Hubert Devonish, GUEST COLUMNIST

Below is an outcome of a study on internationally competitive salaries for WIGUT-level staff at UWI, Mona.

In an international knowledge economy, where the highest value commodity being traded is knowledge, universities are the equivalent of factories in the traditional industrial economy. The University of the West Indies (UWI), whatever the high-minded motives behind its establishment, is now a business.

Decisions about funding the UWI should be based on its value as a contributor to the economy in the short and medium term. This approach, which views higher education as a generator of wealth, can be seen in a recent initiative by New York City. It is investing $100m in taxpayers' money and free land in a competition for the setting up of a technical university in that city. The competition, the results of which were announced in December 2011, was won by Cornel University in an alliance with the Israeli Technion-Israel Institute of Technology, in a competition with 17 other institutions, including Stanford University.

New York Mayor Michael Bloomberg is quoted as saying that the winning application was the one proposing the largest number of students, the highest number of academic staff, and the most building space of any of the proposals submitted to the competition. The selection of the winning bid was made based on what was considered to be the proposal which brought the greatest economic benefit to New York City.

For the past several years, successive ministers of education have proclaimed that the Government of Jamaica (GOJ) subvention to the University of the West Indies should be cut, as that money was needed elsewhere in the education system, notably in early childhood education. How true is it that UWI is a drain on the public purse? This question is addressed in a study commissioned by the West Indies Group of University Teachers (WIGUT).

KEY FINDINGS

The key finding is that by 2010-2011, the GOJ had ceased to be a net contributor to the UWI, Mona. This is based on estimates of the take in taxes and statutory deductions by the GOJ related to the operations of UWI. Even though the institution itself is exempt from taxation, this is not true for its more than 3,000 employees, its 15,000-plus students, and its numerous suppliers of goods and services.

The employees of the university, as well as the employees of those who provide it with goods and services, pay income taxes and statutory salary deductions. In addition, these employees, as well as students, pay GCT on consumer goods and services they purchase with the money they have earned or saved.

The paper shows how the funds which return to the GOJ as a result of taxes and statutory contributions affect the net contribution of the GOJ to Mona. In academic year 2008-9, the GOJ subvention to UWI was $5.43b, against an expenditure by UWI of $9.88b. In that same year, the GOJ collected an estimated $3.58b in taxes and statutory deductions, the net GOJ contribution really being just $1.85b.

In 2009-10, the GOJ subvention fell to $5.01b against an expenditure of $10.05b. The estimated tax take was $3.74b, resulting in the net GOJ contribution being $1.27b, a fall relative to the previous year. In 2010-11, the GOJ further reduced its subvention to $4.00b, while the UWI expenditure rose to $10.80b. The estimated tax take was also $4.00b. In 2010-11, the last complete financial year, therefore, the GOJ gave a net zero contribution to UWI, Mona.

The pattern as seen over the three-year period shows that the GOJ was reducing the level of its subvention to UWI, even while the expenditures of the institution were continuing to rise. To support these increases in spending, UWI increased the share of its income coming from other sources. These included tuition fees from students from other contributing territories, subventions from the other contributing territories to UWI, full economic cost fees from students from non-contributing countries, and income-generating activities.

The paper suggests that, as of the 2010-11 academic year, the debate about the funding of UWI in general by the GOJ, and the Mona campus in particular, has to change. UWI is a generator of wealth for Jamaica, not just in the long term, but in the here and now.

Using the Mona campus accounts for 2010-11, it estimates that US$33.03m was earned in foreign exchange by the Mona campus. This came from fees paid by non-Jamaican students, subventions from governments of other contributing territories, full fees at economic costs paid by students from non-contributing territories, living expenses for the 1,500 non-Jamaicans attending Mona, and donations and grants from overseas sources.

To give this figure some perspective, this sum is in excess of the foreign exchange earned by the combined export of bananas, citrus, coffee, cocoa and pimento in 2011, at US$24.5m or more than half of that earned by the export of sugar in that same year, at US$62.01m.

UWI is also a major employer of labour with more than 3,000 persons directly employed, at all skill levels, but with a bias to the higher end of the educational scale. This number represents about three-quarters of the number of people employed to the entire mining sector in Jamaica. There are, as well, many hundreds more indirectly employed as a result of the existence of the UWI, Mona. Expenditure by the Mona campus and the UWI Centre based in Jamaica together amount to the equivalent of 1.5 per cent of Jamaican GDP in 2011.

A BUSINESS

Despite its role of educating generations of Jamaican and Caribbean citizens, the UWI is also a business. Its sells educational services, with the main local customer being the GOJ, on behalf of Jamaican students who attend the institution, with a 20 per cent contribution of costs coming from the students themselves.

The recent student protests over the non-payment of fees tell us that there is a significant number of students who cannot afford even the 20 per cent of fees they are required to pay, given the more than $300,000 in living expenses they have to finance annually. In addition, in order to provide world-class education, the UWI has to attempt to pay its staff internationally competitive salaries if it is to maintain quality.

Both the providers and recipients of educational services are in pain. In addition, the actual plant of the university has to be upgraded if it is to maintain and improve its status as an institution of international repute. The GOJ subvention, given its small size, cannot satisfy these needs in any serious way. The business of UWI is, therefore, in serious need of more financial resources. But where would these resources come from?

WORTHY INVESTMENT

The answer is that UWI, Mona, is a worthy business investment. Higher education internationally is a global business. An examination of the GOJ's expenditure on UWI shows that in 2010-11, for every $1 of GOJ subvention to Mona, there was a match of $1.69 from other sources. This proved good for the economy, for employment, for foreign-exchange earnings and for the GOJ tax take.

Given the obvious effectiveness with which UWI spends its GOJ subvention, it is in the interest of the overall economy of Jamaica, not to mention the public good, that UWI expands to take in more students, not just locally and regionally, but internationally. Given that it is more than double the population size of Trinidad and Tobago, UWI in Jamaica would have to double the number of its students to approximately 30,000 to match the twin-island republic's participation in UWI. Such a move would be good for the Jamaican economy, particularly foreign-exchange savings and earnings, as well as employment.

But how can this be achieved if the plant of UWI in Jamaica is run-down, it cannot pay its staff internationally competitive salaries, and its students cannot afford their 20 per cent contribution to tuition fees.

This extra investment, according to the paper, would come from a GOJ Tax Rebate Policy. Once the GOJ receives back in taxes the entire sum of its contribution, any additional revenues calculated to have been received by the GOJ beyond the level of its subvention is returned to UWI. This would encourage UWI in Jamaica to further focus on income-generating initiatives such as those in law and medicine, since these contain close to zero financial input from the GOJ but generate income which ends up in the tax net.

The rebate could be split three ways. A portion could be used to assist the university itself to upgrade its plant and its buildings. Another portion should be dedicated to alleviating the financial pain of the students, without whom the university would not exist, by way of a tuition fee subsidy for the most needy students.

A third portion of these funds should be used to address the financial problems of the academic and associated staff who are, by various estimates, being paid 30 per cent less than international rates of pay.

This is a proposal which cost the Jamaican taxpayer zero, and yet provides a model by which UWI can expand, be internationally competitive, and contribute even more substantially to the economy of Jamaica. The GOJ would be able to have its cake and eat it: an internationally competitive university, making substantial contributions to the economy, at no net cost to the taxpayer.

Hubert Devonish is professor of linguistics and coordinator of the The Jamaican Language Unit. Email feedback to columns@gleanerjm.com and hubert.devonish @uwimona.edu.jm.