EXPLANATORY STATEMENT
Guidelines issued under subsection 238-10 of the Higher Education Support Act 2003
Amendment No.4 to the Commonwealth Grant Scheme Guidelines No.1
Issued by the authority of the Minister for Education
Subject:- Higher Education Support Act 2003
Amendment No.4 to the Commonwealth Grant Scheme Guidelines No.1
Authority
Section 238-10 of the Higher Education Support Act 2003 (the Act) provides that the Minister may make guidelines for the purposes of the Act. In particular, item 2 of the table at section 238-10 specifies that the Minister may make the Commonwealth Grant Scheme Guidelines to give effect to matters set out in Part 2-2 and section 93-10 of the Act.
Purpose and operation
The Commonwealth Grant Scheme Guidelines No.1 commenced on 13 December 2006 and are being amended for the fourth time.
The purpose of this amendment is to:
- replace Chapter 8 to specify the arrangements for adjustments to 2008 Commonwealth Grant Scheme (CGS) grants in relation to 2007 enrolments;
- replace subsection 9.5.1 of Chapter 9 to specify two new parts of funding clusters; and
- add a new Chapter 11 to the Guidelines to specify how the amount of Transitional Loading will be worked out.
Explanation of amendments
Item 1 – Amendments to Table of Contents
The Table of Contents is being amended to reflect the changes made by items 2 and 4 below.
Item 2 – Amendments to Chapter 8
Chapter 8, Adjustments, sets out the circumstances in which an eligible higher education provider’s basic grant amount for a year is to be adjusted, and the amount of the adjustment or how it is to be worked out under section 33-20 of the Act.
The amendments to Chapter 8 specify the adjustments that will apply to providers’ CGS grants for 2008 in relation to 2007 enrolments.
8.5 Number of places provided exceeds allocated places
If the number of places provided by a higher education provider in 2007 exceeds the provider’s allocated places, there is to be no adjustment to the provider’s basic grant amount for 2008 under sub‑section 33‑25(1) of the Act. That is, there will be no penalty for over enrolling in load terms in 2007 by more than 5 per cent.
8.10.30 and 8.15.30 Over enrolled Table A or Table B providers
If a Table A or Table B provider’s corrected basic amount for 2007 is more than the provider’s basic grant amount for 2007, an adjustment to the provider's basic grant amount for 2008 will be an amount equal to the lesser of the following:
(a) 2.5 per cent of the basic grant amount;
(b) the difference between the corrected basic amount and the basic grant amount.
That is, Table A or Table B providers that were over enrolled in funding terms in 2007 will receive a funding increase of up to 2.5 per cent of their 2007 basic grant amount.
8.10 Under enrolled Table A providers
If a Table A higher education provider is under enrolled in 2007 by more than 1 per cent of funding (that is, the provider’s corrected basic amount for 2007 is less than 99 per cent of the provider’s basic grant amount for that year), an adjustment to the provider’s basic grant amount for 2008 will be calculated using the methodology specified in subsections 33-25(4) and 33‑25(5) of the Act (‘the adjustment’) unless the Minister determines in a particular case that it would be reasonable to make an adjustment of a lesser amount (‘the lesser adjustment’). The lesser adjustment would be 50 per cent of the adjustment, subject to the following limit: if the difference between the adjustment and the lesser adjustment (‘the retained amount’) is greater than $2.5 million, the lesser adjustment is the adjustment minus $2.5 million.
That is, the Minister may determine that a Table A provider can retain 50 per cent of the funding by which its 2008 basic grant would otherwise be reduced due to under enrolment in 2007, subject to the retained amount not exceeding $2.5 million.
In cases where the retained amount is greater than $1 million, the Minister may also determine that the retained amount will be subject to conditions in relation to the expenditure of that amount that are specified in the provider’s funding agreement for the 2008 grant year. Funding agreements will be revised to include any such conditions, with the agreement of the relevant provider.
8.15 Under enrolled Table B providers
If a Table B higher education provider is under enrolled in 2007 (that is, the provider’s corrected basic amount for 2007 is less than the provider’s basic grant amount for that year), the provider’s basic grant amount for 2008 will be reduced by an amount equal to the difference between the basic grant amount for 2007 and the corrected basic amount for 2007 (‘the adjustment’) unless the Minister determines in a particular case that it would be reasonable to make an adjustment of a lesser amount (‘the lesser adjustment’). The lesser adjustment would be 50 per cent of the adjustment, subject to the following limit: if the difference between the adjustment and the lesser adjustment (‘the retained amount’) is greater than $2.5 million, the lesser adjustment is the adjustment minus $2.5 million.
That is, the Minister may determine that a Table B provider can retain 50 per cent of the value of its under enrolment, subject to the retained amount not exceeding $2.5 million.
In cases where the retained amount is greater than $1 million, the Minister may also determine that the retained amount will be subject to conditions in relation to the expenditure of that amount that are specified in the provider’s funding agreement for the 2008 grant year. Funding agreements will be revised to include any such conditions, with the agreement of the relevant provider.
8.20 Providers other than Table A and Table B providers
If a non-Table provider’s corrected basic amount for 2007 is more than the provider’s basic grant amount for 2007 (that is, the provider over enrolled in funding terms), there is to be no adjustment to its 2008 basic grant amount.
