COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 23 Sep 2010

Special Report No. 75 of the Comptroller and Auditor General: Irish Universities Resource Management and Performance

Mr. John Buckley (Office of the Comptroller and Auditor General) called and examined.

Chairman

We are looking at the 2008 annual report of the Comptroller and Auditor General, Special Report No.75, entitled Irish Universities Resource Management and Performance.

I would like to inform witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, you are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against a Member of either House, a person outside the House, nor an official by name, or in such a way as to make him or her identifiable. Members are also reminded of the provisions within Standing Order 158 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies.

I welcome Mr. Ned Costello, chief executive of the Irish Universities Association. I call on him to introduce his colleagues.

Mr. Ned Costello

Thank you, Chairman. I am accompanied by Professor John Hughes, president of NUI Maynooth, Professor John Hegarty, provost of Trinity College, Professor Hugh Brady, president of UCD, Professor Brian MacCraith, president of DCU, Professor Michael Murphy, president of UCC, Professor James J. Browne, president of NUIG, and Professor Don Barry, president of UL.

Chairman

I welcome Mr. Tom Boland, chief executive of the HEA and I call on him to introduce his colleagues.

Mr. Tom Boland

I am accompanied by the deputy chief executive, Ms Mary Kerr.

Chairman

Mr. Kevin McCarthy, assistant secretary of the Department of Education and Skills is here. Have you some colleagues with you?

Mr. Kevin McCarthy

I am joined by Mr. Philip Crosby, Mr. Jerome Kelly and Mr. Pat Pykett.

Mr. Brendan Ellison

I am Brendan Ellison from the Department of Finance, and I am joined by Mr. David Owens, a colleague from the pensions section.

Chairman

You are all welcome. I call on Mr. Ned Costello, chief executive of the Irish Universities Association, to make an opening statement.

Mr. Ned Costello

Thank you, Chairman. I should mention that I am joined by Mr. Michael Casey, the finance and operations director of the IUA.

Thank you, Chairman, for giving us the opportunity to address the committee. I would like to thank the Comptroller and Auditor General and his staff for having afforded us the opportunity to input to the report during its gestation. The report itself is very comprehensive, so in the time available to me, I will comment briefly on the issues raised, following the sequence in which they arise in the report.

The report records that there were 97,000 students attending university in the 2008-09 academic year. Total enrolments in the new academic year will be well in excess of 100,000. By contrast, enrolments in 2000 stood at 83,000. The Department of Education and Skills projects that student numbers will continue to rise in the period to be addressed by the forthcoming higher education strategy. In the context of those rising numbers, there has been significant change over the past decade. The growth in student numbers and increasing international competition for talent has placed new pressures on our universities. The unit of resource per student is less than that of competing countries and student staff ratios are higher. As well as educating more and more students, research and collaboration with industry and other universities has been a major focus of activity in recent years.

The universities have concentrated on how best to balance these different demands and to deliver the highest possible quality. This has meant a continuing reappraisal of how resources are utilised and the development of structures and processes that are efficient and relevant to the current environment and to the challenges we face. This is both appropriate for accountability and to deliver value for money.

The recent ECOFIN view of higher education indicates that the system is highly productive. However, there is need for constant change and optimisation. The Comptroller and Auditor General's report outlines areas for further improvement, which we welcome.

In this regard, the recurrent grant allocation model has brought greater transparency and equity to university funding. However, as the report records, its full implementation is constrained by the difficult funding situation. Similarly, the issues that have arisen in respect of the student services charge derive fundamentally from cutbacks and reductions in Exchequer funding. We welcome the report's recommendations in this area and will engage directly with the Higher Education Authority, HEA, in respect of them. As the report records, we believe this engagement should form part of a wider reappraisal of the entire system of funding higher education. We look forward to the recommendations of the forthcoming higher education strategy in this regard.

