FINLAND: Upheaval reshapes university sector

In just over 12 months, the form, funding and governance of Finland's higher education sector will undergo a radical makeover. Although final details are yet to be released, from 1 January 2010 three major changes will affect universities and involve funding, governance and the ownership and usage of buildings.

As with university reform elsewhere in the world, Finland has reacted to economic and technological globalisation by revolutionising universities' external and internal structures. The intention is to remove inhibitions to Finnish universities' capacity to be beneficiaries of international research funding and to increase their capacity for research commercialisation.

The current moves are responses to reports from the OECD and the Finnish Science and Technology Policy Council. Part of the Finnish response so far has been impending university mergers but there is more to come.

First, Finnish universities will cease to be government-funded public institutions. The bulk of university revenues will continue to come from the government but in the form of a subsidy rather than a direct allocation through the annual budget.

The way universities hold and apply cash assets will also be different. At present, all university funds are held in Treasury accounts: universities only have access to the money needed to meet that day's commitments. In one sense, therefore, universities have not had to consider cash flow but they will have to do so from 1 January 2010 when the available money will comprise unspent grants at the end of 2009, plus a pro-rated share from a special government allocation of EUR50 million.

Second, university governance will also undergo a revolution. In common with many European systems, Finnish rectors (aka vice-chancellors or presidents) are elected by all or some of their peers, and they chair the university senate or board.

The senate/board at present comprises members elected from among professors, other staff and students. Part of the reforms will see a decline in this highly democratic tripartite involvement in university governance, which is perceived as an inhibitor of change. In effect, the rector runs the academic side of the university while university administration is managed by the 'director of administration'.

Directors of administration typically wield considerable power. In future, universities will be presided over by a board with up to 14 members, half of whom will be appointed from outside the university. The new board's role will be much closer to that of a corporate board of directors, and its chair will be one of the external appointees.

The rector will be appointed by the new board and, although it is likely the incumbent will have to hold a PhD, the appointee need not be a professor of the university, a requirement at present. The rector will become the university's CEO and there are indications this will mean a reduced role for directors of administration.

'Internal fragmentation' will also be tackled by reducing the number of individual academic departments. Internal changes are seen as necessary because there is little scope for increases in government funding, so efficiency and effectiveness are regarded as the answer.

The third impending change relates to the ownership, management and use of buildings. At present, all university buildings are owned and maintained by a government company called Senaatti Kiinteistöt. Universities rent buildings and space from the company but, from 2010, their buildings will be owned and maintained by three separate groups which in turn will be owned by universities (67%) and the government (33%).

The institutions will then be able to use their share ownership of these companies as collateral for loans and so on. These arrangements will apply to the whole sector with the exception of the new Aalto University, the result of a merger of three existing universities, which it is hoped will increase Finland's chance of having a 'world-class' university (see University World News, 20 April 2008, " FINLAND: Merger fever hits universities"). Aalto is to be subject to special financial and governance arrangements.

*Dr Ian Dobson is Helsinki correspondent for University World News. An Australian scholar currently based in Finland, he is editor of the Australian Universities Review and an honorary researcher with Monash University's centre for population and urban research in Melbourne.