This morning, the government together with the Sweden Democrats presented its bill for the state budget 2024. It is the first budget bill negotiated within the framework of the Tidö Agreement.
Finance Minister Elisabeth Svantesson describes that we are entering an economic winter, and the government assesses that the Swedish economy is in a recession with continued high inflation. At the same time, the majority of industries describe great difficulties in recruiting the right skills. To meet the crisis, investments and investments in higher education are needed, to equip more students with skills that will be needed when the economy turns. However, the Tidö parties do the opposite, with the priorities presented in the budget bill. Instead, the funding of student influence is attacked, and higher education is cut by SEK 420 million.
SFS has reviewed the state budget for 2024 and summarizes how it affects students.
Attack on student union funding from 2026
The statutory student influence in Sweden is conducted through student unions and by SFS. The majority of the activities are financed through direct government grants, and a smaller proportion is through membership fees. This is an arrangement that was introduced in connection with the abolition of the union obligation in 2010, when political decisions led to a large reduction in student union membership. A condition for the reform was that the unions' reduced income from membership fees was to be compensated by a state grant. The state grant must cover the student unions' statutory core mission of conducting education monitoring.
It appears from the budget bill that the government intends to reduce the allocation 2:67 in the state budget by SEK 20 million, from SEK 67 thousand to SEK 780 thousand, starting with the budget year 47. Of the current SEK 780 thousand within allocation 2026:67 SEK 780 thousand goes to student influence and SEK 2 thousand goes to other purposes. This means that the contribution to the student influence will decrease by at least SEK 67 million. But our concern is that the entire reduction of SEK 60 million is aimed at the student movement, which would mean a reduction of the contribution to student influence by a third.
Here we do not even factor in that inflation erodes the remaining part of the grant, as it is not calculated at all for 2024.
420 million in cuts
According to SFS's calculations, the government's budget proposal means a cut in the universities' education grants of approximately SEK 420 million. The cuts consist partly of 0,5% in general savings in higher education, partly of an efficiency requirement of 1,84% on the higher education institutions' salary costs.
The cuts refer to a certain extent to a reduction in the number of places, but otherwise it will be felt for the students in the form of fewer teachers and less teacher-led time.
General saving in the university
In the budget proposal, it can be read that: "All grants for education at basic level and advanced level and research and education at postgraduate level within the section will be reduced by 0,5 percent." As we interpret the budget, this saving consists partly of a reduction in the number of education places corresponding to SEK 105 million, and partly of a general cut of SEK 55 million, both in appropriations 2:64.
The effect of inflation on funding for education and research
Inflation has remained high in 2023 and was low in August at 7,5% (CPI). The grants must be increased in line with inflation in order for the higher education institutions to be able to carry out the same activities as the year before. Otherwise, it is a cutback. For universities and colleges, the calculation this year takes place according to a university index of 3,5%.
An increase of 3,5% when inflation is at 7,5%. Does this mean that the gap of a full 4% disappears from the higher education institutions' grants? No, it's not really that simple...
The total enumeration of grants is calculated based on a number of different expenses:
According to the government's calculations, salaries per employee within the state are expected to increase by 2,93% in 2024. At the same time, the government believes that there is room to impose an efficiency requirement in the form of a "productivity deduction" of 1,84% on personnel costs. The productivity deduction has been a recurring element in the state budget since the 1990s, and in the long run leads to a severe erosion of resources.
In addition, there is compensation for increased premises costs, through a rent index, which this year stands at 7,6%.
Finally, there is an index for "other administrative costs", which is calculated for the costs that do not apply to salaries or rents. This year, that item adds up to 8,37%, so slightly more are the latest inflation figures.
The reason the college index is only added up by 3,5% is because of how these costs are added up. Just over 60% of the higher education institutions' costs are salaries, premises make up just under 30%, and other costs just under 10%. This means that the wage index, which is significantly below inflation, has a large impact in the calculation. Even if we accept this calculation, large sums are missing because of the productivity deduction: the markup would have to be 4,7% to cover the higher education institution's salary costs. The appropriations for education at basic level and advanced level amount to SEK 2024 billion in 30. The missing 1,2% corresponds to SEK 360 million.
SEK 360 million will thus disappear from the education grants due to the productivity deduction.
The tuition fee for 2024 increases by 8,33%, as it is adjusted against the price base amount. The function of the price base amount is that certain government subsidies must follow inflation. This is very important so that the supports do not erode over time. The inflation rate has varied during the year but was 7,5% in August, a decrease from July when the inflation rate was 9,3%. In that sense, the increase in the tuition fee is an adjustment of the previous purchasing power of the tuition fee.
At the same time, for example, food prices have increased by 21% since January 2022, which is a large expense for students.
The new interest rate model that was introduced for 2023, which meant an increase in the interest rate on student funds, remains in place. This interest rate increase has been strongly opposed by SFS. Last year, this meant that the interest rate was raised from 0 to 0,59%. The interest rate for 2024 will not be determined until January 1, 2024, but is expected to rise further. The new interest model results in the state's expected losses for student funds being reduced, which can be seen in this budget. It has been funded by the interest rate surcharge for borrowers introduced in 2023.
The government has previously announced increased funding to CSN for the administration of the transition study support of SEK 50 million. At the same time, however, general savings are implemented in the state administration, which at the same time reduces the allocation to CSN by SEK 11 million, respectively a decrease of SEK 190 for the Student Support Appeals Board.
