Tag Archives: state universities and colleges

Trapo Alert! Detecting political pandering, part 5

Panderometer

Featuring Teddy Casiño, Democratic Party of the Philippines and Ang Kapitiran candidates.

This is the fifth part in a series on the candidates for the senate in 2013. Just a recap: I am attempting through this series to have a serious discussion of the aspirants and their political platforms (or lack thereof). These are put through what I call the pander-o-meter to determine whether the policy detail they have released so far places them in either the reformist or populist columns. The following table details the range of possible scores a candidate can get and the equivalent meaning of each reading:

Introducing: the ‘Pander-o-meter’ or Trapo Scale

A reading of… …is equivalent to…

1-2

Low levels of pandering detected, generally reformist in nature

3

A mixed bag of proposals aimed at both pandering and reforming

4

Trapo alert! Approaching dangerous levels of pandering

5

Could be likened to a vote buying trapo

In part 1, I covered Juan Edgardo Angara, JrBenigno Aquino IV and Alan Peter Cayetano. In part 2, I covered Francis Escudero, Risa Hontiveros and Loren Legarda. In part 3, I covered Aquilino Pimentel III,Joseph Victor Ejercito and Juan Ponce Enrile, Jr. In part 4, I covered Gregorio Honasan, Ernesto Maceda and Juan Miguel Zubiri.

In this edition, I will be covering Teodoro Casiño, the candidates of the Democratic Party of the Philippines and the Ang Kapatiran Party.

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Teodoro “Teddy” Casiño (Makabayan) is the lone candidate of his party which has adopted a “ten point agenda”. This agenda reads more like a vision statement, similar to the Liberal Party’s social contract formulated for the 2010 elections.

The party-list representative is seeking to offer an alternative to the two main coalitions whom he portrays as being cut from the same cloth, but his stand on issues tends to reflect what he is opposed to rather than what he would affirm as a senator. Perhaps this is the luxury of being in the minority—you don’t need to present a detailed policy position, just simply oppose things.  I will highlight a few of these positions below:

  • His opposition for instance to the Pantawid Pamilya or 4P’s program, deriding it as a “dole out” is surprising, given that it was patterned after reforms developed in Mexico and Brazil and supported by left-leaning governments. He asserts that providing employment or teaching people to fish rather than giving them fish should be the priority. The problem is that people who are locked in a poverty trap aren’t able to earn enough to sustain their families due to low educational attainment. This leads their children to have low levels of health and education which perpetuates the cycle. The 4P’s helps break people out of that trap.
  • His opposition to the sin taxes bill, which he characterises as simply revenue generating, not a real solution to the health problems associated with vices, is also quite puzzling given that part of the revenues raised will be used to support disease prevention and treatment. I suppose he would also oppose my proposal of imposing a “fat tax” on unhealthy food and drinks on the same grounds, despite the evidence which shows that it influences eating behaviour.
  • He opposes the kindergarten to Year 12 or K+12 reforms, saying it is an added burden to families. He wants the government to focus on addressing the classroom deficit instead (which by the way, the government is saying will be addressed by the time K+12 is fully implemented). Unfortunately, he fails to realise that part of the reason employers demand at least two years of college these days for entry level positions is because a Year 10 secondary qualification simply is not enough.
  • It actually costs less to deliver two extra years of secondary education than two years of university. What in fact we ought to do is extend the 4P’s program so that youths stay in school and finish high school as was the findings of a recent review of the program. Our unemployment problem is largely due to the fact that youths are forced to work at age 15 or even younger. Very little in terms of future career opportunities arise for them if they do.
  • He wants to put a cap on fees charged by higher education institutions to prevent “excessive profiteering” and seeks to uphold student’s rights to free education (translation: no tuition fees should be charged by state universities and colleges or SUCs). The country’s high participation rate in tertiary education relative to other lower middle income countries reveals we are already punching above our weight.
  • We don’t need to incentivise this further by offering tuition free studies. What we need to do is help families finance the cost of it (through 4P’s and student loans), improve quality and ensure that people are equipped with the right skills that are in demand by industry, and that could mean encouraging vocational education and training, which is what the K+12 reform seeks to do. If the country is to rapidly industrialise as per Makabayan’s platform, greater focus needs to be placed on technical training and vocational education.
  • Makabayan supports the growth of small and medium sized enterprise, and yet it would raise minimum wages to levels which would put many of them out of business. These are contradictory statements. The way Mr Casiño would solve this problem is to have government subsidise electricity and other costs of business. He hasn’t specified at what cost to the government and taxpayer, though. This reflects policy thinking that is disjointed and not well-thought through.

