The future of governance in private higher

education providers

Presenter:Dr Peter RyanAdjunct Senior Lecturer, ASM

Adelaide - 29th August 2013

Key questions• What is the impact of independent governance

on private higher education providers that operate as tightly held owner operators?

• Is the owner always the best person to be the CEO?

• How can the funders of private higher education maintain adequate control of their investment?

• In the future will proprietary companies need to behave more like small unlisted companies to be a higher education provider?

But first some statistics…

QA JUN2011 GA099

Higher Education Providers by ownership

Type of institution

Australian university

Overseas university

University of specialisation

Higher education provider

Total

Government owned institutions

36 23 59

Church owned institutions 2 1 23 26

Privately owned institutions

2 2 81 85

Total 40 2 1 127 170

Source: TEQSA National Register, Retrieved 16 August 2013 from www.teqsa.gov.au/national-register

… and some more statistics…

QA JUN2011 GA099

YEAR NEW APPROVALS

2005 13

2006 15

2007 7

2008 1

2009 6

2010 9

2011 12

2012 0

2013 (to date) 1

TOTAL 64

The “New” HE Regulatory Framework

QA JUN2011 GA099

Qualification Standards and

Australian Qualifications

Framework(AQF)

HE Standards Panel

HE Standards Framework

Tertiary Education Quality and Standards Agency Act 2011

Tertiary Education Quality and Standards Agency

(TEQSA)

HIGHER EDUCATION APPROVAL PROCESSES

Registration as a higher education

provider (NSA-HEP)Accreditation of higher

education courses

Education Services for Overseas Students Act

2000 (ESOS)

Higher Education Support Act 2003

(HESA)

Commonwealth Government

For initial applications will be assessed together

Endorsement to recruit and deliver courses to

overseas students

Approval as a Higher Education Provider

(FEE-HELP HEP)

These approvals are optional

Commonwealth Department of

Industry, Innovation, Climate Change,

Science, Research and Tertiary Education

(DIICCSRTE)

Provider Registration Standards

Course Accreditation

Standards

Typical governance structure in a private HEP

QA JUN2011 GA099

Governing Body

(Board of Directors)

AcademicBoard

Teaching and Learning

Committee

CourseAdvisory

Committee(s)

ExecutiveManagement

Academic governanceCorporate governance

What does independent governance mean?

QA JUN2011 GA099

• The separation of ownership from management (Provider Registration Standard 3.3)

• The separation of corporate and academic governance (Provider Registration Standard 3.7)

Is the owner the best person to be the CEO?

QA JUN2011 GA099

• In some cases – no

• The CEO is selected by the Board of Directors and, if necessary, removed by the Board of Directors

• The Board of Directors monitors the performance of the CEO

• If the owner is the CEO how is the separation of ownership from management achieved?

How can the funders of private higher education maintain adequate control of their

investment?

QA JUN2011 GA099

• The owners must select directors that have the skills to oversee the finances of the HEP effectively

• The Board must select a CEO who has the skills to meet financial forecasts and manage the HEP’s finances

What is the future for tightly held proprietary companies

that are HEPs?

QA JUN2011 GA099

• Independent corporate governance mandatory

• Owners do not control the business operations

• Financial reporting at a high level

5 components of good governance

QA JUN2011 GA099

Five components of

good governance

Independence Expertise

Breadth of knowledge

Clarity of purpose

Leadership

Questions?

QA JUN2011 GA099