The National Audit Office made a survey in 2017 which showed that the higher education institutions' authority capital, i.e. saved money, had increased significantly. Since then, no national follow-up has been published, even though the National Audit Office recommended that it be reviewed systematically. In a new compilation, it appears that the capital for education has been greatly reduced.
Universities and colleges can build up authority capital by saving unused funds from previous years. In 2017, the National Audit Office published an audit which showed that the higher education institutions' authority capital had increased and amounted to 19 percent of their turnover at the end of 2016. The National Audit Office considered that the higher education institutions did not fully utilize the space given for operations.
Since then, society has undergone changes that have had significant effects on universities and colleges. The corona pandemic led to an increase in the number of students at the same time as the conditions for the business changed dramatically for a period. This was followed by a period of sharply rising inflation, which has also led to increased costs for the universities. Both of these events could potentially have affected the higher education institutions' finances to the extent that it affects their saved authority capital.
This report aims to follow up how the higher education institutions' authority capital has developed during the period 2016–2023. Despite the fact that the National Audit Office recommended that the authority's capital be followed up, there has been a lack of systematic follow-up at national level.
We can state that the authority's capital for research is more or less unchanged. There are some differences between different types of higher education institutions, as the research capital at, for example, colleges and new universities has been somewhat strengthened, while it has decreased at broad established universities. All in all, the development indicates that research has relatively stable and long-term prospects.
Our follow-up indicates that educational activities are characterized by greater challenges. The authority's capital for education has decreased significantly in recent years, especially in the years 2021–2023. Most universities have made negative results and have to draw from the saved capital to finance the educations. It has also led to the overall reduction of the higher education institutions' authority capital.
As a short-term solution, we suggest that the government introduce more flexible rules for how research grants and education grants can be used. By using more stable research grants to cover temporary budget deficits on the education side, it is possible to stabilize and increase the long-term sustainability of the business. In the long term, however, education grants need to increase to cover the increased costs of recent years. The alternative would be to lower the expectations of higher education, something we as a knowledge-based society cannot afford.