Overall comments:

Some of the positions that Mr Casiño holds are quite surprising. Motherhood statements and muddled policy prescriptions that seek to please different sectors while at the same time undermining them.

In addition, Makabayan fails to provide us with an alternative program of government. They say they want to promote the growth of industry through a kind of state sponsored capitalism. Their platform however fails to specify how that will come about. What will be the framework for promoting industry in the country? Which industries will they target? How will they steer investments that way? What kind of economic bureaucracy will they foster? These are questions that remain unanswered.

This demonstrates that Makabayan is perhaps not quite ready to rule the country yet. Sometimes I wish they would be given a chance to do so, so that they could then realise just how untenable their positions are.

Pander-o-meter: 4 out 5

Note: while drafting this piece, Makabayan’s webpages that contained their 10 point agenda and stand on issues was replaced with two infographics presentations. The simplification of their message has softened the tone. The commentary provided above reflects the detailed policy statements present in the previous versions of the web pages.

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DPPCandidates

The Democratic Party of the Philippines (DPP) has fielded three candidates (from L-R as seen above): Bal Falcone, Christian Señeres and Greco Belgica. On its website, the party has published a 12 point platform. Space does not allow me to cover all of them, but there are a few interesting bits that include.

  • Funding of political parties during elections
  • Moving to a federalist, parliamentary form of government
  • Adopting the jury system

Unfortunately, their website does not provide any policy detail beyond perfunctory statements. In addition, Mr Belgica has a four point plan which is listed on his personal Facebook page, which includes:

  • Imposing a flat tax of “not more than 10% for individuals or corporations.” The current tax system which collects less than 20% of GDP he calls “excessive”.

These proposals from the DPP focus much on the political system. They probably see the design of constitution as problematic. They do have economic policy statements too, but they tend to be quite general in nature. The most specific economic policy they have is to promote the export of halal food.

Overall comments:

The DPP wants to overhaul our political system and one of their candidates wants to overhaul our tax system. These policy positions reflect a kind of high-brow intellectual approach to our country’s development needs. Although they have been supported by academics and policy elites  there really isn’t a strong push either from the business community or civil society for them. They run the risk of becoming locked up in their ivory towers.

There also needs to be more detail. We cannot read their minds or interpret much from the statements they have released so far. Although the major parties are themselves not clear on their agenda, it is incumbent on minor parties to be more forthright and transparent about their policies and programs.

Pander-o-meter: 3 out of 5

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AKPCandidates

Ang Kapatiran Party has fielded three candidates (from L-R as seen above):  John Carlos “JC” delos Reyes, Lito David, and Mars Llasos. It has published a 50-point platform that begins with the “spiritual dimension” which involves “seeking the kingdom of god” as its first point. This party represents the social conservative movement in the Philippines, with its Pro-Life and opposition to violence portrayed in video games and the media. Unlike conservatives in the US however it also supports gun control.

Among its political advocacies are enacting a freedom of information law, the banning of political dynasties and the abolition of pork barrel.

Overall comments: 

The Kapatiran Party raises questions about the role of faith in politics. They should however exercise some caution that in promoting their religious convictions to society through public policy not to infringe on the rights of their fellow citizens in exercising personal choice. According to most religious beliefs, we are endowed with free will. What this party has sought to do is pander to the wishes of those who want to impose religious and moral codes of conduct on others who may not subscribe to them. That is the essence of “brotherhood” or solidarity among men (and women)  in a free and open society.

Pander-o-meter: 4 out of 5

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Up next: Grace Poe-Llamanzares, Eddie Villanueva and Richard Gordon.

Trapo Alert! Detecting political pandering, part 3

Panderometer

Featuring Koko Pimentel, JV Ejercito and Jack Enrile.