As for the issue of costing university activity, the full economic cost project is progressing well. While it is taking time to reach full implementation, I note this is a complex project that is something of a ground-breaking initiative in higher education internationally. There is a balance to be struck between rushing to completion and having a system that ultimately delivers the standards of robustness and transparency that are required. I also note that the timeframe for a similar activity in the United Kingdom, the transparent approach to costs, TRAC, system, is broadly in line with the timeframe we are following. In addition, we welcome the prominence given in the so-called Croke Park agreement on the public service to the issue of full economic cost and the academic activity profile. On quality, the report and its appendices detail the systems in place and demonstrate the commitment of the universities to a high-quality system of quality review and, most importantly, to acting on the recommendations that emerge from that review. The high satisfaction ratings given by employers to Irish graduates, as reflected in the ECOFIN study of higher education and the university rankings, reflect the quality of our institutions.

I will turn to the matter of remuneration, which is dealt with extensively in the report. It is appropriate for me to comment on the overall position, rather than the institutional specifics. As reflected in the report, there has been a difficulty in respect of the determination of the remuneration of senior university staff. Traditionally, the review body on remuneration in the public service dealt with a highly limited number of senior grades, that is, essentially professors, bursaries, secretaries, registrars and presidents. In the meantime, universities have been growing in the scale and complexity of their operations, as well as in the numbers of students, and have been obliged to adjust their structures and management accordingly. There has been a lacuna with regard to the process of determining remuneration levels for grades not encompassed by the established pay determination mechanisms. However, on the matter of allowances, I should make clear that we accept fully the provisions of the Universities Act in this area and that they must be complied with according to the procedures set down. There is no ambiguity in this. On determining remuneration, report No. 43 of the review body, which looked at a sample of posts in two institutions, is significant because it sets out principles in respect of remuneration for higher duties in the sector generally and recommends that this be achieved by way of allowances. Implementation of report No. 43 in full should form part of a concerted effort to develop a more comprehensive remuneration framework for higher education.

On the matter of external work, the growing emphasis on commercialisation and collaboration with industry is an important feature of policy. There has been an increasing public policy focus on ensuring that universities contribute to economic development to the maximum extent, such as, for example most recently in the recommendations of the innovation task force. External engagement is part of this and has significant benefits in exposing academic staff to professional and commercial developments that can then be reflected in teaching. This aligns with another policy focus, namely, that of ensuring that education is in tune with the needs of the workplace. Clearly it is important that external engagement has an appropriate regulatory framework. The report reflects this and makes useful suggestions for improvements in this area. It is important that such regulation should serve to support the overall national policy of encouraging external engagement by staff. We look forward to engaging with the recommendations of the Comptroller and Auditor General in that regard.

Given the constraints on time, I do not propose to comment on the matter of discretionary pension awards, other than to reflect that the decision-making process now ultimately is vested in the Minister for Finance on foot of the transfer of the university pension funds. This concludes my statement and I thank the committee for its attention.

Chairman

I thank Mr. Costello. There are no time constraints if he wishes to comment on it.

Mr. Ned Costello

That covers most of the key areas in the report.

Chairman

I call on Mr. Boland to make his opening statement.

Mr. Tom Boland

On behalf of the Higher Education Authority, I welcome the report and genuinely thank the Comptroller and Auditor General and his staff for what is a comprehensive and objective review of resource management and performance in the universities. The report highlights much that is positive about our universities, makes constructive proposals for change where this is needed and, regrettably, highlights some serious failures in respect of some pay and allowances.

Our higher education system is characterised by universities with a high level of autonomy in the internal management of their affairs. This autonomy is reflected in the fact that the HEA makes a block grant to each university, which then has the freedom to allocate it across the various functions of the university as it sees fit. The level of institutional economy enjoyed by our universities is given statutory backing by the Universities Act 1997 and is widely regarded as one of the strengths of our system, delivering high-quality graduates at a cost below international norms. Given this autonomy, it is important that, as a balance, there are appropriate accountability measures. Reviews, such as that which we are discussing today, form an important part of the structures in the university system, which provide accountability by the universities to the wider community they serve.

