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Procedia Social and Behavioral Sciences 15 (2011) 717–721

WCES-2011

Comparative analysis between the models for financing of education

in Romania and the United Kingdom
Nicolae Todeaa, Doina Maria Tileab*
Professor, Ph.D "1 Decembrie 1918 " University, Alba Iulia
Assistant Lecturer, PhD Student "Dimitrie Cantemir" Christian University The Faculty of International Business and Economics
Received date here; revised date here; accepted date here

Abstract

Our knowledge of the organization and financing of education in most major countries of the world, as an example and a way
for a better understanding of the progress achieved during the transition and directions to be followed to achieve compatibility
and standards system at our higher education worldwide.
International experience has shown that public financing of higher education, to meet present requirements, likely mixed:
- core funding, budget allocations, ensuring access to education, quality and consistency of teaching;
- additional funding obtained by the institution's own efforts and resources, other than the state budget.
Moreover, an important step in the reform process was a replacement funding budget chapters with overall funding of the
university-based institutional contract with the Ministry of Education. This change was a way to get better performance in
education and research through a better management of financial resources. Thus, the financing of public universities will be
determined by the performance and efficiency criteria.

Keywords: Core funding, additional funding, overall funding, budget and quality.

1. Introduction

Our knowledge of the organization and financing of education in most major European countries, as an example
and a way for a better understanding of the progress achieved during the transition and directions to be followed to
achieve standards and compatibility of our system with the European higher education (Eurydice, 2008).

2. Financing System in the organization of educational institutions in Romania

The basic law governing the organization and financing of education in Romania is the Education Law no.
84/1995 republished with amendments and completions. On this basis, education is organized into tiers, as follows:
Preschool, primary education (grades I-IV), secondary education (classes V-VIII), secondary and vocational
education, arts and crafts schools, higher education (university and postgraduate) (MECTS, 2010).
All levels of education up to university education is higher education.

* Nicolae Todea. Tel.:+40-074-561-1986; Doina Maria Tilea tel: +40-072-271-8240

E-mail address: ntodea@uab.ro; alinat75@yahoo.com

1877–0428 © 2011 Published by Elsevier Ltd. Open access under CC BY-NC-ND license.
doi:10.1016/j.sbspro.2011.03.171
718 Nicolae Todea and Doina Maria Tilea / Procedia Social and Behavioral Sciences 15 (2011) 717–721

The education law was established that public education funding is from public funds up to at least 6% of gross
domestic product (GDP).
When setting the level of public spending on education and reporting GDP annually were considered following
funding sources: state budget, local budgets, foreign credit inflows, the unemployment insurance funds, external
grants and own revenue of establishments and educational institutions.
Expenses are funded by state higher education institutions and other units directly subordinate to the Ministry of
Education, Research and Youth (school inspectorates, teacher, children and students palaces and clubs, sports
clubs, libraries, university teaching university sports clubs and other units with specific activities in the field such
as the National Agency for EU Programs in Education and Training, Institute of Education Sciences, etc..).
Educational actions within the responsibility of other ministries are also financed from the state budget, but they
have a low weight. By the Government for approval to the enrollment for state high schools and higher education
in the school / academic 2009-2010, the Government established the figure of tuition for the school year in view of
two components. On the one hand, the results of consultations with social partners in the field and on the other
hand, the detailed work plan for developing education and training systems in the European Union between 2001-
2010 and the Education and Training 2010 "which priorities in education refers to education, vocational training
and university education. As a member of the European Union, Romania is naturally relate to the most important
European trends in education. At the same time, the Government took into account national trends of social,
economic and enrollment quotas were set according to the forecast employment in developing regions.
By legislative act adopted, the Government provides the conditions of access to education for young people /
citizens of European countries in similar terms for ethnic Romanian and Romanian youth abroad. According to
GD, the school / academic year 2009-2010 will be for students of Romanian origin in the Republic of Moldova,
neighboring countries and abroad a total of 1,250 pre-school places and 1,650 places in public higher education.
Higher education institutions: universities are public or private non-profit, are apolitical and promote education
and research as public goods. University has the mission of creating, transmitting and using knowledge. In this
sense, it promotes learning, teaching, research and creativity in science, technology, arts and sport, contributing to
human knowledge and culture to ensure the personal development of beneficiary communities and the welfare of
society. In education, the university offers qualifications competitive labor market From 1 January 1999, funding
of public higher education institutions is carried out according to Art. No. 171 of the Education Act. 84/1995, as
amended and supplemented, on the basis of contracts signed between the Ministry of Education, Research, Youth
and Sports of the respective higher education institution, as follows:
- Contract to finance the institutional base for scholarship and social protection of students and to finance
investment objectives;
- Contract to fund additional research university, repairs, facilities and other capital expenses and subsidies for
housing and meals. Amounts of university research complement contained in the contract, the spread is an
exception from the regulations set by the rate of execution graphs, annexes to these research contracts.
The criteria for establishing the financing of public higher education institutions from the state budget funds
allocated for financing related to basic transport facilities are approved by the Ministry of Education, Youth and
Sports, taking into account the proposals of the National Council of University Research Funding Higher
Education (CNFIS) and National Council of University Research (NURC).
Core funding is made by the Ministry of Education, Youth and Sports to ensure the normal development of the
educational process at undergraduate and postgraduate level, according to national standards. Funds for
scholarships and social protection are reflected in the institutional agreement and allocated according to the
number of PhD students and full time who do not pay tuition. Financial resources allocated by managerial strategy,
public higher education institutions are filled with extra-budgetary resources.
Since 2002, the methodology for allocating the education budget allocations for basic funding is complemented
by a qualitative component, permanently updated during the period 2003-2007, the situation presented in Table 1,
where we presented the evolution of core funding period 1998-2007 European Commission, Education and
Culture. (2005).
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Table 1. Evolution core funding period 1998-2007

