31 марта 2016г.
Abstract: In recent years, financial management mechanism for higher education has always been renovated to meet development requirement. A series of documents on innovation of financial mechanism have been enacted by the government. The goal of financial mechanism innovation is to improve the training & researching quality of educational institutions, contributing to the quality improvement of human resources, as well as the sustainable socio-economic development.
Since 2002, Vietnam national universities Hanoi (VNU Hanoi) has established a financial autonomy scheme and was one of the unit piloting financial autonomy mechanism under Decree 10/2002/ND-CP. Based on the results achieved, as soon as Decree 43/2006/ND-CP was launched, VNU Hanoi had implemented and authorized financial autonomy for universities and its non-business public units. Additionally, VNU Hanoi collaborated with Ministry of Finance to build a piloting project of financial mechanism for basic sciences ordered by the government as per the Conclusion No. 37- TB/TW dated May 26th 2011 of the Ministry of Politics. VNU Hanoi also has published specific guidelines for implementation of Decree No. 16/2015/ND-CP on autonomy mechanism for non-business public units.
This article would focus on analyzing current problems in the implementation process of financial mechanism innovation and propose some solutions to improve the financial mechanism associated with quality target at VNU Hanoi.
Keywords: Financial Management Mechanism, VNU Hanoi.
1. Overview of VNU Hanoi
VNU Hanoi was established in 1994 and the government issued a Decree on Vietnam national universities and the Prime Minister issued the regulations on organization and operation of VNU (Decision No. 16/2001/QD-TTg dated February 12th 2001; Decision No 26/2014/QD-TTg dated March 26th 2014). After 20 years of development, the model VNU has gradually been strengthened, expanded and established some specialized universities and research institute members. VNU in general and VNU Hanoi in particular have witnessed a growth of its position and role in higher education system to become one of the leading - multidisciplinary training center nationwide.
The training scale has been on increase, especially scale of postgraduate education; the scale of full-time training program has been maintained constantly, while the scale of part-time one has been reduced. In VNU, there is a total of 312 curriculums including 85 for bachelor degree, 126 for master's degree and 101 for doctor degree. Bachelor curriculum of science talent with high quality and international standard is on the growth in terms of quantity and scale, and becoming the formal training system of some majors such as basic science, high technology, key economics and societies.
Since 1997, VNU has been the first to take the initiative and organize a successful pilot bachelor of talented science and honor training programs to reach regional and international standard. Many bachelor training programs have been accredited widely according to international standards (by ASEAN University Network). In 2014, QS, a prestigious ranking organization in the world, ranked VNU Hanoi in top 170 universities in Asia, and the first among Vietnam universities. In 2015, VNU Hanoi is ranked the first of Vietnam in QS, Scimago, URAP, Webometric, 4ICU.
The research-oriented multidisciplinary university model with high autonomy of VNU Hanoi has been formed and developed. The management mechanism of VNU Hanoi based on the new model has been established more clearly; it has had a high autonomy in university governance mechanism; the open mechanism with many linkages has positive influences on improving the quality and operational efficiency. However, the innovation of financial management mechanism in VNU Hanoi is considered to be essential toward the target of transforming VNU into an advanced university, reaching international standards.
2. Contents of innovation in financial management mechanism at VNU Hanoi: The model of financial management at VNU Hanoi
As an accounting unit level I, VNU has a high autonomy in financial activities such as:
(i) To directly receive target and budget from Ministry of Planning and Investment and Ministry of Finance; to be prioritized for investment by the government;
(ii) To manage, administrate and allocate budget to subsidiary units in compliance with the model of VNU Hanoi
(including universities, schools and training centers; researching institutes and centers and service units);
(iii) To self-build criteria and cost norms for the whole VNU uniformly; decentralize responsibility for affiliated units in building cost norms toward the direction of saving administrative cost, increasing the expenditure for professional tasks that contribute to the quality improvement of training and scientific research.