The report highlights several positive developments in the sector but also identifies a number of weaknesses. The HEA will work with universities to ensure that they implement the recommendations in the report without delay. The report gives a comprehensive overview of recent developments in teaching approaches and quality assurance in our universities. All the universities have in recent years undertaken major reform in the delivery of teaching services, with significant efficiency gains and improvement of the quality of the student experience. As the report notes, developments in this area have taken account of the opportunities presented by new technologies. This is an area of activities that should see continuing development as the sector expands to meet continually growing demand for higher education.

As for quality assurance, the report notes a good performance by the universities as assessed by objective international reviewers. Implementation of the recommendations of the various reviews is kept under review by the HEA. The report understates the role and impact of the Irish Universities Quality Board. This body is a good example of close collaboration among universities. In effect, they have brought together many of the quality oversight functions into a single agency, which has a comprehensive agenda of full institutional reviews well under way, as well as ensuring dissemination and adoption of best practice across the sector.

This focus on quality assurance and quality improvement is well reflected when one looks to international comparisons as the report itself notes. Our system of higher education performs very well by international benchmarks and the report in particular notes the European Commission ECOFIN report in 2009. While there are reservations about various international university ranking systems, which I share, nevertheless our universities rank well and in some cases very well in the aforementioned ranking systems. This achievement is all the more noteworthy since it is achieved against a backdrop of funding that is below that of most of our competitors in the developed world.

While the report does not address the response of the universities and higher education system to recession, it nevertheless is worth noting the contribution of the sector, including the institutes of technology, in the past two years as one looks specifically at resource management and performance in the sector. Overall full-time stock, undergraduate and postgraduate, increased from 128,000 to 147,000 between 2006-07 and 2009-10, which was an increase of 19,000 or 15%. This was quite unprecedented. New entrants in 2009-10 increased by approximately 10% over 2008-09. This increased intake of 10% will have knock-on implications for the next two to three years as the increased numbers progress through their second, third and fourth years of study. Indications are that the higher education institutions will maintain this high level of increase in 2010-11, with some further increase in intake, albeit less than in previous years. The response of the sector, and here I include the institutes of technology, to unprecedented demand should be seen against a background of diminished budgets and a highly significant cut of 6% in staffing levels.

In all these respects, and subject to the measured and objective recommendations and conclusions of the Comptroller and Auditor General, the universities have demonstrated that they give good value for money to the Irish taxpayer. They provide an overall good experience for students and they produce graduates in growing numbers who are much sought after by industry and business. It is all the more regrettable that these achievements are bound to be overshadowed by the conclusions in the reports concerning remuneration matters. The payment of unauthorised allowances and other payments represents a failure on the part of the management and governance in the universities concerned. They take from the enormous contribution of the sector to our economy and society and raise issues about the regulatory environment, in particular the principle and practice of the balance between accountability and institutional autonomy. From the outset, the objective of the Higher Education Authority, working with the Department of Education and Skills and the Department of Finance, was to have the unauthorised allowances ended. In some cases, this was achieved with minimum delay and the co-operation of the universities concerned. In other cases, resolving the matter was protracted beyond what was reasonable in the circumstances. For the future, the governance code agreed in 2007 between the Higher Education Authority and the Irish Universities Association now provides for an annual statement jointly from the chair of the governing authority and the president that the universities are operating in compliance with public sector governance norms and procedures, including those in respect of remuneration. The objective of the code is to strengthen governance procedures across the sector. The Higher Education Authority will keep the content and implementation of the code under regular review and will make any adjustments to ensure corporate governance in the university sector meets the highest standards applying across the wider public sector. Members may wish to explore areas of detail and I and my colleague are happy to give our full assistance to the committee.

Chairman

Can we publish both statements?

Mr. Tom Boland

Yes.

Deputy Michael McGrath

I welcome our eminent witnesses and thank the Comptroller and Auditor General for his comprehensive and insightful reports on the university sector. We appreciate all that is good about the university sector and, as our guests understand, this is not the forum to laud the undoubted achievements of the witnesses and their colleagues in this sector. This is the forum for us, as members of the Committee of Public Accounts, to ask hard questions based on the report of the Comptroller and Auditor General. We will take the opportunity to do so today.

