Publications

Profile & Trends 2009: New Zealand's Tertiary Education Sector

Publication Details

This is edition 12 in an annual series on the tertiary education sector. Key findings from the 2009 report are:

  • 469,000 students were enrolled in formal study programmes in 2009, including 43,500 international students. There were 202,000 industry trainees in 2009.
  • Young tertiary students are studying at a more advanced level. More than three out of four young tertiary students are now studying level 4 qualifications and above.
  • International tertiary student numbers increased by more than 9 percent in 2009. In 2010, international enrolments are expected to increase by about 8 percent, while domestic enrolments are expected to increase slightly.
Short articles on the following topics are included in Profile & Trends 2009: Participation in post-compulsory education following decreases in New Zealand’s economic activity, What do students earn after their tertiary education, Raising the literacy, language and numeracy of the adult population, Progression to, and success in, bachelors-level study, Adults in non-formal and formal learning, and Students who had a disability

Author(s): Tertiary Sector Performance Analysis and Reporting, Ministry of Education

Date Published: August 2010

Sector capability

The year 2009 saw a lift in the financial performance of New Zealand’s public tertiary education institutions.4 The institutions collectively met all four of the benchmarks5 set for prudent operation of a tertiary education institution, whereas in 2008 they had met three of the four. The aggregate operating surplus increased from 2.8 percent of revenue in 2008 to 4.4 percent, compared with the benchmark of 3 percent. The working capital ratio – which gives a snapshot of an institution’s current assets maturing within one year against its short-term obligations maturing within one year – increased from 104 percent to 121 percent, compared with the benchmark of 100 percent.

While these results suggest the institutions were in a healthy state overall in 2009, there are two cautions to consider. The first is that the 2009 results were influenced by a number of short-term revenue streams that are scheduled to be phased out in 2010. In particular, polytechnics and wānanga were supported by the Quality Reinvestment Programme, which was designed to help institutions move to a more sustainable business model.

The second caution relates to the fact that there was considerable variation among the tertiary education institutions. Only one of the 31 institutions recorded an operating deficit, compared to nine in 2008 and seven in 2007, but four other institutions had a surplus below the Tertiary Education Commission’s recommended level of 3 percent of revenue. Some institutions continued to experience uncertain financial performance.

Overall, the universities performed better in 2009. Collectively, the surplus of the eight universities was 3.3 percent of revenue, compared to 2.7 percent a year earlier and to the benchmark of 3 percent. One university reported a deficit, while one other fell short of the 3 percent benchmark. The net cash flow, the value of liquid assets and the working capital ratio of the universities also lifted in 2009.

In the recent past, the financial performance of some polytechnics has been problematic, with seven polytechnics reporting an operating deficit in 2008. But in 2009, all of the polytechnics had an operating surplus, and 17 of the 20 met the benchmark of an operating surplus of 3 percent of revenue. There were also improvements in the polytechnics’ aggregate results on the other three benchmarks set for prudent operation. However, the financial performance of the polytechnics in the last few years was influenced by a number of short-term funds which come to an end in 2010. The effect of decisions made in Budget 2009 on the government’s funding of polytechnics was to reduce it by more than 3 percent.

Another notable feature of 2009 was the continued strong financial performance of the wānanga. All three wānanga had a surplus over the benchmark of 3 percent of revenue. In part, the healthy performance of the three wānanga was due to high earnings from interest.

The industry training organisations, however, experienced difficult conditions in 2009. Sharp increases in expenditure and a fall in revenue meant the organisations collectively had a break-even result, following a combined surplus of around $20 million in 2008. Nearly half of all industry training organisations experienced a deficit in 2009 – compared to a fifth in 2008 – while the proportion whose surplus was 3 percent of revenue or better fell from 60 percent in 2008 to 40 percent in 2009.

Figure 1.10: Strategic financial position of tertiary education institutions

Image of Figure 1.10: Strategic financial position of tertiary education institutions.

The number of staff6 employed by tertiary education institutions increased overall from 2008 to 2009. Staff numbers in private training establishments increased significantly in that period, following several years of decreases.

The number of academic staff at tertiary education institutions decreased slightly from 2008 to 2009, continuing a downward trend since 2004. The number of non-academic staff has moved in the opposite direction, averaging a small annual increase since 2004. From 2008 to 2009, the increase in the number of academic staff in private training establishments was matched by a similar size increase in the number of non-academic staff.

In wānanga, the number of teaching staff increased substantially for the first time since 2004. The number of students at wānanga increased even more strongly, raising the 2009 student to academic staff ratio to 45 to 1, compared to 42 to 1 in 2008. A decrease in the number of teaching staff at polytechnics, together with an increase in the number of students, increased the student to academic staff ratio in 2009 to 19 to 1, compared to 18 to 1 in 2008. In universities, the increase in student numbers outweighed the increase in academic staff, raising the student to academic staff ratio from 16 to 1 in 2008 to 17 to 1 in 2009.

Total expenditure on personnel in public tertiary education institutions rose from 2008 to 2009, while personnel costs as a percentage of total operating expenditure remained at 58 percent.

Footnotes

  1. In 2009, there were 31 public tertiary education institutions. However, to allow comparisons to be made over time, the data from the colleges of education has been merged with that of the universities in this chapter unless otherwise stated.
  2. The Tertiary Education Commission is currently reviewing the financial reporting framework for public tertiary education institutions and it is likely that the measures used for financial monitoring and their associated benchmarks may change. However, as these changes are not yet finalised, the existing measures and benchmarks have been used here. In the analysis of industry training organisation performance, we look at the surplus as a percentage of revenue as a measure of financial health.
  3. The number of staff refers to full-time equivalent staff unless otherwise stated.

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