Pre-investments: a recipe for failure

By Yvonne van de Meent

In this second part in a series of investigative stories, we find out why students have hardly noticed the results from pre-investments

• Research and applied sciences universities promised to invest 600 million euros in better education, in anticipation of the release of the bursary millions.
• The money was there: before the basic grant was abolished, the academic institutions had bolstered their collective reserves with 700 million euros.
• The pre-investments were supposed to provide the first students who were no longer eligible for a study grant with better education, ‘a delusion from politicians,’ university administrators say.
• Agreements on pre-investments were kept vague on purpose.
• The annual reports from research and applied sciences universities scarcely provide any information about where the money from pre-investments came from and what it was spent on.

Since 2015, students who can’t rely on a financial contribution from their parents to cover their study expenses, are forced to accumulate large debts. But they will have education of a higher quality than their predecessors who were still entitled to a basic grant were provided with. This was the promise made by minister of education Jet Bussemaker (PvdA) back in 2015 in her Strategic Agenda The value of knowledge. The hundreds of millions that the abolition of the basic student grant would generate each year was to be used in full to improve education.

The money allows research and applied sciences universities to recruit four thousand extra teachers, tutors and coaches. That will lead to more intensive and smaller scale learning: fewer lectures for large groups, more instruction lessons, more individual feedback and personal supervision. The introduction of the loan system is not a blunt spending cut, but a targeted quality impulse.

Large reserves
There is just one small problem: the bursary millions only became available in small bits as of 2018. This means that the first generation of loan system students would not benefit from the quality impulse. That is why research and applied sciences universities agreed with the minister to invest €600 million from their own reserves in education between 2015 and 2017. The money was there: in 2012, 2013 and 2014, the research and applied sciences universities had accumulated a total sum of €700 million in reserves.

‘It’s not that easy to recruit new teachers’

600 million euros extra sounds like a lot of money, but in reality it’s only 280 euros per student annually, just a fraction of the amount loan system students miss out on. In 2015, students who still lived with their parents received a basic grant of 1.233,24 euros; students living away from home received 3.433,80 euros. But the first generation of loan system students would benefit from visible improvements in education, despite the modest sum of the pre-investments, the minister promised.

“A delusion from politicians,” Paul Rüpp angrily says five years later. The board president of Avans University of Applied Sciences expresses a widely held opinion among administrators at research and applied sciences universities. The promise to free up 600 million euros was necessary to convince the House of Representatives, and to secure the millions of euros from the basic grant for higher education. “The minister simply demanded from us that we would prefinance the promises she had made to students,” Rüpp says. “Impossible to implement in practice, because you can’t improve education overnight.”

Minister Bussemaker’s promise that the millions from the basic grant would also allow research and applied sciences universities to recruit four thousand extra teachers, didn’t go down well with administrators at all. “It’s not that easy to recruit new teachers, you need a plan first, you need to know how and where you want to use them. Setting up a plan like that takes time.”

No firm commitments
he associations of research and applied sciences universities tried to control the damage by formulating the promises about pre-investments in the vaguest possible terms. What they wanted to prevent in any event, was the making of firm commitments about the recruitment of extra teachers or more contact hours to which individual institutions could be held accountable. 

The Association of Universities in the Netherlands (VSNU) spoke of investing in ‘higher-quality, more intensive education and facilities that are in line with a higher education that is internationally competitive.’ The VSNU believed that the universities could also free up money by making ‘rearrangements within their budgets.’

• Translation of this infographic: See in this map what your university or university of applied sciences says it spent on pre-investments and what that meant for its financial position and student-docent ratio. Click on the city or region of the university or university of applied sciences for more information.
• Read below under the heading ‘About this research’ how we collected the information for this map.

The Groningen example
The University of Groningen claims to have freed up a total sum of 18 million euros for pre-investments, which amounts to 207 euros per student annually. 5 million euros were intended for the development of new Master’s tracks, which had originally been budgeted at 30 million euros. Thanks to the pre-investments, the budget was raised to 35 million euros, the university board claimed.

The rest of the money supposedly went to the renovation of the university library. Not the kind of investment that immediately comes to mind when you think about the improvement of education. But the quality of the learning environment has an effect on learning results, and that is why research and applied sciences universities counted ‘modernizing the infrastructure’ among the ways to improve education.

Old wine in new bottles
Jasper Been together with a number of like-minded people founded the student movement Democratische Academie Groningen (DAG) in 2017. Been represented DAG in the university council in the academic year 2017/2018, and therefore had access to all policy documents about pre-investments. He ploughed through all documents from the period 2014/15 and discovered that the RUG had set aside 35 million euros for the development of new Master’s tracks in March 2014 already. Months before national agreements about pre-investments were made. The renovation plan for the university library – including the 2,200 study places – was even drawn up in January 2014.

‘You’re allowed to include the things that you already do to improve education quality’

The RUG apparently presented old plans as new pre-investments, the DAG researchers concluded in their web publication Hoe de RUG haar beloftes brak en jij geen beter onderwijs kreeg (‘How the RUG broke its promises and you didn’t get better education’). The RUG failed to do anything extra for the first generation of loan system students.

