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Performance Based Financing in Higher Education

April 11, 2012


Developing Higher Education Funding Agreements – a Policy Option for Croatia

The Government of Croatia and the World Bank have successfully cooperated in various areas related to education and science. Since 2010/11, this also includes Technical Assistance for Higher Education with a focus on modernizing how universities are financed.

The power of funding instruments has been recognized by national governments in Europe: Funding models are changing – trends like lump-sum budgeting, formula funding, performance or target agreements occur in many countries, gradually replacing “traditional” models based on line-item and incremental budgeting.

The idea behind performance- based financing (PBF) is that universities receive state budgets as flexible lump-sums and through incentive-oriented instruments like performance agreements or formulas, linking budgets with performance. These instruments are also used inside universities to allocate money.

In February 2011, the World Bank and the Ministry of Science, Education and Sports (MoSES) organized a workshop on Performance-based financing and the European experience with PBF for Croatian universities. In early July, a second workshop, this time on testing and implementation of funding agreements (FAs or Performance Agreements, PA) was convened by MoSES and the Bank. The workshop involved the leadership of most public universities in Croatia. All participants agreed to go ahead with the proposed model of FAs, as a basis for future budget allocations and to test the model.

Subsequently, three Croatian universities have developed ‘Roadmaps’ towards FAs, covering topics like strategy development, human resources and data collection. In March 2012, the Bank team visited these universities to provide feedback and recommendations for their further development.

On this webpage you can find and consult documents resulting from the World Bank-supported PBF work in Croatia in 2011 and 2012.

EVENT 1: Performance-Based Financing – Experiences
from Europe, Developments in Croatia
Place and Date: Dubrovnik, February 17-18, 2011
Hosted by: University of Zagreb's Center for Advanced Academic Studies, Dubrovnik

A workshop on higher education financing and the European experiences with Performance-based Financing, organized by the World Bank, the Ministry of Science, Education and Sports, and the University of Zagreb, took place on February 17-18, 2011 in Dubrovnik, with the participation of over 60 key Croatian higher education stakeholders. The workshop was very successful in creating a space for open and honest discussion about the funding challenges facing the tertiary system in Croatia, providing a forum for learning about Funding Agreements as a strategically important reform option for higher education financing, and exploring the experiences of model systems, including those of Germany, Denmark, and Austria.

EVENT 2: Workshop with Rectors of the Croatian Universities and the Ministry of Science, Education and Sports (MoSES) on Piloting of Performance-Based Financing
Place and Date: Zagreb, July 4, 2011
Hosted by: The World Bank Zagreb Office

This workshop with rectors of the Croatian universities and the Ministry of Science, Education and Sports (MoSES), hosted by the World Bank, was used to reach agreement with MoSES and universities on the plan for piloting of Funding Agreements, including the scope, the number of piloting universities and the timeline.

It was followed by a smaller workshop on July 5, 2011 at which the World Bank team and the leadership of the University of Zagreb discussed the specific situation of this institution with regard to future Funding Agreements.

EVENT 3: Workshop on Performance-Based Financing - Next Steps
Place and Date: Zagreb, October 10, 2011
Hosted by: University of Zagreb

This workshop on Performance-based Financing / Funding Agreements, hosted by the University of Zagreb and attended by rectors and key staff of the universities (20 participants), was used for discussing: (i) “Roadmaps” towards Funding Agreements for individual universities; and (ii) “Rules of the Game”, i.e. basic principles according to which Funding Agreements between MoSES and universities can be established in the future. As a next step it was agreed that “Roadmaps” towards Funding Agreements at individual universities would be prepared  by participating universities and sent to the World Bank team for comments.

Performance-Based Financing of Universities - Visits to the Universities that Prepared the Roadmaps
Place and date: Visits to Split, Zagreb and Osijek, March 5 - 8, 2012
Hosted by: University of Split, University of Zagreb and University of Osijek

The World Bank team held workshops at the universities that prepared draft “Roadmaps” towards Funding Agreements – University of Zagreb, University of Split and University of Osijek – to provide direct feedback on draft “Roadmaps” and discuss open issues with main institutional actors. At each of the three workshops, between 10 - 20 members of the rectors team and key staff involved (e.g from the administration and financing committee) participated in the discussion. The discussions focused mainly on the development of university strategies as a key condition for the introduction of Performance-based Financing on both the macro level (Funding Agreements between the Ministry and individual universities) and the micro level (Funding Agreements between the central level of universities and faculties). Following the visit, the World Bank team prepared recommendations for each individual university, based on the "Roadmap towards Funding Agreements" which had been produced by the universities and discussions during the visit.

DOWNLOAD: Documents and Presentations from all 4 events