From reading the report of the Comptroller and Auditor General, it is clear there were serious governance failures across the university sector, where the standards applied are not what one would expect from world-class universities. In his opening remarks, Mr. Boland alluded to some of those references.

There is some evidence in the report that universities resisted efforts by the Department of Education and Skills, the Department of Finance and the Higher Education Authority to bring universities in line with public sector norms and to cease some of the arrangements that developed over a period of time across the sector. I refer in particular to remuneration and allowances, an area that occupies an important part of the report of the Comptroller and Auditor General.

I refer to the unapproved allowances paid to staff. When was it first brought to the attention of the Higher Education Authority and the Department of Education and Skills that such allowances were being paid to senior staff members in universities across the sector?

Mr. Tom Boland

The first correspondence on our files is from June 2001. We indicated to one university then, and to all universities in August, that unauthorised allowances were not to be paid. The August letter was in the context of report No. 39 of the Review Body on Higher Remuneration in the Public Service. It is clear that the Higher Education Authority was aware of allowances at that stage but a very small number of allowances were paid. In 2005 and 2006, the Higher Education Authority became aware of a significant increase in the number of unauthorised allowances being awarded in a particular university.

Chairman

Which one?

Mr. Tom Boland

I refer to UCD. That began a trail of considerable correspondence between UCD, the Higher Education Authority and the Department of Finance and the Department of Education and Skills. The matter came to a resolution in March 2009 with the termination of the allowances by UCD. During that period there was some correspondence with almost all universities regarding a much smaller number of allowances, all of which were terminated more quickly.

Deputy Michael McGrath

How many members of staff were benefiting from these unapproved allowances? What was the overall value in that period?

Mr. Tom Boland

The Comptroller and Auditor General has figures on that and estimates the cost in a particular year to be €1 million. If one extrapolates over four or five years, it is of the order of €4 million or €5 million.

Deputy Michael McGrath

Mr. Boland mentioned that his involvement began in June 2001. Was that when he started writing to universities about the issue or was that when he first became aware of the issue? Based on returns, he had information that these allowances were being paid.

Mr. Tom Boland

It is the first letter I have seen in our records specifically making the point that allowances that are not authorised should not be paid. The issue related to allowances being paid at that point and sought information about those allowances. The letters specifically stated that correspondence was not to be construed as approval for the allowance. There was a hiatus between August 2001 and June 2005, when there was little if any connection on the issue. My understanding is that there was an assumption on the part of the Higher Education Authority and the Department that the situation had been regularised in accordance with the 1997 legislation.

Deputy Michael McGrath

But it was not.

Mr. Tom Boland

It was not although the number of allowances was very small at that point. We are talking about a handful of allowances. The significant increase in allowances occurred from 2005 or thereabouts.

Deputy Michael McGrath

An estimate of the overall value is at least €4 million or €5 million if we extrapolate one year across four or five years.

Mr. Tom Boland

It is fair to say it is of that order.

Deputy Michael McGrath

How did this practice develop if it was not approved? Perhaps Dr. Brady can comment given that his university was the best exponent of the payments. How did it arise?

Dr. Hugh Brady

I am happy to comment. I should stress that I phased out all new allowances in 2007 and there was a period between then and early 2009 when we phased out any existing allowances. No allowances have been paid since early 2009. Many of the allowances in question had a long history and many predate the Universities Act 1997, the point in time at which approval was required.

