The document analyzes the impact of financial autonomy regulations on the share of private financing for universities in European Union member states. It uses a Tobit regression model with dummy variables representing five dimensions of financial autonomy to analyze data from 22 EU countries. The results show that while some autonomy dimensions like asset ownership have a negative impact, ensuring mandatory public funding and allowing business activity and independent financial management positively impact the private share of university financing.

1. Janusz Kudła
University of Warsaw, Poland
Monika Stachowiak-Kudła
University of Warsaw, Poland

2.  The purpose of the study is to compare the financial
autonomy of European universities in the acts on
higher education of European Union member states.
 We are going to distinguish the similarities in
autonomy regulations and identify the most important
legal components of financial autonomy.
 We also strive to measure the impact of the
distinguished items on the share of private financing
with a Tobit regression.

3.  Firstly, we identified explicitly formulated in
primary legislation acts basic dimensions
(factors) affecting financial autonomy of
universities,
 Secondly, we used these dimensions to find the
similar provisions existing in other European
Union countries,
 Finally, we applied the dummy variable in Tobit
model to estimate the impact on the share of
private funding in tertiary education institutions.

4.  One can expect that the enhancement of financial
autonomy should increase the share of private
financing at the expense of the public,
 This statement (if true) confirms indirectly greater
diversity of tertiary education funding in systems
assuming higher level of legal autonomy,
 On the operational level, it means positive and
significant value of parameters in model, explaining the
private financing share, controlling for other variables
affecting the structure of higher education funding.

5.  Property utilization and free disposal of assets, primarily
by the sale of owned real estate, commitment and its
security;
 Transfer of unspent public funding for the next year;
 Pursuit of economic activity,
 The imposition of public obligation on government to
provide funds for fulfilling the basic functions of
universities;
 The lack of control over investments, revenues and costs
incurred by one of the bodies inside the university for
the sake of appropriate governmental authorities, for
example a minister of higher education.

6.  We use Tobit model for censored data (because the
dependent variable - share of private expenditures
in total sum of funds spen t on higher education -
is limited to 0-1 range),
 The controlling variables reflect: the cost of higher
education, level of research and development expenses
and the differences in relative affluence, calculated
according to the purchasing power standard provided by
Eurostat,
 The dummy variables represent five dimensions of
financial autonomy of universities.

7.  The key figures for higher education are available at
the latest for 2008 and origin from two sources –
OECD and Eurostat.
 The control variables refers mainly to the later
source. Variables for non-members of OECD were
taken from Eurostat 2005 and rescaled for 2008.
 Eventually the model was estimated for 22 countries
of EU.

8.  Only five control variables turn out significant: Annual
expenditure on public educational institutions per
student in euro PPS, Total Public Expenditure on
education in millions euro PPS at tertiary level of
education, the ratio of students at academic studies to
non-academic and the relationship of students in private
schools to public,
 Of the five dummy variables of financial autonomy, only
one proved to be not significant at 10% significance
level. This variable represents the opportunity to carry
forward unspent public funds in a given year (indicator
of high public finance?).

9.  Universities-assets-ownership-variable has negative
and significant sign contradicting the previous
expectations (the universities’ property can be a
substitute for private funding sources?),
 Pursuing the business activity and lack of inside
control of government in universities are about the
limits of confidence interval, which may raise some
doubts about the sustainability of the identified
dependencies (so we repeat the estimation for 12
old EU countries and the last variable turns out to be
insignificant).

10.  Beneficial impact of financial autonomy on the university
funding diversity does not determine the direction of the
relationship.
 The study confirms the importance of financial autonomy
for the diversification of funding sources for universities,
especially for greater utilization of private funds.
 The diversification should be positively affected by:
ensuring the mandatory funding by the state for the
university functions, permission for the pursuit of
business activity and exemption from control on
investments, revenues and costs exercised by special
units inside universities.