Chapter 34 : Expenditure

34.1 Education is a service industry whose purpose is to do something of usefulness to a particular individual and, possibly, through him or her to an employer or more generally to the society of which that individual is a part. It has a number of features in common with other service industries, including stratification into various levels of service, and a tendency for labour costs to be the determinant of profit and loss.

34.2 All education in all countries is expensive and occupies a substantial part of national budgets, but higher education is particularly costly. The main reason for this is that student-staff ratios in higher education (about 12 in Hong Kong), are much more favourable than those in secondary education (21), or primary education (25).

34.3 The necessity for much more advantageous staffing in tertiary education compared with secondary or primary is probably not related to learning difficulty. A six year old may find as many problems in the connections between pronunciation and spelling as an undergraduate does or finds in distinguishing between differing theories of economics. The arguments for intensive personal teaching lie more in the complexity of higher education : complex interaction within the subject matter; complex and labour intensive adjuncts such as the development of skills in using equipment and software; and complex practical dexterity in many areas of medicine and the social sciences. The favourable student-staff ratios are also, of course, a reflection of the fact that academic staff are commonly employed to undertake tasks additional to their teaching - in particular research.

34.4 Within higher education, there is a wide variation of student-staff ratios between disciplines, and this is a major factor in determining relative costs. Typical values for major groups are given in Table 34.1, but there is much discrepancy within them (in the first group, clinical dentistry has a student : staff ratio of 3, and nursing 11.; and in the second, physics 9 and mathematics 14). The figure for Education refers to UGC institutions excluding HKIEd: that for the HKIEd is currently somewhat lower because of expansion.


Table 34.1 Student - Staff Ratio by Discipline (1994-95)

Discipline Student-Staff Ratio
Medicine, Dentistry and Health 6
Sciences 12
Engineering and Technology 13
Business and Management 14
Social Sciences 13
Arts & Humanities 11
Education 14

Source: UGC Secretariat

34.5 If generous staffing is the main determinant of the relatively high cost of higher education, the next must be that those staff are paid more than their colleagues in secondary or primary education. Typical annual salaries are given in Table 34.2.

Table 34.2 Annual Salaries of Teachers in Primary
and Secondary Schools and Tertiary
Institutions (1995-96)

Primary School Teacher 239,880
Secondary School Teacher 332,460
University Lecturer (non-clinical) 606,840
University Lecturer (clinical) 725,700

Source: UGC Secretariat and Education Department

34.6 Although the salary bill for academic staff is the major component in recurrent expenditure on higher education, there are other substantial items. Expenditure on supporting staff, ranging from senior administrators to library and laboratory staff to porters and cleaners, is higher than in other levels of education. The maintenance and updating of equipment, library stock and buildings is also costly as, in some disciplines, is the provision of consumables. The major elements in total recurrent expenditure are shown in Table 34.3 for the UGC institutions.


Table 34.3 Total Recurrent Expenditure
in the UGC-funded Institutions

Academic Staff 45%
Other Staff 19%
Fringe Benefits 10%
Maintenance of Buildings 10%
Equipment 10%
Others 6%

Source: UGC Secretariat

  The purposes of the expenditure shown in Table 34.3 are, of course, diverse and include research as well as teaching.
34.7 As well as recurrent expenditure, HEIs also need to spend money on capital projects. The recent expansion in both the subvented and private sectors has required unusually high levels of capital expenditure (see paragraph 8.8). The skills needed to manage a building programme cost-effectively and to produce a result which satisfies the academic desiderata are quite different from those required for efficient recurrent expenditure, and they often place considerable strain on HEI staff. During the quadrennium 1991-95, capital expenditure in UGC institutions was about 15% of recurrent expenditure.
34.8 Although the balance of recurrent expenditure between differing purposes (such as teaching versus non-teaching) varies from time to time and from institution to institution, if we ignore these distinctions and look only at total annual expenditure, the broad division by providers is as shown in Table 34.4.

Table 34.4 Total Recurrent Expenditure of
Higher Education including CPE

UGC Institutions 10,851
Other subvented Institutions(1) 835
Private Colleges(2) 344
CPE in-house by government 550
CPE in-house by other employers 200
Total 12,765
Notes: (1) including APA, TC and HKIEd. The HKIEd did not join the UGC until 1996
(2) including OLI, Charitas Adult & Higher Education Service and Chu Hai College
Source: UGC Secretariat and other organisations concerned

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