The other allowances were not gratuitous add-ons to salaries. They were paid for substantial added management duties, such as being head of a college or head of a school, particularly after restructuring of the university. The payment of higher responsibility allowances is common in the education sector. It is the norm internationally. In order to put matters in context, a secondary school principal may have an allowance of up to €40,000 depending on the complexity of the school. In comparison, one of the heads of UCD's largest schools, such as medicine, receives a non-pensionable allowance of up to €25,000. That is someone running a school with thousands of students and over €7 million in non-Exchequer income, international student programmes and overseas programmes. In the absence of a set format in the 1997 Act for the approval of allowances, UCD disclosed details of all allowances to the Higher Education Authority on an annual basis going back to 1999. Between 1997 and 2007, UCD was never led to believe there was a significant issue with these payments and, from the correspondence, we believed approval was a mere formality. The correspondence between UCD and the HEA is summarised and laid out in a letter from the chairman of the UCD governing authority in 2007 and I will cite the committee some of the contents. In March 1999, the allowances were submitted to the HEA and letters were submitted to the Department of Finance for approval. In June 2001, the Department regretted the delay in approving these allowances. When I took over in 2004, there was no indication that there was an issue. From my point of view, an academic middle management layer is a necessity in a university and the remuneration for such roles was at the international norm. I was aware of practice elsewhere in the sector. Again, there was no suggestion that we were to stop these allowances. When the issue was raised, I phased them out.

Why not stop them all in 2007? We took the view in 2007 that there was a contractual obligation to those already in receipt of allowances and that therefore we would phase them out as they came to the end of their management roles. Certainly, the HEA was not pleased about that but our interpretation has been proved right. The committee might not be aware of the recent Labour Court ruling, which instructed us to restore an allowance to one of those heads of schools whose allowance we stopped. As I stated, there is an historic basis to many of the allowances. We disclosed all of the details of all of the allowances going back to 1999. In none of the correspondence detailed in the letter was there ever an objection and we were not told stop paying the allowances until 2007 when we stopped all new allowances.

We need these individuals. These are individuals who run major schools. They are responsible not only for academic programmes, they are also responsible for research and industry partnerships and international student recruitment. They have become increasingly important now that we are trying to reduce our dependence on the Exchequer. UCD brings in €87 million in non-Exchequer fees and we are trying to ramp that up as quickly as possible.

Deputy Michael McGrath

What is the total value of the payments in UCD's case from 1999 to when they ceased completely in 2009?

Dr. Hugh Brady

I do not have that figure but I will be happy to provide it to the Deputy in a note. If one takes a snapshot, they accounted for 0.3% of our total payroll.

Deputy Michael McGrath

When does Dr. Brady believe it became clear from the correspondence——

Chairman

Let us be more specific please. If it is 0.3% of the total payroll, what is the total payroll?

Dr. Hugh Brady

Including everyone, it is €285 million. That includes research staff as well as full-time staff.

Deputy Michael McGrath

When does Dr. Brady believe it became clear in the correspondence from the HEA that these payments had to stop and were unapproved?

Dr. Hugh Brady

It became clear in 2007.

Deputy Michael McGrath

Is that the case, Mr. Boland?

Mr. Tom Boland

I regret that I must disagree with the president.

Deputy Michael McGrath

We have to get to the bottom of the issue.

Mr. Tom Boland

Of course. First, I agree with the president that in the view of the university these allowances were merited, and those who received the allowances were certainly doing duties that may, in certain circumstances, have allowed the payment of allowances. Those circumstances could not entail just informing the HEA and the Departments that they were being paid, however, they had to have been approved. In June 2005 the matter of the need for approval was adverted to. There was correspondence or meetings in July 2005 and January, February and April 2006.

In my letter to the president, Mr. Brady, on 27 November 2006 I referred to previous correspondence and discussions concerning certain payments in excess of approved rates which were being made in UCD, including payments and pension arrangements in respect of the office of president. I stated it was the view of the Higher Education Authority that these allowances were contrary to the Universities Act 1997, were ultra vires and were a breach of public sector pay procedures and norms. I stated it was our view that in the circumstances, arrangements should be made to end the payments without delay. I informed Dr. Brady that he should be aware that this was also the view of the Department of Education and Skills. The letter continued in strong terms to put forward the case.

