Editorial | Publish Green Paper on UWI’s finance plan

Caribbean education stakeholders, including taxpayers, are no doubt looking forward to the early publication by The University of the West Indies (UWI) of a Green Paper on its seemingly innovative public-private sector funding model, which has been broadly sketched out by Vice-Chancellor Hilary Beckles but is in need of deeper particulars.

The release of the detailed proposal, allowing for its serious debate on The UWI’s contributing states, has greater urgency, given, as Professor Beckles noted in his recent article on the issue, the US$75-million (J$10.3-billion) funding gap in the university’s account, and his expectation that the new arrangement will be in place by 2021-2022.

We assume that Professor Beckles’ analysis is based on the university’s unpublished financial statement for 2018-2019 and clear commitments by regional administrations, given his assumption that shareholder governments, under the proposed funding plan, will “cover about 50 per cent of the university’s operational cost”, which would not only represent a reversal of the trend of recent years of declining subventions to the university, but would be counter to the signals from cash-strapped treasuries that they intended to cap payments at current levels.

Indeed, for the 2017-18 financial year, subventions from governments accounted for 45 per cent of The UWI’s total income of Bds$965.3 million (US$482.7 million), when its operating costs reached approximately Bds$1.1 billion, or US$500 million. The 2017-18 outlay by governments was one percentage points lower than the previous year’s.

What, though, is on the face of it, even more significant about the proposed financing model, is the intention of the university’s management, as declared by the vice-chancellor, to ask “governments to market about 20 per cent of their 100 per cent equity in The UWI to private investors”. The private sector would then, it is implied, fund The UWI to the proportion of its ownership.

What, however, is not clear from Professor Beckles’ presentation is how the divestment will be done. And since this, apparently, will be an equity investment, what mechanism will ensure that the 20 per cent private-sector commitment toThe UWI’s operational costs is sustained after the initial outlay for the acquisition of the stake.

Put another way, if this is not an annual endowment by private firms, the university, we suspect, will need to present a credible plan of how it intends to provide a return on any investment by private partners, equivalent to their annual funding obligation, for reinvestment in the not-for-profit institution.

SUBSTANTIAL ‘IFS’

The proposal for governments to transfer lands to the university, much of which is already in its possession, on a freehold, rather than the current leasehold basis, would clearly add muscle to The UWI’s balance sheet, providing it, we agree, with greater entrepreneurial flexibility, which could then be leveraged for capital, including, perhaps, enticing private investment into real estate development.

“The UWI is engaged with the private sector in terms of how best to present it with an investment instrument to enable private-public partnership,” according Professor Beckles.

If the regional governments not only promise, but do, in fact, cover, on a sustained basis, half the cost of running The UWI, while the private sector fills in another 20 per cent, and students, 15 per cent, the 20 per cent that the university will be asked to find from its “international engagements” appears, on paper, quite doable.

But given the stresses on Caribbean economies and the state of regional treasuries, there are substantial ‘ifs’.

Indeed, there is a difference between declaring policies and their effective, and successful, implementation. The latter happens best when policies are rigorously analysed and robustly stress-tested, and best from the bottom up. That is why an engagement of all stakeholders is so important and urgent.