Fox guarding the henhouse in Finnish university funding model

A bit more than a month ago Helsingin Sanomat published a text (in Finnish), which criticised the new funding model for Finnish Universities (abstract in English). The text was critical towards model’s approach to use student feedback as a criterion for distributing state money to universities. Authors of the text had very good grounds for criticising this aspect. However, this aspect is not the only thing wrong in the new model.

As of 2015, 12 % of state funding to universities is based on the number of bachelor’s- and master’s degree students who have completed 55 study credits per year during previous years.  This 12% sums up to approximately € 200 million. According to Ministry of Education’s report (link above), the rationale behind this is to “emphasise teaching and study guidance in universities”. The report also says that after the criterion’s inception in 2013, there has been signs that it has encouraged universities to “develop teaching practices, course offerings and possibilities for year-round studying”. The report provides no evidence to support this claim and gives “lack of statistics-based information” as a reason for this.

This funding criterion immediately raises two questions.  First, how does this differ from the established convention of using number of completed degrees as a criterion? Well, it really doesn’t. The only difference is the fact that criterion’s connection to quality of learning is even more difficult to establish. Completion of a degree requires student to submit a thesis which is made public after its submission. So there is, at least in theory, possibility to objectively assess the quality of degree’s most important part. With study credits nobody has the possibility to do this, as study credits mostly relate to unpublished coursework.

This brings us to the second question. If universities make decisions about giving study credits, who ensures that the new funding model does not lead to a wholesale of study credits? Who ensures that universities do not hand out credits for free just to raise their share of the 12%? At the moment nobody ensures this. Universities have full autonomy over the way they give study credits to their students. This means that under the model universities have strong incentives to hand out as many study credits as they dare.

Most likely they will dare to hand out a lot. Or at least they did at Universities of Applied Sciences, or AMKs as they are called in Finnish. In 2011 a similar funding model was introduced for them. From the start of 2014 the funding for AMKs went from encouraging student intake to encouraging study completion. In the new model (in Finnish) 46 % of budget will be distributed based on degree completion (was 30%), and 26% will be distributed based on the same “55 cr” –policy as we now have for universities (was 0%).

Based on the schedule of related legislation (in Finnish) it is likely that AMKs started to know about the new model at around midway of 2012.  After this the number of study credits distributed at AMKs has exploded.*

Number of 55 cr students AMKs

As you can see from the chart, the number of students who completed 55 credits / year has risen by ~13000 from 2011 to 2014. This is a growth of 37% while at the same time student intake to AMKs has stayed on the same level.**

How did the schools achieve this remarkable rise? Was it by “emphasising teaching and study guidance in universities” and by “develop teaching practices, course offerings and possibilities for year-round studying” as ministry report suggested? Or was it done by giving easy credits to students with lax grading? At least Ministry of Education does not seem to have any idea. At the moment only teachers and assistants grading the exams know.

Before study credits are emphasised more in the university funding model, it is important to find out what has really happened in the AMKs during the past three years. A funding model like this where fox is guarding the henhouse can be a threat to integrity of university teaching. Evidence from a similar incentive system can be read from the popular Freakonomics –book. In it the authors discuss a case, where teachers of elementary schools in US were given bonuses based on their pupils’ performances in tests. As teachers were responsible for grading the tests as well, they started to fill the tests on behalf of their pupils.

In the Freakonomics-case pupils were the ones who ended up losing, as they stopped receiving fair feedback on their studies. If Finland continues to fund universities based on criteria, where subject is measuring itself, Finnish university system will be at risk of finding itself from similar circumstances.

Ville Sillanpää

Board Member of Aallonhuiput

ville dot sillanpaa at aalto dot fi


*) Figures for the chart are gathered from Ministry of Education’s Vipunen statistics portal

**) Intake figures for 2014 are not yet available. In past years the intake has been as follows:

Student intake to Finnish AMKs

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