This is the third part in a series on the candidates for the senate in 2013. Just a recap: I am attempting through this series to have a serious discussion of the aspirants and their political platforms (or lack thereof). I have identified nineteen so far that have articulated some kind of policy agenda in running for a seat in the upper house. These are put through what I call the pander-o-meter to determine whether the policy detail they have released so far places them in either the reformist or populist columns. The following table details the range of possible scores a candidate can get and the equivalent meaning of each reading:

Introducing: the ‘Pander-o-meter’ or Trapo Scale

A reading of… …is equivalent to…

1-2

Low levels of pandering detected, generally reformist in nature

3

A mixed bag of proposals aimed at both pandering and reforming

4

Trapo alert! Approaching dangerous levels of pandering

5

Could be likened to a vote buying trapo

In part 1, I covered Juan Edgardo Angara, Jr, Benigno Aquino IV and Alan Peter Cayetano. In part 2, I covered Francis Escudero, Risa Hontiveros and Loren Legarda.

In this instalment, I will be covering Aquilino Pimentel III,Joseph Victor Ejercito and Juan Ponce Enrile, Jr.

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Aquilino Pimentel III (PDP-Laban-Team PNoy) has served less than half his term as senator since he spent the first half proving that he was the rightful occupant of the 12th slot in the 2007 senate race.  His father was also a victim of cheating, which makes him a strong advocate of clean, honest elections. A good portion of the time he has served as senator though was occupied by the impeachment trial, which left little opportunity for lawmaking. But in that time, Koko as he is fondly called was able to propose one significant measure, which is discussed below.

“Hating Kapatid” of revenues between local and national governments: will increase the share allocated to local government units (LGUs) to 50% from the present 40% and will consider all national revenues in determining this share, not just taxes collected from the internal revenue agency (that means local governments would get 50% of customs, VAT, and other forms of income).

My critique:

It is important to know what problem this proposal seeks to solve. If it is to make local governments fiscally more autonomous, then what the bill will do is make them even more dependent on Internal Revenue Allotments (IRA) from the national treasury. There have been problems identified with the current method of distributing IRA (50% based on population, 25% on land area, and 25% on equal sharing) which does not necessarily match revenues with costs or responsibilities and capacities. This proposal seeks to address the current mismatch by simply throwing more money at the problem by increasing the take of LGUs.

An alternative approach would be to increase the capacity of local governments to raise revenue autonomously from the national government. A discussion paper by the Philippine Institute of Development Studies noted back in 2009 that there was an “emerging consensus” which was “to amend Book II (Local Taxation) of the Local Government Code, which has the common support of the DILG and the various leagues.” The proposed package of reforms could raise revenues of local governments by about a third without increasing their cut from the national government.

As Fitch Ratings agency recently remarked, our government’s tax collections are abnormally low, relative to other countries that receive the same BBB- rating. The challenge therefore is to achieve the policy goal of raising the revenues of LGUs relative to the national treasury not by increasing its IRA but by amending existing laws to enable them to raise revenues on their own. That would be true fiscal autonomy responsive to the needs of local communities.

Overall comments:

When we talk of local government, there are two people that usually spring to mind. They are the former Senator Aquilino “Nene” Pimentel, Jr, the father of the Local Government Code of 1991, and the late-DILG secretary Jesse Robredo. Kaya Natin, a good governance advocacy group recently endorsed Senator Koko Pimentel, the son of the former, as a champion of the latter’s approach to reform.

Koko Pimentel is clearly seeking to further the reforms begun by his father, which have been credited with improving the quality and development capacity of LGUs nationwide. In principle, the cause of furthering local autonomy is quite laudable because it allows the allocation of resources to be determined by officials who are closer to where the needs are. There are many good examples of local innovations resulting from this practice. There are however a lot more cases in which LGUs have wasted and mismanaged resources transferred to them by the national treasury.

The late Jesse Robredo sought to correct this problem by encouraging LGUs to adopt best practices through a system of block grants and reward payments. Increasing the IRAs of LGUs has in the past limited the funds available to engage in such efforts. What this means is that we clearly have a choice of two philosophies. Senator Koko Pimentel’s approach of “hating kapatid” sounds folksy and politically easier to convey, but the evidence from over two decades of implementing the Local Government Code tends to point towards a different direction. Clearly, it is the one that Jesse Robredo would have favoured.