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

mil. Lei 137 173 269 376 467 617 833 952 1 159 1 537
re funding
mil. EURO
located according
137 106 135 145 149 164 205 263 327 439
the formula)

mil. Lei 137 174 270 380 477 633 847 1 041 1 175 1 560
tal core funding mil. EURO
137 107 135 146 153 169 209 287 332 446

mestic Product mil. Lei 37 380 54 573 80 377 116 769 151 475 197 565 246 469 288 048 342 418 401 287
DP) mil. EURO
37 436 33 388 40 346 44 904 48 442 52 613 60 842 79 551 97 118 99 993

are FB (spread over 0,37% 0,32% 0,34% 0,32% 0,31% 0,31% 0,34% 0,33% 0,34% 0,38%
mula) in GDP

Total Share in GDP 0,37% 0,32% 0,34% 0,33% 0,32% 0,32% 0,34% 0,36% 0,34% 0,39%

ro rate 0,999 1,630 1,996 2,603 3,126 3,756 4,053 3,623 3,540 3,500
nual average)

Source: Ministry of Education Database

Conform table set in 2006 and 2007, analysis of data at their disposal follows:
- Share of total funds allocated for education from GDP: 4.79% (2006) 4.96% (2007)
- Share of funds allocated for higher education in total GDP: 0.67% (2006) 0.68% (2007)
- Share of funds allocated for core funding of total GDP: 0.34% (2006) 0.39% (2007)

It may be noted that higher education pays attention to the entry into EU become a national priority, and observe
its performance after the period of 2004-2008, where GDP increased significantly 6% for education in 2008,
compared to 3.4% of GDP in 2004.

• 2008: 26.41 billion lei - 6% GDP

• 2007: 21, 25 billion - 5, 5% GDP
• 2006: 15, 20 billion - 4, 52% GDP
• 2005: 9, 98 billion - 3, 5% GDP
• 2004: August, 04 billion - 3, 4% GDP

