The ability of Irish universities to determine their own level of borrowing may be sharply curbed if the government is required to include the finances of third-level institutions on the exchequer balance sheet.
Eurostat, the EU statistics agency, has asked the Central Statistics Office to recommend whether Irish universities should be included in government borrowing figures. The final decision as to universities’ designation is left to the discretion of Eurostat.
As the Irish government must comply with EU fiscal regulations, exchequer spending and university borrowing will be severely restricted if universities’ finances must be included on the balance sheet. If this were to occur Irish universities would become more reliant on direct government expenditure. The potential risk of further decreasing state financing was flagged previously in UCD’s 2016 financial statements. In 2016, the heads of UCD and TCD warned that the continual decrease in state funding for third-level institutions was resulting in annual falls in international rankings.
In 2016, the Cassells report into the financing of higher education institutions stated that €5.5 billion will be required over the next 15 years for the third-level sector in order to provide for the predicted 25% increase in student numbers over the next decade.
Irish universities have relied heavily on borrowing to expand their facilities in recent years. UCD’s 2016 financial statements show that the university has borrowings which total almost €74 million, down from €81.2 million in 2015. UCD has previously obtained loans from the European Investment Bank (EIB) which are secured against the Merville and Belgrove Student Residences, and the Sports and Leisure Centre. In 2015, TCD owed an estimated €321 million to its creditors.
NUI Galway announced last month that the EIB had provided €60 million in funding to construct new student residences and facilities for its college of medicine, nursing, and health sciences. Similarly, loans of €110 million are expected from the EIB to finance the continued development of DIT’s Grangegorman campus.
Factors such as the state’s control over salaries and staffing numbers, potential evidence of a large degree of state governance, will likely affect whether Irish universities pass the ‘market test’ and ‘control test.’
In 2015, Eurostat announced that Irish Water had failed the ‘Market Corporation Test,’ stating that the Irish state had a considerable amount of control over the entity, to the point where its financing must be included in the balance sheet. This decision came despite a report submitted to Eurostat by the CSO which recommended that Irish Water be excluded from government borrowing figures.