There may well be some confusion about the date, but after November 2006 I cannot understand how there could have been any impression in UCD but that it was the view of the HEA and the Departments that these allowances were ultra vires, unlawful and should be stopped.

Mr. Kevin McCarthy

I wish to confirm that the Department of Education and Skills is ad idem with Mr. Boland’s version of the correspondence of November 2006 and I will fill in a little more on the early stages of this. As far as the Department is concerned, the requirements of the 1997 Act are very clear and there is no room for misinterpretation on the requirements for universities. As early as August 2000, the HEA wrote to each university to set out the requirements of the Act and to remind them of those requirements. This followed meetings held in the summer of that year at which the requirements of the Act were made clear to each university.

Specifically with regard to UCD, requests were made for information on the allowances that were notified annually to the HEA from a very early stage, and repeated attempts were made by the Department through the HEA to seek further information to justify the payment of these allowances. It was made very clear at all stages that the requirements of section 25(4) of the Act were that all forms of pay and remuneration were subject to sanction by the Ministers for Education and Skills and Finance and that such sanction had not been provided. I clarify for the committee this background prior to the correspondence of November 2006 which requested that the sanctions be ceased.

It is also worth noting that the scale of the allowances grew considerably in the run-up to 2006. With regard to the value of the allowances, based on information we have on the early years from 2001 to 2003, small numbers of allowances and amounts were involved then, as Mr. Boland stated. From 2004 onwards, there was a very significant increase and this was reflected in the concern raised at that stage, in terms of the oversight of the Departments and the HEA, which led to the instruction in November 2006 to withdraw payment.

Deputy Michael McGrath

Does the president wish to respond?

Dr. Hugh Brady

I do. We were left in a situation of having declared details of all the allowances from 1999 to 2007 but we had not been told to cease. Report No. 43 of the Review Body on Higher Remuneration in the Public Sector acknowledges that the leadership roles are necessary for a university to function. The increase to which Mr. McCarthy rightly pointed was with regard to a restructuring of the university in 2005 with a view to reforming its curriculum and boosting its research, innovation impact and international reputation. At that time, we deliberately set up an academic middle management role. We were delighted that report No. 43 acknowledged that there should be such roles and set out a mechanism. This time last year, we put in an application under report No. 43 but even under that mechanism a year later we do not have the approval. There is a sense of déjà vu about this from our point of view.

Deputy Michael McGrath

We seem to have a complete conflict of evidence on the issue. Mr. McCarthy made it quite clear that under the Universities Act 1997 approval was required definitively and there are no grey areas surrounding that issue. The payments continued until 2009 despite efforts by the HEA to bring them to an end. One can argue about the degree of efforts made by the HEA. We understand the figure is in the region of €5 million but we cannot verify that for sure. This is a significant issue. I submit that Dr. Brady's obligation and that of the other heads of universities went beyond including figures in their returns to the HEA. Dr. Brady had an obligation to comply with the Universities Act and it appears quite clearly that he did not.

Dr. Hugh Brady

I would be happy to put on record the 2007 letter from the chairman of our governing authority which would take members through the correspondence in detail. That correspondence can be coupled with the details we sent to the HEA, the fact that it is the norm internationally and elsewhere in the sector for these roles to exist and that we were not told to stop. When we were told to stop, we stopped. The other dispute is over why we did not stop all of them at once. Based on our legal advice, we decided to do it in two phases, namely, to stop new allowances in 2007 and then to phase out the others. The recent Labour Court finding would at least support that approach.

Deputy Michael McGrath

I ask the officials from the Department of Finance for their view of the issue.

Mr. Brendan Ellison

The view of the Department of Finance is ad idem with that of the Department of Education and Skills and the HEA. The matter came to the attention of our Department in the first review body report which issued in 2001. At that stage our understanding was that the universities had been advised no unauthorised allowance should be paid and that the legislation was to be complied with. The matter rested there until 2005 but the Department’s understanding was that the position had been rectified.

