A new report prepared by Audit Scotland has looked at the state of higher education funding in Scotland and how it contributes to national strategic objectives, in addition to how well the sector is equipped to handle financial challenges.

Scotland universities play an important role in the economic and social development of the country.  With more than £1.1 billion in funding from the Government in the 2014-15 school year and around £623 million in funding for individual students, the objective is to make the country wealthier, smarter, and fairer.

While Scottish Funding Council funding to universities has gone down 6% in real terms since 2010-11, Scottish Government funding has increased by 37% in the same time frame.

The report, “Audit of higher education in Scottish universities,” suggests a number of new policy initiatives for higher education by the Scottish government, including support for world-class research and the improvement of innovations.  In addition, the government would like to see increased access for students from deprived backgrounds to enter universities.

However, in order for this to happen, authors say more needs to be done by the Scottish Funding Council to ensure that the funding received from the Scottish government goes the furthest it can to fulfill the education policy ambitions.

The report maintains that, overall, the Scottish higher education sector is doing well financially as of 2014-15, with universities bringing in £3.5 billion in total income and creating a surplus of £146 million.  The authors say that while surpluses and reserves are seen in a small number of universities, others rely on Scottish Government funding, which is decreasing.  They go on to say that universities should be generating surpluses and reserves and putting aside savings for their capital costs and activities.  Income is continuing to come for these schools from fee-paying students who attend from the rest of the UK and outside of the European Union.

In the 2014-15 school year, 232,570 students were enrolled in Scottish Universities.  Of those, 66% were Scottish.  While the overall student population has increased by 5% over the last decade, it is becoming increasingly international, making it harder for Scottish students to earn a spot.

The report continues to state that a number of challenges are being faced by the sector due to increasing costs, the possibility of a reduction in funding from the Scottish Government, and the risk of being able to continue to generate income from other sources such as fee-paying students.  In order to handle these challenges, the authors suggest that the Scottish Government, SFC, and universities work together.

The authors make a number of recommendations to this end, including the support of long-term higher education policy ambitions.  They say this can be accomplished if the Scottish Government is clear concerning its policy priorities as pressure continues to be placed on budgets.

They go on to say that the Scottish Government and SFC should ensure that they both fully understand the impact that policy and funding decisions have on the ability of the SFC to ensure its contributions are fully made use of toward the achievement of higher education policy ambitions.

In addition, they suggest research on trends in applications be completed in order to determine the impact that the limits on funded places are having on university access for Scottish and EU students.

The report also recommends that a long-term framework is put together by the Scottish Government, SFC, and universities to ensure that the Scottish Government works with the higher education sector to ensure the benefits for higher education are maximized.

Established in April of 2000 under the Public Finance and Accountability (Scotland) Act 2000, Audit Scotland was created to help the Auditor General for Scotland and the Accounts Commission ensure that money is being spent properly, efficiently, and effectively by organizations.