Investment in engineering education
The government has previously announced an investment in technical education, in the form of more places and a corresponding expansion of the study material. The reimbursement amount for Natural science, technical, pharmaceutical education area is increased by 1,6%, in addition to the addition of 3,5% that is made for all reimbursement amounts. At the same time, a targeted expansion of SEK 49 million is being made for more places in engineering education. In addition, a broader investment in advanced level education of SEK 74 million is made.
In order for more people to be able to attend a qualifying education and be able to start an engineering education, the government pushes to SEK 23 million for the technical base year.
The government also wants to expand the opportunity for engineers to further their education, and is therefore introducing development funds of a total of SEK 30 million to develop short courses for professionals, which are to be used for courses focusing on batteries, technology and green transition.
However, it is important to remember that all areas of education are affected by general cutbacks and efficiency requirements, including technical education. The investments described here will thus be partially eaten up by cutbacks and missed enumerations.
Housing allowance and housing
The housing allowance is not automatically adjusted against the price base amount and no increases in the allowance are announced. With the cost increases and inflation, this means in practice a reduction in the housing allowance. The allocation for the housing allowance is at an unchanged level for 2024, but it is announced that it will decrease in future years when the temporary supplementary allowance is removed.
The temporary increase in the supplementary allowance for families with children is extended until June 2024.
The government announces that it intends to come back with a proposal to introduce monthly data as an income basis when calculating housing allowance. This is very positive as the current system leads to a high risk of debt for students, which SFS repeatedly highlights. However, it remains to be seen whether it will actually be introduced.
The investment support is still being phased out and is estimated to be fully phased out by 2026. The government justifies this by saying that costly subsidies do not solve the housing shortage. At the same time, the government states that more housing is needed. The Housing Authority forecasts that the number of completed homes will decrease significantly in 2024 and the years to come.
It is therefore particularly noteworthy that no government incentives for increased new construction are announced in the budget bill.
A temporary support for conversions from, for example, offices to housing is introduced at 20 million and then amounts to 25 million in the coming years. A temporary support is also introduced to the municipalities to plan more buildable land, especially for detached houses, of 60 million.
In Sweden, there is a general housing shortage. All types of housing are needed. However, most students live in apartment buildings. The investment in increased single-family house construction when the new construction of apartment buildings is at a standstill is therefore a priority contrary to the students' needs. In addition, the phasing out of support for energy efficiency in apartment buildings continues. That the housing policy is aimed at prioritizing housing that few students have the opportunity to use is the wrong way to go.
Expansion of YH
The government and the Sweden Democrats have previously presented an expansion of the university of applied sciences. In the budget bill, the government states that it is prioritizing funds for more places both within the university of applied sciences and vocational adult education.
The investment involves approximately 3 places at the university of applied sciences and 000 places in regional vocational education. The expansion of the university of applied sciences is particularly interesting, as it is sometimes described as an alternative to certain university educations. An inquiry has recently proposed developing YH training as a supplement to university education. The expansion of YH can therefore in the long term affect students in higher education. The grant for the University of Applied Sciences Authority (MYH) is increased by SEK 16 million for 500, linked to the expansion.
We already know that the regions' ability to receive students for business-based education (VFU) is affected by how strained the business in general is. It remains to be seen whether the regions' ability to receive VFU students is affected by the regions' increasingly strained finances.
The budget bill does not contain much about VFU. The compensation amount for VFU is calculated in the same way as other compensation amounts, with 3,5%.
The government mentions in the budget proposal that a special investigator, who will act as national coordinator, has previously been tasked with supporting universities, health and medical care authorities and care providers in collaboration around VFU.
Much of the government's research policy will be presented in the research bill that will be presented in the fall of 2024. The budget bill mentions, among other things, that the government intends to steer more towards excellent research rather than breadth. Otherwise, no news is presented in the research area that is deemed to have any major effect on education at first and second level.
University and College Council will receive reduced grants in the coming year. For the work with a web portal for student health, however, UHR's grant will be increased by SEK 1 starting in 000.
The higher contribution to certain students who study further after introductory program in upper secondary school being wound up.
The government also announces that they intend to expand medical education starting in 2027, i.e. after the next election.
Those universities with ongoing trial activities with a new shorter one supplementary pedagogical education (KPU) receives some increase in targeted funds, and the budget bill states that shorter KPU should be expanded to more universities and more people should be able to study within shorter KPU.
A Cyber Campus to be established at the Royal The Institute of Technology, with the aim of strengthening both society's defense capabilities and Sweden's competitiveness.
Something about the future
The budget bill for 2024 results in a decrease in the number of study places in higher education. This partly reflects a reduced search pressure in the past year. At the same time, it is worrying for the future. In the next few years, the search pressure is expected to increase for higher education. Partly as a result of increasingly large cohorts of young people expected to graduate from high school, partly in combination with the fact that more and more professionals are seeking further education. Source: UKÄ annual report 2023
In order to be able to meet the increased application pressure, the universities need to be prepared. The alternative is that the proportion of the population that goes on to higher education decreases. With a reduced number of education places, the preparedness of the higher education institutions decreases and the opportunities to meet the skills shortage decrease significantly. That is not what Sweden as a nation of knowledge needs. Especially not when it happens in combination with less and less teacher-led time and greatly weakened conditions for exercising student influence. This budget bill leaves a lot to be desired, to say the least.