The Department's priority at present is to ensure that all allowances and payscales are rectified. As the report notes, contact is ongoing regarding some of those allowances. The Comptroller and Auditor General raised the issue of retrospection, about which I am sure the committee will be concerned. This is a matter to which the Department will be returning once the position has been sorted out for all the allowances. We will have to address the issue of whether the Department is prepared to issue retrospective sanction for allowances that have been paid in the past. My understanding at present is that it is unlikely to be the case, in which even we will have to explore with the Department of Education and Skills and the HEA whether unauthorised and unsanctioned payments have to be recouped from the universities.

Deputy Michael McGrath

What allowances continue to be paid which, in the view of the Departments of Finance and Education and Skills, require approval? In the case of UCD, up to 100 staff receive €9,500. Are these also subject to approval?

Mr. Brendan Ellison

Some allowances are at lower levels. I understand that the levels investigated by the review board have been dealt with at this point. Certain allowances at lower levels remain under discussion between the two Departments. Had approval been sought in respect of some of these, there would not have been a difficulty sanctioning them. They are equivalent to other allowances available throughout the public sector and they probably would have been sanctioned. I do not see a difficulty with such allowances.

The Department of Finance is seeking more information on whether other allowances can be justified. That is an ongoing process but if it transpires at the end of the day that the Department is not prepared to sanction them, the implication of funding them with Exchequer money will have to be investigated.

Deputy Michael McGrath

They are under active consideration. Is the Department still in correspondence with one or more universities on the payment of performance bonuses which were not permitted?

Mr. Brendan Ellison

I am not aware of any discussion on that matter. There are no sanctioned performance bonuses for universities and that is the end of the matter.

Deputy Michael McGrath

I ask Mr. McCarthy whether performance bonuses are permitted.

Mr. Kevin McCarthy

No. We would have communicated that to the universities in the 2005 to 2006 period. I will have to check the dates. The issue of payment of performance bonuses in one of the universities came to light in the context of the report of the Comptroller and Auditor General and we have sought further information on it. We are in the course of seeking clarification on the information that has been provided. Our position is that performance bonuses should not be paid.

Chairman

To what university does Mr. McCarthy refer?

Mr. Kevin McCarthy

UCD.

Deputy Michael McGrath

Between 2005 and 2008, €266,000 was shared between 12 people. What is the status of that matter?

Mr. Kevin McCarthy

We have not sanctioned a performance bonus scheme in the university sector. That position has been communicated to all the universities. Performance bonuses would come within total remuneration and be subject to sanction by the Ministers for Education and Science and Finance, in line with the legislation. On foot of the issues identified in the report of the Comptroller and Auditor General regarding the payment of bonuses in one of the universities, we sought clarification from the institution concerned on the details and circumstances of the payments. If they represent a departure from approved scales, they are not sanctioned.

Deputy Michael McGrath

Has the payment of such bonuses ceased across the sector?

Mr. Kevin McCarthy

To our knowledge, yes.

Deputy Michael McGrath

Has anybody contradicted that?

Dr. Hugh Brady

In regard to the question of whether other allowances are paid, the university provides a range of payments such as lower down craft allowances, the 24-hour service in the veterinary hospital and overtime at the national virus reference laboratory. Most of these arise from sectoral agreements negotiated over the years. With the finance committee, we have instigated a complete review across the university to identify them and ensure they are all compliant. We will be working with the HEA on that. No performance related element — the terminology is important — has been paid since 2008 in UCD.

We had a small number of people who were on fixed-term contracts whose salaries were within a certain scale. We told these individuals they would only receive the top 10% to 30% subject to performance. I would like to see more of that. We did not feel we were contravening the rules in this regard. We are still in discussion with the HEA in respect of two cases which have given rise to dispute.

My problem is that I wake on a certain day every October to find that €3 million in increments that are not performance related have automatically been added to my pay bill. I suspect my colleagues would share my desire to see a greater performance element introduced to the sector. That has been recommended in at least one review body report and in the Croke Park agreement.

Deputy Michael McGrath

I suppose that is a policy issue. How did it come to pass that three people were paid at the president's salary level in the University of Limerick in 2007 and 2008?

