This chapter outlines how the Government proposes to finance the new academic structure. The Government invests heavily in education and will continue to do so to meet the needs and challenges of a knowledge-based society. The new academic structure will incur very substantial resources and bring sustained benefits to Hong Kong, but only with shared commitment by the whole community.
Original proposal
12.1 The Government originally estimated that about $6.7 billion is needed to meet capital, developmental and transitional costs of the new academic structure over ten years, and that the UGC-funded institutions would require an annual recurrent cost of about $1.8 billion to run an additional year of undergraduate programmes to sustain the new academic structure. In the light of the heavy financial investment needed and the financial constraint of the Government, a shared funding model was proposed through which the parents and students will share by paying higher tuition fees for tertiary education, and the community will share through the general revenue of the Government.
12.2 Independent of the development of the new academic structure, the Government has indicated the need to gradually bring the senior secondary school fee level back to 18% of recurrent cost according to the prevailing policy as compared to the existing cost recovery level at about 15%.
12.3 It is the Government’s commitment that no student will be denied the opportunity to study due to lack of means. Financial assistance will continue to be provided to assist needy students, and the Government will explore new arrangements in the student financial assistance schemes to facilitate students’
continuing study.
Support
12.4 While any proposed increase of tuition fee is deemed controversial, the principle of the shared funding model is generally supported insofar as the tuition fee level is reasonably set and is affordable for parents and the community.
Concerns
12.5 On the annual university tuition fee level at $50,000 (at 2005 prices) indicated in the Main Document, there is concern that the tuition level is high, and that it is now too early to set the tuition level to be applied only upon commencement of the new 4-year undergraduate programme after 2012.
12.6 With the senior secondary school fee level brought back to 18% of recurrent cost and with the proposed university tuition fee for the 4-year undergraduate programme, parents are generally concerned that their financial burden in the future will be significantly heavier than now. The pressure on low-income families will be particularly felt.
12.7 In the case where tuition fees must be increased, general feedback is that the increase should be effected in a gradual manner, and more financial support should be provided to students in need, including more scholarships for students and more flexible loan repayment arrangements.
12.8 There are requests that more resources be set aside for the new academic structure, in addition to those indicated in the Main Document, for schools
to prepare for and migrate to the new curriculum, including minor school-based modifications of special rooms and laboratories to meet different subject requirements;
to arrange teacher training during the preparation years; and
to hire sufficient teachers for flexible groupings of students for some NSS subjects, like Liberal Studies, and to provide for more diversified learning
for students at schools.
The Way Forward
The Shared Funding Model
12.9 The principle is generally accepted that the community and the parents of students who are going to benefit directly should share the costs of the new academic structure. The key consideration is what level of tuition fee is generally considered as reasonable and fair share.
12.10 It should be noted that the annual university tuition fee level at $50,000 (at 2005 prices) stated in the Main Document (compared with the existing tuition fee level of $42,100) is indicative in nature, showing what may be the reasonable and affordable tuition fee level for tertiary education. On the basis that a shared funding model is accepted in principle by the community, the Government will review the tuition fees for the new undergraduate programme nearer the time.
12.11 The Government will review the current arrangements of the student financial assistance schemes including the assistance level, and the loan and repayment arrangements, to ensure that no students will be deprived of the opportunity of learning due to lack of means. We will conduct a public consultation on the proposed tuition fee level for the new 4-year programme and the corresponding changes to the student financial assistance schemes, before we come to a final view on the tuition fee level in the last quarter of 2011 at the latest for implementation in the 2012/13 academic year.
12.12 While the current policy of setting 18% of recurrent cost for senior secondary school fee is independent of the decision to move to the new 3-year senior secondary programme, the Government will give due regard to the affordability and the pace of adjustment of the school fee. Government will bring the senior secondary school fee level back to 18% of recurrent cost at a measured pace, tentatively over a period of four years starting from the 2005/06 school year.
