Policy Analyses on the Effectiveness of the National University Corporation Act: What Has Changed since 2004?

(Purpose) While numerous data and research indicate that the fiscal practice of institutions has been influenced by National University Corporation Act (NUCA), what exactly the effect NUCA has had on institutions is not known beyond anecdotal experiences and stories. The contribution of this paper is to provide hard evidence on such institutional perceptions. (Methodology) We employed two approaches to understanding the impacts of NUCA on the running of the national universities. First, we conducted descriptive analyses on national universities' fiscal conditions using selected financial indices in the period of 2004-06 using data retrieved from CNUFM. Second, we then analyzed the results of a survey conducted in early 2006. The postal survey was sent to the CFOs of all national universities and asked a total of 26 questions in regards to their perceptions of the impact of NUCA on their budgeting practice and educational quality at their institutions. From the 86 national universities, 84 CFOs responded. Through these two methods, we aim to understand the impact of NUCA quantitatively and qualitatively. (Results) As a result of the drastic change in the public funding scheme for national higher education in 2004, tax appropriations for higher education were substantially decreased, which has led to the decline in core funding for education and research for the majority of national universities. However, the extent of the financial impact of NUCA differs by institutional type. Those institutions with solid reputations and large financial resources, such as the former imperial universities, have been little influenced by NUCA. Our analyses found that the smaller the institution's financial resource, the more negative the impact of NUCA on the institution. A dichotomization among Japanese national universities is progressing. (Conclusions and Recommendations) The current funding policy in the allocation of tax appropriations needs to be revisited. Essentially, what current policy has done is simply to decrease spending on higher education in order to pay off public debt accumulated over the last 20 years. The impact generated by the sudden shift in 2004 was too drastic for the majority of national institutions, except some elite universities, to absorb. Policymakers need to take institutional missions and their fiscal conditions into consideration in the formula in order to minimize the damage caused by the ongoing decline in public support for higher education. The one-size-fits-all approach has brought unfairness to the market. (Contains 12 charts, 1 table, and 19 endnotes.)