VNU Hanoi now has 3 levels in financial management under the finance autonomy mechanism, namely:
Level I: It is the level that is supported by the state budget to ensure its regular operations in order to maintain and operate management macro level; this level has revenue of below 10% of the government budget, by units submitting tuition revenues to conduct management and administration tasks (VNU Hanoi Headquarter);
Level II: It is the level which is supported 50-60% by the state budget for training and supporting training activities, including university members and affiliated departments;
Level III: It is the level which must cover the full cost for regular operation by itself. The level includes publishing & printing unit, technology transfer service units.
The decentralization of financial management in one hand helps VNU Hanoi coordinate the state budget from surplus units to missing units for central tasks assigned by VNU, and help its members get actively involved in expenditure plan under the law and regulation on internal expenses of the unit in order to use the funds efficiently and improve training quality.
Contents in innovation of financial management mechanisms at VNU Hanoi are as follows:
a) Managing budget associated with requirements of output:
- Promulgating guidelines for making plan and cost estimation based on activities and outputs (setting target, action plan and content, product and essential resources) to be the basis of budget allocation as per tasks and targets;
- Gradually building up the output index to assess performance result and efficiency of investment in order to improve quality. For example, the output index of the project establishment and development of professions with international standards of technology activities should be formulated.
b) Allocating budget based on the task and workload:
- Planning human resource, allocating personnel and payroll as per workload and actual tasks undertaken by universities and affiliated units. Rector of the university has the right to make decision on the recruitment and utilization of staff within the workforce and salary budget assigned. In fact, some units have been saving budget, use fewer manpower than target assigned to increase operational expenditure and income for staff;
- Allocating funds based on tasks and targets which have been registered and approved; based on the achievements of tasks and targets of the previous year (capacity of the unit).
c) Allocating funds based on the coefficient of training field numbers, giving coefficients priority to basic science with experiment and fieldwork; giving priority to training fields with difficult enrollment.
d) Making the focused investment for some fields, specialized fields which have nearly similar conditions in training program, staffing, materials and some quality conditions soon reaching international level.
e) Allocating autonomy and strengthening decentralization for members about organization, structure, personnel and finance.
3. Existing problems and inadequacies
Shortcomings related to revenues and financial expenditures are common existing issues that public universities are facing during the implementation of innovative financing mechanisms. To be more specific:
First: Despite the financial autonomy, schools are not autonomous to determine tuition fees, and they have to
comply with the low ceiling of tuition as stated in Decree No. 49/2010/ND CP for a long time.
Second: The school must not self-determinate the enrollment quotas which match its capacities and real situations. These quotas annually have been allocated physically. In addition, the autonomous agencies are still managed the framework program closely, so the curriculum in schools are often similar, leading to the reduction in their competitiveness and enrollment ability.
Third: In the case of partial autonomy, the state also implements block grant mechanisms for each school with the shares which have not been associated with the assigned tasks, training and output quality. The budget allocation is still on average, depending on the ability to balance the state budget, thus not encourage dynamism, positiveness, motivation and competitiveness of universities.
Fourth: Universities with financial autonomy have not been fully autonomous on apparatus and payroll. Despite a joint circular issued by the Ministry of Education and Training and the Ministry of Home Affairs on the specific guidelines of autonomy, self-responsibility for performing the tasks, organization and staffing for units public service, this regulation has not been implemented uniformly in the reality. The ministries, branches and localities still impose its own regulations on the organization and payroll of their affiliated universities.
Fifth: Decree 43/2006/ND-CP defines that when the state adjusts the regulations on wages, raise the minimum wage, grade and position wage, as per the state’s regulation, the universities will ensure the autonomy of the business revenues by themselves. Thus, whenever there is a salary reform, the universities will have to cut down the budget of direct training activities to cover the raised salary, which directly affect training quality. Actually many schools are unable to cut large amount funding for the training. Under the provisions of Decree 43/2006/ND-CP and Circular 71/2006/TT- BTC, salary is not counted on regular expenses of business activities and services or earnings increased as internal spending rule. This expenditure must be accounted after tax. This makes the university’s financial problems more difficult for a long time.
