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Autonomy vs control at state universities
Plans to forge international partnerships between local and foreign universities have led to widespread debate among academics and the public
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span>Plans to forge international partnerships between local and foreign universities have led to widespread debate among academics and the public. This is actually a great opportunity to challenge policymakers, universities and all stakeholders to develop world-class Indonesian universities.
In joining the seemingly unavoidable global trend of “internationalizing” universities, the government has placed Indonesia’s higher education institutions in direct competition with universities all over the world.
Currently, only nine out of 4,538 Indonesian universities are included in the global QS World University Rankings. The best of these Indonesian institutes, the University of Indonesia (UI), is ranked at a low 277. Therefore, all of our higher education institutions are challenged to improve the quality of their educational process, faculty members, alumni, research and publications.
The government has introduced distinctive governance that enables universities to take up these challenges.
State universities, which previously operated in a bureaucratic manner, have been driven to adopt a business-like approach by implementing a different kind of governance from other government agencies. A hybrid management system with both government and private-sector characteristics has thus emerged across state universities.
State university governance has changed four times over the last 20 years. Initially, the State-Owned Legal Entities (BHMN) system in the early 2000s comprised seven universities. In 2005, the government introduced a semi-autonomous concept, the Public Service Agencies (BLU), in its ministries. Since 2008, the BLU has been adopted by 71 universities.
In 2009, the BHMN was replaced by the Legal Education Entities (BHP) system. A year later, this was annulled by the Constitutional Court following a request for judicial review that cited the commercializing of education as unconstitutional. From 2012, all former BHMN universities were changed into State Higher Education-Legal Entity (PTN-BH). As of 2017, 11 universities hold this status.
Essentially, these arrangements have a similar purpose: provide several degrees of autonomy and develop appropriate control mechanisms.
Universities have both academic and non-academic autonomy. Academic autonomy refers to freedom in intellectual and scientific activities, whereas non-academic autonomy covers administrative, human resources and financial autonomy.
Under the latest governance system, the autonomy for state universities focuses on the financial aspect, as they are exempted from general regulations on state finance. This privilege mainly includes flexibility in generating income, a direct revenue management system and the opportunity to take out loans and manage investment. This autonomy also represents the extent to which a university can make financial decisions.
Within the ideals of the “new public management” (NPM) paradigm in the public sector, autonomy must be counterbalanced by control. For a university, control is developed through a combination of structural steering — or direction and supervision — and results-based monitoring; in Indonesia’s case by the Research, Technology and Higher Education Ministry. Results-based monitoring is applied through a financial rewards-and-sanctions scheme to control performance.
A key finding from my recent research on governance in state universities is an unstable balance between financial autonomy and control practices. The autonomy does not cover the whole financial function and the steering mechanism is seen by university managers as overemphasized.
Universities perceived themselves to be excessively controlled with regard to their financial activities. For example, uniform and detailed regulations restricted the institutions from making long-term investments. This indicates that high levels of financial control are not being compensated with more financial autonomy.
The practice contradicts the NPM ideal agency model, in which more control is combined with more autonomy. The government controls universities in a centralized higher education system, but does not give these universities more freedom. Instead, the centralist financial setting allows more opportunities for the state to exercise tighter control.
To some extent, such autonomy-reducing regulations, as well as control mechanisms, prevent universities from facing global challenges. Overt control will lead to a perception that autonomy is only a myth.
“Autonomized” universities have benefited from autonomy in more opportunities to generate their own incomes, thus reducing their dependency on the state budget. On the other hand, the Research, Technology and Higher Education Ministry and the Finance Ministry play an extensive role in controlling state universities.
From a university manager’s perspective, the benefits of autonomy become worthless because of these strong control practices. In response, the government has made some adjustments, such as in its reporting requirements.
In sum, the new university governance system matters to a great extent. Autonomy and control exercised by oversight authorities play a great role in developing world-class universities. For instance, output-based funding for research has increased publication in international journals.
However, a university with more autonomy would have greater potential for opportunistic behavior. Therefore, an effective combination of autonomy and control is vital, as the autonomy the government grants may become less relevant if stronger control is continually applied to universities through various means and methods.
Despite successes in introducing a business-like atmosphere within bureaucratic universities, questions about balancing autonomy and control remain. Therefore, the government should improve the implementation of autonomy and ensure it takes a constructive role in control by developing clearer governance mechanisms and applying less control.
It is thus necessary to develop the kind of autonomy that can allow state universities to become more flexible and to design an effective control mechanism that supports their dynamics and agility to face global challenges. This is not an easy job.
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The writer is a lecturer at the State Accountancy Polytechnic (STAN) in Jakarta. He is pursuing a PhD at the School of Business, University of Leicester, United Kingdom. His recent research on state university governance is to be published in The International Journal of Public Sector Management.
