Abstract The expansion of enrollment in regular HEIs in the last ten years usually means the rapid increase in the enrollment in regular HEIs from 1999 to 2009. In this period the annual average number of entrants in regular HEIs was 4.66 million, the net increase of number of entrants was 0.53 million, and the rate of increase of entrants is 19.95%. In 2009 the gross enrollment rate of students in HEIs was 24.2%. The rapid expansion of enrollment in regular HEIs has exerted great pressure on the increase of expenditure on higher education. Many stakeholders show concern for the increase in educational resources and enhancement of quality of higher education. Statistical data show that in terms of sources of funding of regular higher education institutions in the last decade in China the public expenditure was taken as the main channel, the tuition and fees was taken as the second channel, and other kind of expenditure was taken as the third channel. With the lapse of time, the ratio of public expenditure as percent of total expenditure on HEIs has been decreasing, the ratio of tuition and fees as the percentage of total expenditure on HEIs has been increasing, the ratio of social donation and endowment as the percentage of total expenditure on HEIs has been decreasing, the sources of funding of higher education has been increasingly more diversified. The input of capital expenditure on HEIs was insufficient, most of it was raised by HEIs themselves, and the deficit of capital expenditure on HEIs increased. The shortage of capital expenditure brought negative effects on the improvement of facilities in HEIs. The ratios of public expenditure on HEIs as the percentage of total expenditure was fluctuating, it shows the trend of rise of this kind of expenditure in the beginning, descent in the middle period and rise since 2006. The expenditure on HEIs per student has been rising but the index of expenditure on HEIs per student has been descending. There existed five critical problems concerning the funding of regular HEIs. Firstly, the insufficiency of public expenditure on HEIs has been the main reason for the lack of total expenditure on HEIs. Secondly, the scale of higher education was so large that the government was not able to give a sufficiently large portion of expenditure to HEIs, and the assurance mechanism of financing of higher education was not so perfect. Thirdly, the standards for tuition and fees paid by students and the ratio of tuition and fees as the percentage of the total expenditure was high, and the system of student financial aids was not complete. As a result, students were not easy to pay for tuition and fees. Fourthly, most HEIs could not generate sufficient revenues by themselves and the donations and endowment raised from individuals and groups were not as much as anticipated, HEIs could not reserve sufficient strength to raise funds by using market means. Lastly, in terms of equality of higher education opportunity and narrowing the gaps between different HEIs, the funding of higher education faced great challenges. In order to guarantee a sufficient, equitable and efficient distribution of expenditure for HEIs, it is necessary to take six key measures which include introducing the new system of public finance and constructing new system of assurance of expenditure on HEIs, normalizing the criteria of tuition and fees paid by students, improving the system of student financial aids, actualizing the potentiality of increase in funds raised by HEIs as well as donation and endowment coming from other agents, changing ways of budgetary allocation and optimizing the structure of allocation of expenditure on higher education.
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