If a non-Table provider’s corrected basic amount for 2007 is less than the provider’s basic grant amount for 2007 (that is, the provider under enrolled in funding terms), its 2008 basic grant amount is to be reduced by an amount equal to the difference between the basic grant amount and the corrected basic amount.
Item 3 – Amendments to Chapter 9
The Higher Education Support Amendment (2008 Budget Measures) Act 2008 amended section 93-10 of the Act to reduce the maximum annual student contribution amount for students studying mathematics (including statistics) or science units of study. The reduction applies to all units of study in mathematics, statistics and science for commencing students regardless of their course of study (and existing students who transfer from a course of study that is not in the natural and physical sciences to one that is) from 1 January 2009. Existing students (other than ‘transferring’ students as above) will continue under current arrangements.
To reflect the amendments to section 93-10 of the Act, this instrument amends subsection 9.5.1 of Chapter 9, Determining Funding Clusters, which specifies the funding cluster, or a particular part of a funding cluster, in which a unit of study is included, to specify two new parts of funding clusters – ‘mathematics and statistics’ in funding cluster 3 and ‘science’ in funding cluster 6.
Item 4 – Amendments to Chapter 11
The Higher Education Support Amendment (2008 Budget Measures) Act 2008 also provided for a new Transitional Loading. This instrument inserts a new Chapter 11, Transitional Loading, to specify how the amount of the Transitional Loading will be worked out.
The Transitional Loading will have two components – the ‘Transitional loading for mathematics, statistics and science units’ and the ‘Transitional loading for Commonwealth supported places for the phase out of domestic undergraduate full fee paying places’.
The ‘Transitional loading for mathematics, statistics and science units’ will ensure that providers’ funding for mathematics, statistics and science units of study is maintained by paying the difference between the old and new maximum student contribution amounts ($3,250 per EFTSL in 2009 and indexed from 2010 in accordance with Part 5‑6 of the Act) for students that are subject to the new lower maximum student contribution amount. This applies regardless of the actual student contribution amount that a provider determines for these students. If a higher education provider chooses to reduce the student contribution amount for students that continue to be subject to the existing maximum student contribution amount, no Transitional Loading will be payable for those students. Funding for a calendar year will be based on an agreed estimate and will be reconciled against actual data in the following year.
The ‘Transitional loading for Commonwealth supported places for the phase out of domestic undergraduate full fee paying places’ will assist providers with any agreed transitional costs associated with phasing out those places, which was also enacted through the Higher Education Support Amendment (2008 Budget Measures) Act 2008. Transitional assistance may be available to providers that are able to demonstrate support is required to provide replacement Commonwealth supported places. Discussions are under way with affected providers on these arrangements.
Commencement
Amendment No 4 to the Guidelines will take effect on the day after the day on which it is registered on the Federal Register of Legislative Instruments.
Consultation
Chapter 8
The higher education sector was consulted extensively on this amendment. On 31 July 2008, the draft amendment was sent to Universities Australia, the Australian Council for Private Education and Training, the Australian Technology Network, the Group of Eight, the Council of Private Higher Education and the Innovative Research Universities Australia. Comments on the draft amendments where then sought from the sector more broadly on 8 August 2008.
Twenty submissions were received during the consultation process. The majority of the submissions (sixteen) supported the amendments and four submissions (from providers not directly affected) raised some concerns in relation to the adjustments for providers that were under enrolled in 2007. Given the majority of stakeholders supported the amendments, the proposed amendments have been retained.
Chapter 9
No specific consultation with the higher education sector was conducted on this amendment. It arises from the result of the change to the student contributions for mathematics, statistics and science units of study announced in the 2008-09 Budget. It is required to identify the part of the funding clusters covered by the reduced student contribution.
Chapter 11
The higher education sector was consulted extensively on this amendment. On 16 July 2008, the draft amendment was sent to Universities Australia, the Australian Council for Private Education and Training, the Australian Technology Network, the Group of Eight, the Council of Private Higher Education and the Innovative Research Universities Australia. Comments on the draft amendment were then sought from the sector more broadly on 24 July 2008.
Twenty submissions were received during the consultation process. The majority of the submissions had no concerns with how the Transitional Loading is to be worked out, but related to the policy and eligibility for the reduced student contributions for mathematics, science and statistics, which is set out in the Act rather than the Guidelines. These concerns have been addressed with the individual stakeholders. Minor concerns that related to the calculation of the Loading have been addressed through changes to the Guidelines.
Three submissions included comments on the calculation of the transitional assistance for offering replacement Commonwealth supported places in place of full fee paying domestic undergraduate places: the principal theme being that some guiding principle and/or funding formula be included in the Guidelines for transparency. This is considered unnecessary as providers were provided separately with a document containing detailed proposed arrangements for the phasing out of fee paying places, including a range of possible options in negotiating replacement Commonwealth supported places to suit their individual circumstances and needs. This flexibility also applies to the transitional assistance. Providers were advised that the scope and nature of any transitional assistance would be discussed with each affected provider under the guiding principle that transitional assistance may be available where a provider could demonstrate that such assistance would be required to ensure the delivery of replacement Commonwealth supported places. It would be provided for specific purposes relating to the delivery of those places.