With the minister’s approval
Jasper Been decided to confront the executive board with these findings during the university council meeting of March 2018. “And we were allowed to! We had the minister’s approval,” executive board president Sibrand Poppema said. According to him, minister Bussemaker said during a verbal consultation with the Association of Research Universities, of which Poppema was vice-president, that previously made expenditure plans could also be regarded as pre-investments.

“You’re also allowed to include the things that you already do to improve the quality of education. You can count buildings, you can count anything and everything,” the minister supposedly said. “I remember very well that we were in the meeting and said: well, if that’s how things stand, we have no problems agreeing to those pre-investments.”

Minister Bussemaker was worried about the large reserves

Other universities applied similar broad definitions of pre-investments. In 2015, the University of Twente listed 1.3 million euros in expenses for its new Designlab as a pre-investment, even though that laboratory had already officially been opened by minister Bussemaker in the previous year. Wageningen spent 5 million euros – at the request of students – on a sports hall that also functions as an exam hall. And VU Amsterdam claims that the 27 million euros it spent on the new building for its science departments is in fact a pre-investment, even though that building didn’t open its doors until February of last year. By that time, the first loan system students had already obtained their Bachelor’s diploma.

Hoarding money
Even though the research and applied sciences universities weren’t exactly strapped for cash, they refused to put down in writing any promises about the level of pre-investments at individual institutions. They were once again guided by the fear of being held accountable. But minister Bussemaker was worried about the large reserves. Institutions in higher education had been hoarding their money and saw their capital grow from 1.1 to 1.7 billion euros in the period between 2009 and 2014. In university education, capital grew from 2.8 to 3.4 billion euros. Bussemaker was afraid that political support for pumping back the millions from the basic grant into higher education would dissipate if the hoarding didn’t stop. During closed meetings with administrators and supervisors, she urged them to stop setting aside money for prestigious construction projects and to spend it on education instead. Use the accumulated reserves as pre-investments, was her message.

At first sight, it appears that the thirteen research universities and twelve major universities of applied sciences we investigated listened to the minister’s appeal. Their annual reports show that the 25 institutions under investigation collectively earmarked 642 million euros for pre-investments. On average, they appropriated 343 euros per student, almost 60 euros more than promised.

• Translation of this infographic: The amount that universities of applied sciences have pre-invested seems totally random and not related to their financial position or student numbers. See how much your university or university of applied sciences pre-invested per student per year in the years 2015-2017.

The variation in pre-investments sums, however, is inexplicably large. The VU was by far the most generous institution with 1,132 euros per student, whereas students at the UvA came off worst with 109 euros. Avans leads the universities of applied sciences with 850 euros per student, and HAN University of Applied Sciences in Arnhem and Nijmegen finishes last with 85 euros per student.

‘Unlikely that the institutions invested the extra 600 million euros as promised’

These significant differences have nothing to do with the level of reserves. Amsterdam University of Applied Sciences has been at the bottom of the ranking when it comes to equity position for several decades, but it nevertheless claims to have freed up 78.7 million euros as pre-investments, which amounts to 570 euro per student annually.

The Netherlands Court of Audit
Practically none of the research and applied sciences universities – with a few exceptions – explain in their annual reports how they arrived at those pre-investment sums. The millions appear to have been chosen at random, and they also change over the years. In 2015, the University of Amsterdam, for example, claims that there is no money for pre-investments. Priority lies with keeping staff employed at the shrinking humanities department. A year later, however, the records suddenly show a pre-investment of 4.4 million euros that was supposedly spent in 2015.

The Netherlands Court of Audit, which investigated whether the research and applied sciences universities delivered on their promises, reached the conclusion in 2018 that it is unlikely that the institutions invested the extra 600 million euros as promised. Only one third of the 860 million euros presented by the research and applied sciences universities to the Court of Audit as pre-investment, was spent according to the original intentions, the researchers said. A sum of 280 million euros was recognized by researchers as actual expenditure on students who started their studies without a basic grant in the period from 2015 to 2017.

Growing reserves
Thirty percent of the presented pre-investments did not meet this requirement according the Court of Audit, and for the remaining 330 million euros it cannot be properly determined where the money came from and what it was spent on.

Research and applied sciences universities responded furiously. The Court of Audit was said to have used its own definition that didn’t correspond with the agreements made with the minister, and had therefore wrongfully rejected many pre-investments. It can’t be determined whether the Court of Audit researchers did indeed go about their work unreasonably, since the sub-reports about the individual institutions remain confidential until this very day, and because members of co-determination bodies who were allowed access to these reports are bound to confidentiality obligations

Our research shows that it is in any event unlikely that research universities drew from their reserves to make pre-investments. Collectively, they had 303 million euros to spare from 2015 until 2017. The reserves didn’t shrink, but grew.

• Keep an eye out for our next article: ‘How the bursary millions evaporated due to the increase in student numbers.’ 

Folia / Het journalistieke medium van de Universiteit van Amsterdam