Sixth: Despite being financially autonomous, universities still must comply with outdated technical and economic norms, and standards, which are irrational. Many technical and economic norms are still missing, but they are not allowed to build automatically by themselves. They are autonomous but the government controls both revenue and spending (to meet the training requirements and to ensure training activities in units which often exceeds revenue, or revenue is not in regulation, difficult to control).
For VNU alone, the current self-financing mechanism has some shortcomings as follows:
- VNU Hanoi manages budget based on outputs but the criteria and standards promulgated by the government are not adequate to evaluate the results of the activities, tasks and targets achieved;
- The government has not yet had a specific financial mechanism applying for the basic sciences. Therefore, some basic sciences of VNU are currently facing with human resource shortage, not attractive to students; and the training quality tends to decline;
- VNU Hanoi has not developed specific financial mechanisms to promote a greater autonomy;
- The current physical facilities of VNU Hanoi do not meet the operational requirements and development of VNU Hanoi.
4. Some measures to implement innovative financial mechanism associated with quality target at VNU Hanoi
- Applying radically the principles associated with output in management and allocation of financial resources;
VNU Hanoi develops and submits to the government for the adoption of specific financial mechanisms for VNU as per the content and schedule;
- Proposing financial mechanisms applied in the form ordered by the State for the basic sciences: The government promulgates mechanisms to ensure that VNU Hanoi recruit and use trained manpower; promulgate preferential policies for lecturers and students. It should be implemented immediately for some highly specific fields;
- Proposing financial mechanisms for high quality training and training of talents. At first, applying investment mechanism to ensure adequate resources for the implementation of international training programs should be applied; at the same time, increasing tuition for high quality training programs being tested and acknowledged; Universities are autonomous in decisions using financial resources especially in terms of attracting and treating staff;
- VNU implements the restructure of the decreasing state budget and increasing tuition fee for fields which are highly potential to be socialized;
- VNU receives total financial resources toward a roadmap.
Conclusion
Nowadays, the issue of innovative financial mechanism associated with quality target is not just a matter of VNU Hanoi only, but a question to all public universities in the higher education system of Vietnam.
The implementation of innovative financial mechanism will lead to a fundamental change in university governance; the university will have to access methods of corporate governance, which associates training quality with attracting student and the university’s revenue; it will create an environment for fair competition among public universities, between public universities and non-public foreign universities in the direction of an decrease in tuition fee and increase in training quality, then establishment of a market for training high quality human resource.
With the content of innovative financial mechanism which has been implemented at VNU Hanoi, it could be stated that VNU is one of the pioneers in the implementation of innovative financial mechanism. However, because of its unique organization structure, VNU Hanoi must have its own method to ensure the effectiveness of financial management and the target achievement. To make these proposed solution be fully feasible, VNU Hanoi must get the support of the government and the ministries on: (i) Specify guidelines and orientations of the state on the prioritized investment to meet the requirements of VNU Hanoi, especially the targets and plans in 5-year development plan and development strategy VNU Hanoi up to 2020 and vision up to 2030; (ii) Approve and allow VNU Hanoi to apply specific financial mechanism;
(iii) The ministries submit to the government the allocation of sufficient capital under construction progress and allows to apply mechanism of mobilizing non-state capital for constructing VNU Hanoi in Hoa Lac.
List of references
1. Ministry of Finance and UNDP (2011), Proceedings of Workshop on Innovate Financial Mechanism for Educational Institutions Public University, Hanoi.
2. Final annual reports on organization, operation and finance of VNU.
3. Phung Xuan Nha, Pham Xuan Hoan (2012), “Deficiency in Investment in Early Education: the Second-best Optimal Investment Levels of Education and Human Capital Later print”, already submitted to and being reviewed by the Singapore Economic Review.
4. Razan, R., (2012), Higher Education Governance in East Asia, background paper for the World Bank in 2011 the prepared.
5. World Bank (2012), Promoting efficiency of higher education, region report.