Funding requirements Recurrent funding
12.13 Assuming that the tuition fees for the new 4-year undergraduate programme were set at $50,000 per annum (at 2005 prices), and that the tertiary institutions are to achieve maximum cost efficiency in the provision of the additional year of undergraduate programme taking into account economy of scale and new learning approaches of an integrated programme, the Government is prepared, under a shared funding model, to provide about $1.1 billion on a recurrent basis upon full implementation of the new academic structure to meet the additional funding requirements of the tertiary institutions, while the parents will contribute about $0.7 billion through tuition fees.
12.14 As for the school sector, there has been a misconception in some of the feedback received that the funding model proposed by the Government is to redirect resources freed up from the projected decline in secondary student enrolment to fund the 4-year undergraduate programmes. This has never been the Government’s intention.
12.15 Indeed, we have been planning on the basis of redeploying recurrent savings arising from the projected decline in secondary student enrolment and reduction in the number of classes to finance a number of new initiatives to support and sustain the NSS, including the following:
to facilitate school arrangements for flexible student groupings, in particular for the learning and teaching of Liberal Studies (see Chapters 4 and 11);
to support schools in offering diversified courses and learning opportunities to their students (see Chapters 5 and 11);
to support schools in catering for student diversity, including those with special educational needs (see Chapters 6 and 11); and
to improve the teacher-to-class ratio for senior secondary levels after the
double cohort year (see Chapter 11).
12.16 We estimate that upon full implementation of the new academic structure in 2015, the above improvement measures would cost about $900 million on a recurrent basis. Funding-wise, the additional financial requirements will be met by savings from the reduction of number of class when secondary student population declines progressively, and by ensuring viable school class structures in the coming years (para. 11.21-11.25). Because of these improvements and declining student population, we expect a higher unit cost for senior secondary education, which would have an impact on the level of tuition fees under the existing cost recovery policy.
Non-recurrent funding
Capital works
12.17 We estimated in the Main Document that about $3.4 billion will be required for the construction of additional complexes and facilities to accommodate undergraduate students pursuing an extra year of study. While the UGC-funded institutions have yet to finalise their plans, it appears that the original estimate is on the low side having regard to site constraints in some institutions and complexity of large-scale campus developments. Each project will be justified on its individual merits and technical feasibility, and subject to availability of land and resources as well as funding approval by the Finance Committee of the Legislative Council. We will also continue to encourage the institutions to seek private funding for their ongoing campus development and enhancement works.
12.18 For the school sector, some modification work to the physical structure of schools would be required to provide suitable accommodation for flexible grouping of students for certain NSS subjects, including Liberal Studies.
Some training centres currently operated by vocational training institutions would also need to be renovated to support diversified learning and COS.
12.19 Taken together, we now estimate that a capital expenditure of about $3.5 billion would be required, or $100 million above the original estimate.
Non-works expenditure
12.20 Additional resources will also be allocated for the one-off development and transition costs over the years leading to full realisation of the NSS. The UGC-funded institutions would require about $550 million to prepare for the changes in curriculum, for revised student admission procedures and other necessary preparation, including engaging additional academic, administrative and professional staff.
12.21 Having reviewed the level of resources for the NSS and considered feedback from the public, in particular from the school sector, we propose to earmark additional resources for the NSS on top of those indicated in the Main Document. This includes $1.7 billion non-recurrent funding before the NSS is put fully in place for a number of new initiatives, including:
professional training for teachers on the NSS and assessment, particularly school-based assessment;
cash grants for schools to arrange for an NSS co-ordinator to help co-ordinate the change process, provide training relief to release serving teachers to attend professional training, procure services that can increase the professional capacity of teachers, procure learning and teaching materials and other necessary equipment for migration to the NSS (see Chapter 11);
developing, accrediting and piloting diversified learning and career-oriented studies; and
NSS curriculum development.
12.22 Taken together, we estimate that a non-recurrent non-works expenditure of about $4.4 billion would be required, including about $1.9 billion for additional senior secondary school places for the transitional years, particularly the double
cohort year. This is about $1.1 billion above the original estimate.
12.23 The Government will seek necessary funding approval, and will ensure that resources will be deployed in the most effective ways to best serve the interest of students.