Pander-o-meter: 3 out of 5

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Joseph Victor Ejercito (PMP-UNA): the former mayor and congressman of San Juan has a thirteen point agenda listed on his website. These thirteen points fall under four priority areas: education, jobs, worker protection and Mindanao. This clearly echoes the priorities of his half-brother, Senator Jinggoy Estrada who has served as chairman of the senate committee on labour and the brand of his father, former President Joseph “Erap” Estrada whose popularity in Mindanao is without question. These priorities are covered below:

  1. Education: creating regional hubs for higher education, while increasing the budget for state colleges and universities (SUCs), encouraging youth development and monitoring the K+12 implementation.
  2. Jobs: improving higher education curriculum to match industry requirements, encouraging tourism investment through “innovative incentive packages”, stimulating agriculture investment in new technologies, infrastructure and market access, redesigning the Pantawid Pamilya program by converting it into a disabilities and pension scheme and redirecting it towards LGUs, and supporting LGUs in their livelihood programs.
  3. Worker protection: providing accessible government support services to overseas Filipino workers, improving health and safety measures within the business process outsourcing industry and monitoring the implementation of the Kasambahay Law.
  4. Mindanao: promoting economic development and power generation on the island.

My critique:

The priorities read, unsurprisingly like a list of motherhood statements and vague policy pronouncements. There is nothing in them that tells us what the outcome would look and feel like on the ground or what they would cost. The proposal for creating regional hubs for higher education could for instance mean amalgamating or merging some SUCs or it could mean increasing the number of SUCs. As he notes, the government has already increased spending in this area, so how much would be enough? The answer seems to be more than whatever the budget is. How can you arrive at a realistic outcome, then?

Does he intend to encourage the gerrymandering of SUCs as I have termed it, or does he intend to arrest it? We can’t really tell from his statement. Increasing the SUC budget is one thing, but allowing it to remain inefficient is another. Serious reform is needed in the sector which would improve the quality of the spending first, before significant budget expansion is done in my opinion.

Secondly what does he mean by “innovative incentive packages” to encourage tourism? I am worried especially as he cites the upgrade of hotels and restaurants near tourist spots needing attention. To my mind, these businesses aren’t infrastructure, at least not since the time of Imelda Marcos as Metro Manila governor have they been regarded as such. The same goes for his statement about encouraging investments in productivity improving technology in the agriculture sector. Here he cites hand tractors. What happened to Erap’s Karabao Bill?

Thirdly, the proposal to break up the Pantawid Pamilya and transform it into a disabilities and old age pension scheme would mean the health and educational outcomes noted recently by the World Bank (lower incidence of malnutrition and stunting, which if unchecked become irreversible and cause long-term learning difficulties) would not be maintained. That to my mind is not productivity enhancing.

Finally, just a quick note on the Kasambahay Bill. JV claims to have been one of its “principal authors”, but a search on the website of the House of Representatives shows only one bill sponsored jointly by Diosdado and Gloria Macapagal Arroyo. It was actually Jinggoy Estrada who sponsored the bill in the Senate. I wonder then what JV’s contribution was to the measure.

Overall comments:

Joseph Victor Estrada is following in the footsteps of his father and half-brother by promoting policies that they have championed and the career path they have taken. The way his policy statements are crafted, it sounds like he has very specific measures in mind. Then again, he might only be posturing. Even with the vagueness of his policy statements though, there are deep reasons to be concerned.

Pander-o-meter: 4 out of 5

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Juan Ponce Enrile, Jr (NPC-UNA): the congressman of Cagayan is lifting a page from his father’s playbook by using consumer rights and protection issues to anchor his electoral base in his first senate run. His dad used the high cost of electricity as the defining issue of his candidacy in 2004, and Jack as he is fondly called plans to use food security as his platform. He makes use of the slogan, “Murang pagkain, maraming pagkain”(affordable and abundant food) as the catchphrase of his campaign, but what does it actually mean?

