Prof.dr.sc.

Vesna Vašiček
Performance agreement: sources of
financing
Presentation contents
Performance agreement: sources of financing
• Background – past events
• Current state
• Future
Legal framework
• The Science and Higher Education Act (Official Gazette of the Republic of Croatia issue no.
123/2003, 105/2004):
1. University can be funded by:
▫ the funds of the founders,
▫ the state budget of the Republic of Croatia,
▫ the budgets of counties, towns and municipalities,
▫ the National Fundation for Science, Higer Education and Tehnological Development of
the Republic of Croatia,
▫ the income that its’ constitutional units earn on the market (e.g. from tuition fees, from
research, artistic and profesional projects and analyses conducted for companies and
legal entities)
▫ direct investment of individuals, companies and other legal entities,
▫ donations, and
▫ other sources.
2. Financing of science and higher education, in accordance with the provisions of this Act, was
set to be effective from 1 January 2006.
Period 2006.y. 2007.y. 2008.y. 2009.y. 2010.y.

funds amonut % amount % 07./06. amount % 08./07. amount % 09./08. amount % 10./09.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

The state budget - lump

992.569.036,71 52,64 1.062.718.821,03 52,69 107,07 1.154.293.960,78 51,73 108,62 1.204.647.775,60 53,46 104,36 1.214.944.543,00 53,19 100,85
sum

The state budget - apart

314.086.725,22 14,08 306.413.191,40 13,60 97,56 384.026.004,00 16,81 125,33B
from the lump sum
232.495.216,95 12,33 195.207.071,32 9,68 83,96 164,54
The budget of counties,
towns and 7.113.631,00 0,32 11.549.027,00 0,51 162,35 7.322.680,00 0,32 63,41
municipalities

The owner revenue 658.776.224,00 29,52 626.206.753,00 27,79 95,06 606.615.541,00 26,56 96,87

578.345.852,00 30,67 683.383.230,00 33,88 118,16 98,60

Donations and other
15.064.187,00 0,68 26.843.678,00 1,19 178,20 19.773.150,00 0,87 73,66
sources

Loans 82.212.988,34 4,36 75.636.519,65 3,75 92,00 82.079.805,00 3,68 108,52 77.642.780,00 3,45 94,59 51.440.681,41 2,25 66,25

100,0
Sum 1.885.623.094,00 100,00 2.016.945.642,00 106,96 2.231.414.533,00 100,00 110,63 2.253.303.205,00 100,00 100,98 2.284.122.599,41 100,00 101,37
0
Proposal of Budgetary Funds and Their Allocation

• The state budget funds allocated to the University shall be remitted as a lump
sum.

• University shall distribute the lump sum according to the their budget of each its’
constitutional unit, to particular cost items, in accordance with the Statute and
decisions of Senate.

• Universities and their constitutional units shall be funded from the state budget
taking into consideration available funds and guality of these institutions, paying
attention to whether their capacities correspond to the needs for education in the
particular scientific area.
Proposal of Budgetary Funds and Their
Allocation
• Apart from the lump sum, the following shall be funded from the state budget:

▫ the amounts for the scientific projects’ financing,

▫ collaborative scientific programmes,
▫ associate employment positions, and
▫ purchase of scientific equipment

• Resources for the capital investment are

▫ secured partly from the State budget, and partly from
▫ the income of the University and its’ constitutional units
Implementing proces of Lump Sum
• Transmission of the duties and responsibilities from Ministry of science, education and sports to
University is rather slow.

• It is not clearly defined, through legal documents (acts and provisions), which items are included into the
lump sum.
• Some activities are funded apart from the lump sum.

• The result of the abovementioned is that:

▫ full transmission of the duties and responsibilities from Ministry of science, education and sports to
University has not been made transparent
▫ management and desicion making processes are made somewhat difficult
▫ some of the responsibilities are not clearly divided between Ministry of science, education and
sports and the University (e.g. University decides about the new contract with employees but
Ministry of science, education and sports decides about their salaries)

• Consequences:
▫ Autonomy of University has been reduced
▫ Functional and financial integration processes have been minimized
▫ The developing activities have been slowed down
Implementing proces of Lump Sum
• Capacity of the University and the capacity of the Ministry of science, education
and sports:
▫ Insufficient sources for financing all the activities needed
▫ Non- existing IT infrastructure
▫ Insufficient number of employees and inadequate financial support and award
for their education
• Organizational structure specifics:
▫ Large number of the constitutional units (33)
▫ The expressed autonomy of constitutional units
▫ Development of different and specific means of financing
Financing issues of today
• The expressed trend of stagnacy and decrease of state budget funds

• The process of decentralization of higher education:

▫ Through founding new public faculties, schools for higher education, and
campuses, all to be funded from the same resources as the University has been.
▫ Result: the “same” amount from state budget shall be divided into larger number
of units

• The global trend – recession

▫ GDP decrease
▫ Deficit increase
▫ Amount from state budget asigned for the education needs has not increased

• The students’ requests regarding tuition fees reduction and students’ standard
increase
The future
• Change in legislation – new acts’ proposals: The University Act, The Science Act,
The Higher Education Act
• The critical opinion regarding the drafts of the aforementioned legislation
• Performance agreement:
▫ acceptable framework for issues regarding the financing
▫ offers the possibility for determining the complete and absolute amount of all the
University acitivities financed from the budgetary funds
Performance agreement contents
• Activities:
▫ Studies programe and education,
▫ Science and research
▫ Life-long learning
▫ Mobility of teaching staff and students

• Mission – vision - strategic plan – activities – performance indicators

• Performance indicators
▫ The aproach for result measurement
▫ The basis in the negotiation process
Performance agreement contents
• Established in a three-year advance period
• Consists of two parts:
▫ Basic budget
▫ Formula based budget - the amount apportioned to university shall be
calculaced in accordance with the calculated qualitative and quantitative
indicators.
• The universities shall be free to dispose of their global budget as they see it fit their
needs, within the limits of their duties and the performace agreements.
Financing from the owner revenue and from the
third party
• The university (and their units) shall report for the receipts from third-party and for
the investment income, but
• those receipts remain at the disposal of the university and shall not reduce the
portion of the state allocations.
• Internal rules of financing should determine the way of earning and allocating
universities’ (and their units’) own revenues
• The emphasised principles: transparency and comparability
Advantages
• The longer period for planing and making long term desicions
• Financial stability improvement
• Financial autonomy under the reliable framework (duties and
indicators)
• Higher degree of accountabilitiy and responsibility of the University
Preconditions and activities (1)
• Defined level of functional and organizational integration of the
University
• IT support – the integral operations system that supports
planning,control and reporting
• Regulation on financing brought as an internal act that sets
▫ Internal relations on the University
▫ Relations of the University towards the Ministry of science, education and sports
• The development of University’s own quality system
• Internal and external performance evaluation
Preconditions and activities (2)

The Ministry od science, education and sports and The Government

shall enable:
• Transparent and clear financing of all universities
• Assuring the budget amounts, according to the signed program agreement –
warranty that the funds are to be secured and payed out to the University