a positive step and will hopefully lead to greater changes than the previous set of Gender Actions Plans, which are reported to have had limited effect (Roos et al., 2020[25]). The new Charter does not appear to establish time frames for realising its key objectives. As such, careful monitoring of progress towards gender equality goals in the next few years – as proposed in the Charter – will be especially important as a basis for assessing whether more robust measures need to be taken to improve the gender balance in senior ranks.
The rigorous Dutch-language requirements for permanent academic staff positions make Flemish higher education comparatively unattractive – and sometimes simply inaccessible – for many international staff and researchers. Concerns to ensure that public servants have a good command of the domestic language and to protect the Dutch language within academia are entirely legitimate goals. However, it is questionable whether the current stringent and uniform requirements are needed to achieve these objectives. It is notable that other OECD jurisdictions, such as Quebec or Finland, implement measures to promote language diversity without imposing such rigorous language requirements for academic staff. Moreover, the costs and benefits of a rigorous protection of the Dutch language should be weighed against the costs and benefits of a more internationalised higher education workforce. It is clear that, at present, the Flemish Government invests considerable sums of taxpayers’ money in supporting international researchers at doctoral and post-doctoral level, who are often subsequently unable to access permanent positions. There is a risk that some of the best talent is thus lost to the higher education system.
24. The Flemish authorities and higher education sector should closely monitor progress in relation to the goals of the Charter on Gender in Academia and, in parallel, assess whether an equivalent initiative is needed in the university college sector. Should progress in the university sector within three to five years prove inadequate, the sector should consider the adoption of binding goals for gender representativeness in senior academic positions.
25. With a view to increasing the proportion of international academic staff in Flemish higher education, the Flemish Government should introduce greater flexibility in the formulation and application of the Dutch-language requirements for initial appointment to permanent academic posts, drawing inspiration from the models adopted in other OECD jurisdictions, including the Netherlands and Finland.
The Flemish higher education system, like its counterparts in other OECD jurisdictions, faces increasing calls for it to play a greater role in post-initial, continuing education as part of broader efforts to support citizens develop their skills throughout life. In parallel, higher education institutions face the shared challenge of exploiting the potential of digitalisation to enhance the quality and reach of higher education. While the higher education landscape has evolved considerably in recent years in the Flemish Community, most recently with the transfer of associate degree programmes to university colleges, Flemish higher education institutions will need to adapt their profiles and activities to a changing environment. The development of micro-credentials, complementing existing degree programmes, and the potential for further specialisation and profiling key examples of areas where further change is likely and desirable.
The review team noted that the Flemish Community lacks an overarching higher education strategy, similar to those seen in some other OECD jurisdictions, such as Finland (Ministry of Education and Culture, 2017[26]), Ireland (Department of Education and Skills, 2011[27]) and the Netherlands (Dutch Government, 2019[28]). The recent “Higher Education Advancement Fund” (Voorsprongfonds) (Flemish Government, 2021[29]), which guides deployment of the European Union Recovery and Resilience Funds, sets out some very brief strategic orientations. However, these priorities are not comparable with the system-wide strategies, informed by broad consultation, seen in some other leading higher education systems. Given the importance of addressing challenges relating to lifelong learning, digitalisation and refining the institutional landscape, there is a need for a systematic, collective analysis of the precise nature of these challenges and the direction the higher education system should take in responding to them. This could form the basis for a Flemish higher education strategy, encompassing these issues, but also topics related to research, such as the future organisation and scale of practice-based research support for university colleges.
26. Building on the consultation undertaken for the “Higher Education Advancement Fund” (Voorsprongfonds), the representative organisations of the higher education institutions, in close partnership with government, should develop a clear and accessible Flemish strategy for higher education as a single reference document, encompassing education and research. The development process for should involve the higher education sector, relevant government departments and agencies, student and staff representatives and other stakeholders. Such a strategy can provide a framework for future policy actions affecting the higher education sector and the refined institutional strategies developed as part of the new system of institutional agreements.
References
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Note
← 1. Belgium is a federal state composed of three geographical regions and three language-based communities, with the Belgian constitution assigning each entity its own responsibilities and institutions. The Flemish Region (often referred to as Flanders) is officially Dutch-speaking, the Walloon Region (Wallonia) is officially French-speaking, with the exception of three German-speaking cantons, and the Brussels-Capital Region is officially bilingual, with French and Dutch as official languages. The language-based communities are primarily responsible for education (including higher education), culture, youth policy and certain social services. The Flemish Community is responsible for these issues in the Flemish Region and for speakers of Dutch in the officially bilingual Brussels-Capital Region. The responsibilities of the Flemish Community and the Flemish Region are, in practice, unified under the authority of the Flemish Parliament and the Flemish Government.