The Food for Filipinos First Bill he co-authored with Walden Bello of Akbayan in the lower house seeks to create a national food requirement plan through the Department of Agriculture, re-organise the National Food Authority into a corporation that would ensure sufficient food is secured for domestic consumption, protect agricultural and fishing zones, promote agricultural education, training and credit, and improve the competitiveness of local produce by eliminating subsidies and enforcing anti-dumping and anti-smuggling measures with respect to food products.

My critique:

The package is perhaps one of the most comprehensive set of reforms in the agricultural sector to ever be proposed in the house. Walden Bello who has been a strident anti-globalisation activist and proponent of agro-industrial development has forged an unlikely alliance with Jack Enrile to sponsor this bill (who would have thought we would be mentioning both their names in the same sentence?). If Jack makes it to the senate, he has promised to advance it there.

Overall comments:

The Aquino government is already working towards making the country self-sufficient in rice production and its aim is for us to be a net exporter of rice before its term ends. The proposal of Bello and Enrile would apply the same principle across all agricultural sectors and institutionalise its application. This is a positive step and a long overdue one in my view.

Despite his motto sounding rather pie-in-the-sky-ish (sorry for the pun), Jack has actually done his homework here in determining a legislative priority with strong reform credentials. Much of this, it might be argued, could have been influenced by his co-author, the esteemed scholar, Walden Bello, but that is beside the point. The fact of the matter is, he has made a commitment towards enacting it, and that is what counts.

Pander-o-meter: 1.5 out of 5

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Up next: Gregorio Honasan, Ernesto Maceda and Juan Miguel Zubiri.

Higher Education Reform

This is a follow-up piece to an earlier post, The Wrong Solution to the Right Problem.

At the start of every academic year, the lenses of the media are trained on the educational system. A lot of focus is paid to the rising cost of tuition particularly at higher education institutions (HEIs) and state universities and colleges (SUCs). Legislators take advantage of this attention often by sponsoring bills that seek to provide scholarships to “poor but deserving students”.

This led me to dig up all the pending senate bills at the 15th Congress where if you visit their website and do a search by using the word “scholarship”, you will find that there are 19 such bills (excluding the latest one, which I picked apart last week). All but four of these bills were filed in the month of July near the start of classes (what a coincidence).

To give you a bird’s eye view of the proposals, I would like to offer the following table which itemizes each bill’s intended beneficiaries, their sources of funding and authors/sponsors:

Scholarships provided for Sponsor: SB# Source of Funding
Top 5% of high school seniors and all graduating students of science high schools Juan Ponce Enrile: 3074 General Appropriations (GAA) augmented by PAGCOR profits
Household helpers Jinggoy Estrada: 2910 GAA
Family members of policemen, soldiers, firemen and jail wardens Jinggoy Estrada: 2907Miriam Santiago: 2648 (for PNP only)

Manny Villar: 1153

Sonny Trillanes: 305

Bong Revilla: 26

Firearms license fees, 15% of fire code fees and 10% of CHED scholarship grants
Agricultural entrepreneurs/farmers Manny Villar: 2712 10% of the Agricultural Competitiveness Enhancement Fund
Public school teachers and their children Miriam Santiago: 2251 None
Top 30% of graduating students enrolled in pre-medical courses Ralph Recto: 2141Lito Lapid: 1000 Contingent fund and savings of Executive Branch
Poor but deserving students enrolled in state colleges and universities Bong Revilla: 1999  Manny Villar: 1259 None
Poor but deserving students in private colleges and universities Manny Villar: 1229 From tuition fee increase
National and local government officials Manny Villar: 1046Lito Lapid: 1001 Existing local scholarship programs of government and savings of agencies
Women Jinggoy Estrada: 794 GAA
Valedictorians and salutatorians of public high schools Chiz Escudero and Sonny Trillanes (jointly): 170 GAA

These bills seek to either meet a lack of qualified trained professionals and workers in some specialized area like science, medicine or agriculture, or provide access to underprivileged constituents. Majority of them are aimed at improving the compensation and benefits package of public sector employees by providing scholarships to either them or their families. Soldiers, police officers, firemen and teachers are singled out by six separate bills for this purpose.

