For discussion FCR(96-97)74
on 29 November 1996

ITEM FOR FINANCE COMMITTEE

HEAD 177 - SUBVENTIONS : NON-DEPARTMENTAL PUBLIC BODIES
Subhead 318 Hong Kong Institute of Education
HEAD 190 - UNIVERSITY GRANTS COMMITTEE
Subhead 492 Grants to UGC-funded institutions
Subhead 496 Refund of rates - UGC-funded institutions
Subhead 761 Grants towards academic exchanges (block vote)

Members are invited -

1. to approve supplementary provision of $308,372,000, $2,360,000 and $462,000 respectively for Head 190 University Grants Committee Subhead 492 Grants to UGC-funded institutions, Subhead 496 Refund of rates - UGC-funded institutions and Subhead 761 Grants towards academic exchanges (block vote), to be offset by deleting an equivalent total amount from Head 177 Subventions : Non-departmental Public Bodies Subhead 318 Hong Kong Institute of Education; and
2. to accept the recurrent funding for the Hong Kong Institute of Education estimated at $753,218,000 and $776,662,000 for the 1996-97 and 1997-98 academic years respectively.

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PROBLEM
PROPOSAL
JUSTIFICATION

Proposed Funding Arrangements
Acceptance of Recurrent Funding
FINANCIAL IMPLICATIONS
BACKGROUND INFORMATION
Detailed Breakdown of Net Earmarked Recurrent Grants for HKIEd for 1996-97 and 1997-98 Academic Years

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PROBLEM

The Governor designated the Hong Kong Institute of Education (HKIEd) as an institution under the aegis of the University Grants Committee (UGC) with effect from 1 July 1996. It is necessary, as a consequence, to put funding for the HKIEd under the UGC head of expenditure and to transfer the vote controlling responsibility for the Institute from the Secretary for Education and Manpower (SEM) to the Secretary-General, University Grants Committee (SG, UGC).

PROPOSAL

2. The SEM proposes the following -

1. supplementary provision of $308,372,000, $2,360,000 and $462,000 respectively for Head 190 University Grants Committee Subhead 492 Grants to UGC-funded institutions, Subhead 496 Refund of rates - UGC-funded institutions and Subhead 761 Grants towards academic exchanges (block vote), to be offset by deleting an equivalent total amount from Head 177 Subventions : Non-departmental Public Bodies Subhead 318 Hong Kong Institute of Education. This is to formalise the funding under the UGC of the HKIEd and to transfer vote controlling responsibility for it from SEM to the SG, UGC with effect from 1 December 1996; and
2. the acceptance of the recurrent funding for the HKIEd at $753,218,000 and $776,662,000 for the 1996-97 and 1997-98 academic years respectively, to enable the UGC to finalise the level of grants for the HKIEd for the remaining period of the current (1995-98) triennium.

JUSTIFICATION

3. We established the HKIEd in April 1994 to provide sub-degree courses on teacher education. The Institute has a significant role to play in the provision of quality teacher education and training to the teaching profession in Hong Kong. The Administration has brought HKIEd under the aegis of the UGC for the following reasons -

1. the UGC has a well-established monitoring and financial assessment mechanism for tertiary institutions. The HKIEd, at its initial stage of

   institutional development, could benefit from the academic expertise of the UGC. The UGC could advise the Government on the future development plans of the HKIEd as well as on the development of teacher education in the tertiary education sector as a whole;

2. it would enhance the HKIEd’s image and status as a UGC-funded institution and enable it to attract more students, and also students of better quality; and
3. the HKIEd would be able to become more of an integral part of the academic community.

Proposed Funding Arrangements

4. The approved Estimates for the HKIEd for the 1996-97 financial year is $699,758,000. To tie in with the UGC-funded institutions’ financial and academic year which runs from 1 July to 30 June, the UGC has assessed that the HKIEd would require recurrent funding of $753,218,000 and $776,662,000 for the academic years 1996-97 and 1997-98 respectively, broken down as follows -

5. The HKIEd will be subject to the same set of budgetary and expenditure control mechanisms currently applicable to the other seven UGC-funded institutions. For instance, any virement between the four headings of expenditure under the net earmarked recurrent grant, namely senior staff, subordinate staff, equipment and general expenses, would require the UGC’s prior approval. In respect of purchases of equipment, the UGC would apply the existing Inter-Institutional Equipment Committee (IIEC) procedures to the HKIEd. That means the HKIEd would have to refer to the IIEC for comment all purchases of equipment over $1 million and seek approval of the SG, UGC on the advice of the IIEC.

6. The proposed net recurrent grants for the 1996-97 and 1997-98 academic years will support 4 865 and 5 048 full-time equivalent students respectively.

Acceptance of Recurrent Funding

7. Members accepted on 17 February 1995 the recurrent funding for the then seven UGC-funded institutions estimated at $27,013.8 million for the 1995-98 triennium [FCR(94-95)116]. In order to finalise the level of grants for the HKIEd for the remaining period of the triennium, the UGC recommends that Members accept the recurrent funding requirements as detailed in paragraph 4 above.

FINANCIAL IMPLICATIONS

8. The proposal is cost neutral and will not incur any additional resource requirement on the Government. The amount of recurrent funding for the HKIEd for this financial year will remain the same as previously approved, at $699,758,000.

9. The funding arrangement for the 1996-97 financial year is as follows -

The revised Estimates for Head 177 Subhead 318 for this financial year will be $388,564,000 for the period 1 April 1996 to 30 November 1996.

10. If Members approve the proposals in this item, we will include the necessary provisions for the HKIEd for the last three months of the 1996-97 academic year and the first nine months of the 1997-98 academic year in the 1997-98 draft Estimates under appropriate subheads of Head 190 University Grants Committee.

BACKGROUND INFORMATION

11. We established the HKIEd on 25 April 1994 with a view to upgrading teacher education and professional development for teachers. The Governor designated the HKIEd as an institution under the aegis of the UGC with effect from 1 July 1996. The Legislative Council also approved amendments to the HKIEd Ordinance on 20 November 1996 to bring it in line with the legislative provisions for other UGC-funded institutions.

Education and Manpower Branch
November 1996

(1) -- In line with the funding mechanism for other UGC-funded institutions and for better budgetary control, the UGC will fund the HKIEd via the Earmarked Recurrent Grant system under which the HKIEd would disburse its earmarked grants under four major headings for senior staff, subordinate staff, general expenses and equipment. Detailed breakdown of the net earmarked recurrent grants is in the Enclosure.
(2) -- Including Teaching Development Grants, Language Enhancement Grants, and supplementary funding for the Earmarked Research Grants administered by the Research Grants Council, etc.
(3) -- Excluding the requirements arising from the HKIEd's new Tai Po Campus as the Commissioner of Rating and Valuation will only be able to determine the rates of the new campus when it si completed in mid-1997.

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Enclosure to FCR(96-97)74

Detailed Breakdown of Net Earmarked Recurrent Grants for HKIEd for 1996-97 and 1997-98 Academic Years

(a) -- In assessing the HKIEd's funding requirement, the UGC has taken into account other income of the Institute, including tuition fees, bank interest income, staff quarters rental and shuttle bus operation income. The assumed level of such income is estimated to be $49.1 million and $51.4 million in the 1996-97 and 1997-98 academic years respectively.
(b) -- Arising rom the 1996 civil service annual pay award.

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