In private education, financial resources are just extra, so in this case, accounting is more flexible and efficient.
Administration of extra-budgetary resources and their use is provided by each institution of higher education based
on income and expenditure budget, prepared under equilibrium conditions, in accordance with criteria established by
the Ministry of Education, Youth and Sports and with its consent (EU Council, 2006).
Revenue and expenses include financial resources for achieving the objectives of the strategic plan of each
institution of higher education during that financial year. Extra-budgetary resources of institutions of higher
education consisting of (National Institute of Statistics, Bucharest, 2002):
- Own revenues derived from fees and activities of institutions of higher education. The income from fees and
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activities of institutions of higher education means charges under the law of natural and legal persons, Romanian
and foreign income from the sale of courses and non-periodical publications, income from service, income from art
events and sport facilities rental income from external collaborative programs other than those financed by the
Ministry of Education Youth and Sports Research, and other incomes;
- Other own revenue: donations, sponsorships, and other grant amounts;
- Revenue from scientific research, design and consulting, operating on principles Treasuries. Such revenue may
come from research contracts concluded with legal entities (companies, National Authority for Scientific Research
and other legal persons concerned). Also, the income from research grants to include research and amounts obtained
by competition from the Ministry of Education, Youth and Sports;
- Income from micro, from experimental educational activity stations, botanical gardens, and specialized training
centers, publishers, operating on principles Treasuries.
- Revenues of hostels and canteens, including: revenue of directed home and cafeteria food value, household income
Annex in rental space and other own income homes and canteens.
The income and expenditure budgets of higher education institutions are under the following categories of
expenditure according to the types of financing, as follows:
- Core funding amounts, to cover the average costs of training and education relating to: personnel costs(Wages,
CAS, unemployment, health insurance, domestic and international travel) and costs for materials and services,
excluding expenditure on repairs and transport facilities to students, according to law;
- Expenditure on additional funding, secured from the state budget, intended for carrying equipment and other
capital expenses, repairs and to cover expenses related to university scientific research and to cover part of the costs
of maintaining student hostels and canteens;
- Expenditure on scholarships and social protection of students, clad in amounts allocated from state budget;
- Expenditure to achieve investment objectives funded by the state;
- Expenditure from external sources, and loans and grants for projects and funding from the state budget for projects
financed represents Government contribution to these projects;
- Expenses from its own funds, made under the Education Law no. 84/1995 republished, with subsequent
amendments;
Final allocations from the state budget, higher education institutions granted shall be determined annually within the
budget appropriations approved by the Ministry of Education, Research and Youth annual budget law. On this basis
it concludes the annual budgets of income and expenditures of institutions of higher education.
For extra-budgetary activities to prepare separate budgets for revenue and expenditure, which is attached to the
income and expenditure of the institution and approved by the university senate.

3. Developments in UK higher education funding

Unlike university systems in the continent, the British system was born and grew up to a level outside the state
system. Such as Oxford and Cambridge University were opened under the patronage of the church and were self-
financed by donations and admission fees, to twentieth century, urban university in the nineteenth century by
century were financed by local and private efforts, only in the century twentieth-century British government
intervened in funding. Between the two world wars, the British government took over both the current expenditure
and capital arrive approx. 90% of university budgets. From a financial standpoint nationalization was complete,
dependence on a single source was quite widespread (European Union Council, 2004).
After 1980 this dependence is clear from previous decades is confronted university financial constraints, but at the
end of that decade, the government will return and will fund more and more research.
All universities in the UK are legally dependent, belonging to private sector institutions with charitable status
(non-profit society). There is no direct support from state ministries and the university operates a system of major
budgetary constraints. So if a university carried out a deficit it must respond with urgency to avoid becoming
insolvent. An institution may not achieve a budget deficit in 2 consecutive years, which exceed the threshold of 5%
4
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of its income, or £ 2 million and not be offset by its available reserves. For long-term loans, which exceed 4% of
annual income of an institution (plus interest rates), the University must be free to borrow on the private market, but
must make the argument that they are able to repay. Budget cuts have led to reductions in some cases the amounts of
budget allocations amounted to 20-30%.
Approximately 45% of university revenues come from English Higher Education Financing Council England
(HEFCE) funds allocated by the Ministry of Labor Education and Employment, the University enters into a
contractual funding with HEFCE (European Union Council, 2010).

4. Conclusions

The general conclusion which emerges from the comparative analysis of funding, is the fact that there is no ideal
model of funding, but rather the diversity and complexity of the phenomenon characterized allover higher education
financing. What is true in today's funding could be summarized as: a mixed of funding with an unfair distribution of
contributions "taxpayers" public-and private-in too low, meaning the share of private sector funding allocations for
higher education, there is a wide variety methods of determination that the allocation of the amounts due to
institutions of higher education from budget funds, based on both quantitative and qualitative criteria to increase the
share of their income in total income of an institution, coming in particular from charging fees for services
university.

References

Eurydice. (2008). Management, monitoring and support staff. European glossary on education, Volume 4. Brussels, 52- 62;
MECTS. (2010). Romanian legal framework for the organization and functioning of the education system, http:// www.edu.ro;
European Commission, Education and Culture. (2005). Implementing the Education and Training ''2010'' Work Programme – Romania;
EU Council. (2006). "Modernizing education and training: a vital Contribution to Prosperity and Social Cohesion in Europe", a joint interim
report of the Council and the Commission on progress under the "Education & Training 2010" work program;
National Institute of Statistics, Bucharest. (2002). Statistical Yearbook of Romania;
European Union Council. (2004). "Education & Training 2010" The Success of the Lisbon strategy hinges on Urgent Reforms ", Joint
Interim Report of the Council and the Commission on the Implementation of the detailed work program on the follow-up of the Objectives
of education and training systems in Europe;
European Union Council. (2010). Community legal framework in education, http://www.europa.eu.int;