Most of them rely on the executive to provide from the general appropriations or national budget to finance these entitlements. Those that cite specific sources of funding identify already existing sources such as profits from government corporations or fees from services charged to the public. They merely specify where a portion of these revenues are to be spent, as opposed to mandating new sources of income.

Some of them in fact identify savings as their sole source of funding making the grants entirely contingent on such savings being made. Others do not even bother to identify where the money will come from such as the ones mandating state colleges and universities to satisfy a certain quota for scholars from public schools.

In other words, what happens when these measures are signed into law is that the sponsor gets all the credit for creating the new entitlement while the government is left to scrounge around for the money to pay for it, and often gets blamed when it is unable to do so.

Meanwhile at the lower house, the name of the game is the creation of new SUCs to service the province or congressional district of the sponsoring legislator. Look at the General Appropriations Act of 2012, and you will see what I mean. Under section VIII of the GAA, you will find the budget for SUCs broken down by region and province.

Notice that some provinces have more than one SUC. Out of a total budget of 22 billion per year, a quarter of which goes to UP, you have 112 to fund. With the growing number of SUCs, efficiencies of scale are not gained, and a lot is wasted on duplicating functions and programs. With the gerrymandering of congressional districts comes the gerrymandering of SUCs and the dilution of the budget for the existing ones and their students.

The problem

The main problems besetting higher education are therefore a lack of quality, access, appropriateness and funding. The last one, funding, is what solves the first three. Legislators often aim to address a lack of access to please their electorates, but often to the detriment of quality. The executive tries to address quality and funding, but is often limited by a lack of revenue.

Part of the problem when it comes to funding is that Filipinos have a strong preference for college education. Our participation rates at the tertiary level are higher than what our economic standing as a lower middle income nation merit (see chart below). Nearly one out of every three unemployed people in the country is either a college graduate or undergraduate student.

Data from World Bank

This is in part due to the abbreviated basic educational system which only now is being corrected with the K-12 reform. Admitting students with only a Year 10 attainment has meant HEIs and SUCs have had to “dumb-down” their content which accounts for some of the decline in quality. But extending basic education to Year 12 now means that the government has to expand its conditional cash grants to “poor but deserving students” from the current 14 years of age to at least sixteen.

The challenge from here on out is to make tertiary education efficient, equitable and effective in contributing to our goal of national development. One major way the government can drive serious reforms in this sector and hit multiple birds with one stone is to examine the use of its purchasing power. The second is to look at the way students finance the payment of their fees. Allow me to explain how this works.

The solution

Part One: A new funding model

To improve state funding for higher education, we have to look at the twin components of SUC funding which are government subsidies and student fees (we leave donations and non-education related income aside). Forget what the sign says on the gates of the campus, all SUCs derive their main source of income from the national coffers. Any reference to a city, province or region has more to do with location, rather than ownership. Their governing boards are run by national officials or regional officers paid for by the national government.

Thus the entire SUC budget can be treated as one big scholarship fund. All other existing and proposed funds to promote specific students could potentially be pooled and placed under the control of a national governing board which could decide how to dispose of it. Instead of seeing the SUCs as 112 separate entities, they should be viewed as one national system. The sole exception is UP, which has its own charter.

A funding model needs to be set up wherein funding to SUCs is student based. A set of criteria for determining the subsidy rates per head should take into account program specialization, skills shortages, national priorities, and regional inflation. Eventually, the funds could be made contestable so that if students should decide to enrol at a private college, the money should be able to follow them, subject to quality standards of course. This will drive greater efficiency in the system. SUCs will be encouraged to merge and gain synergy to survive in this new environment.

Some might object that this is a little too hard. That it is much simpler to maintain the current system where the government funds teachers, facilities and equipment rather than students. I would counter by referring to the health system, where this model is already in place through PhilHealth where the government subsidizes the treatment of members through accredited health providers. Health is a much more complex environment compared to education, and yet somehow, the government is able to pull it off.

If the first leg of higher education reform is fixing the public subsidy, the second leg is financing private costs. Despite what student activists might say, tertiary education is not a universal right. To engage in it, one must possess either intelligence or resources. What I am trying to say is if a student makes it to college, he or she is already part of a fortunate few. The rest of the population actually subsidizes those that make it.

