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MINISTRY OF EDUCATION

A NEW FUNDING FRAMEWORK: HOW GOVERNMENT GRANTS ARE ALLOCATED TO PUBLIC HIGHER EDUCATION INSTITUTIONS

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Income sources of public higher education institutions The new funding framework: an overview Division of the government budget for higher education into categories of grants Teaching input grants Teaching output grants Research output grants Institutional factor grants Moving from current to the new funding framework

February 2004

1

INCOME SOURCES OF PUBLIC HIGHER EDUCATION INSTITUTIONS

The diagram below offers a broad summary of the ways in which funds flow to public universities and technikons in South Africa.

Diagram 1: Sources of funds of public higher education institutions
Government grants 50%

Student tuition & other fees 25%

Annual funds for public higher education 100%

Other private income 25%

The proportions reflected in the diagram are averages for the system as a whole. These proportions can differ widely between institutions. For example, government grants as a proportion of total income can be as low as 35% if an institution is able to raise large amounts of private funds through research contracts, donations and investments and can be as high as 65% in the case of institutions which are not able to generate substantial amounts of private income. The Ministry of Education has direct control over only government grants to public universities and technikons. The Ministry furthermore takes no account of income raised from student fees and other private sources when distributing government grants to individual institutions. These institutions are however required, as public entities, to submit to the Ministry annual financial statements which reflect all expenditures and all income from all public as well as private sources. This paper explains how the Ministry of Education

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