Part Two: A new financing scheme

How can we then justify poor Juan dela Cruz paying for Isko the scholar’s studies? Social returns to schooling is the answer. Less productive workers benefit from having highly productive ones in their midst. On the other hand, private returns to education, through increased earnings (compared to non-college graduates), is the reason for making the scholar shoulder part of the cost of training. To be fair to the rest of the citizenry who do not attend college, student contributions to the cost should reflect the split of public and private benefits.

In short, it would neither be sustainable nor desirable for the state to abolish student fees. Filipinos already demonstrate a strong preference for higher education anyway. Despite the low return on investment (nearly one in three unemployed Filipinos are either college graduates or undergraduates), the participation rate of the country is already high compared to other countries with similar levels of per capita income.

The second leg of reform should focus on helping those who have the intellectual capacity but lack the financial resources to finance the costs of higher education. We have already witnessed how private credit and insurance markets have sought to address this problem with varying levels of success for upper middle class families. The challenge is doing the same for poor and lower middle income families.

Milton Friedman was the first to propose providing income contingent loans to students of higher education. These loans as their name suggests allow for repayments to be contingent on the borrower reaching a certain level of income. Friedman suggested governments collect repayments through the tax office. The interest rates charged to such loans would be concessionary, not market, rates to reflect the benefits that redound to the state in terms of higher income tax collections.

A case study

To explain how this system would work, let’s look at the example of Isko, a college scholar. He has the option of either paying his fees up front at a discount or deferring them through the new scheme. Even after graduating, he will not have to start repaying this loan until he starts earning a certain level of income expected of a college graduate. Once his personal income reaches this threshold, regular repayments will be deducted from his salary similar to the way withholding taxes work. This continues until his entire loan is fully repaid.

This scheme would only work for institutions that receive government subsidies. As part of the funding model, student fees are to be regulated with a cap that is set annually. Only SUCs at first will be part of this scheme, and later private HEIs that meet quality and other conditions. SUCs and HEIs will be allowed to set their tuition fees within the band prescribed. Isko might have to pay higher fees for particular courses that are more expensive to administer, but there will be a limit to what schools can charge to students as part of this scheme.

The experience of Australia which has had this system in place since the mid-90s is that students are less sensitive to price if they can postpone payment. In fact participation rose after the scheme was introduced despite the growth in fees. The Federal government is now in the process of expanding the scheme to cover vocational education.

Admittedly, the government will still have to put up the initial funds to cover student fees, but it will be creating an asset in the form of loans collectible rather than incurring new expenses. Over time, the funds initially invested will become self-sustaining. In this manner will both the state and the students be able to afford paying for the cost of higher education.

The way forward

The challenge now is to build on the earlier reforms of the Congressional Education Commission headed jointly by Sen. Edgardo Angara and Cong. Carlos Padilla which created the DepEd, TESDA and CHEd, and the Presidential Task Force for Education jointly chaired by Fr. Bienvenido Nebres and Emmanuel Angeles which reformed basic education by introducing the K-12 system.

Reforming the way the tertiary educational system is funded and financed addresses the issues of efficiency, equity, effectiveness and appropriateness. The funding model will drive efficiency among SUCs which will have to compete with each other and with private HEIs after a certain grace period. It will put a premium on courses for which graduates are in short supply, thus making training more appropriate. The financing scheme allows fees to be raised in a more rational manner, thus allowing the system to be more effective in delivering learning at a sufficient quality standard without adverse impact to student participation.

The best time to introduce such a reform would be towards the end of the Aquino administration when a gap will exist in the system as Year 10 completers head for Years 11 and 12 for the first time rather than first year college. Although that is still a few years away, there is a lot of groundwork that has to be covered before then including taking stock of the current situation, designing the new model and consulting with relevant stakeholders.

This reform can be initiated either through the legislative or executive branches of government as shown by past reforms. It is high time that they stop treating the problem of higher education with stop gap and piece meal measures. The problem will not go away simply by ignoring it. It is time to reform higher education and to do so from the ground up.