Professor Don Barry

I thank the Deputy for that question and welcome the opportunity to deal with it. I wish to make it clear from the outset that at no time did the University of Limerick pay three employees at the president's rate. The events to which the report of the Comptroller and Auditor General refers were unique, exceptional and challenging for the university. Unless advised otherwise by the Chair I am going to follow the rubric used by the Comptroller and Auditor General of referring to the individuals involved as "A", "B" and "C".

Chairman

No, I would not be happy with that.

Professor Don Barry

I am not happy with it myself. It would be easier for me to discuss the issue if I could name them.

Chairman

Professor Barry has privilege here.

Professor Don Barry

The person known as "A" in the report is Professor Roger Downer, "B" is Mr. John O'Connor and I am "C". In early 2006, Professor Downer underwent intensive treatment for a serious health condition and was unable to perform the full duties of the role of president. In that context, negotiations took place between the university and Professor Downer which resulted in his relinquishing the role of president in April 2006. There were two aspects to the context in which the negotiations took place. The first was that Professor Downer, over the course of his time as president, had been involved in developing strong relationships with potential philanthropic donors through his work with the University of Limerick Foundation. The second was that Professor Downer had come to the university in 1998 after a long and distinguished career in Canada and Asia. He was aged 55 at the time and it was a ten-year contract. Pension considerations formed a major part of the negotiations that took place to attract him to the university, and explicit entitlements regarding his pension were written into his contract at the time of his appointment.

The outcome of the negotiations was that Professor Downer agreed to relinquish the role of president of the University of Limerick and to be seconded to the University of Limerick Foundation to continue his work with the philanthropic donors. These arrangements had three consequences. First, the relationship with important philanthropic donors was protected in the interests of the foundation and subsequently in the interests of the university and, indeed, the taxpayer. Second, the contractual obligations into which the university had entered in 1998 were honoured. Third, the remuneration of Professor Downer, including salary, PRSI and pension costs, was fully funded by the University of Limerick Foundation from private donations, not by the university and not by the taxpayer. Professor Downer retired in August 2008.

When Professor Downer retired, the university appointed Mr. John O'Connor as acting president while it went about recruiting a new president. He remained in that role until I took up my appointment on 1 May 2007. At that point the university was going through a very challenging time in terms of development. Mr. O'Connor had been the head of development at the university for more than 35 years and was on the point of retiring in 2006 when he was prevailed upon to take on the role of acting president. The challenging nature of the development environment for the university at that time is evidenced by the fact that our capital development programme for 2006 to 2010 amounted to more than €200 million and involved 13 separate projects. Even more significantly, in March 2007, the Government had given a mandate to the University of Limerick to establish a new medical school, the first new medical school to be established in the history of the State. Mr. O'Connor had been leading the capital development programme and the development of the medical school proposal since their inception. The Government authority — at the same meeting, in fact, at which it approved my appointment on 1 May 2007 — also determined that the university should seek to retain the services of John O'Connor following his stepping down as acting president to see through the completion of the capital development programme and the establishment of the new medical school.

The outcome of the arrangements that were put in place by the university at that time — a university acting in good faith in very difficult, challenging and exceptional circumstances that were there for all to see — has been that the €200 million capital development programme has been all but completed. The first students will graduate from the new medical school in September of next year, a mere four and half years after our being given a mandate by the Government to establish it, and philanthropic donations worth €20 million have been raised to support those developments. That is €20 million the State does not have to provide to make these things possible. For example, tomorrow in Limerick — if I survive this meeting — we will be opening a €20 million music building, more than half of which has been funded by philanthropic donations. The building will stand for generations to come to the benefit of taxpayers in this country. The decisions made by the university during that time must be considered in the context of the outcomes achieved as a result of those decisions.

Deputy Michael McGrath

On that point, is it the case that the retention of Mr. O'Connor to oversee these projects following his retirement took effect from the commencement of Professor Barry's contract on 1 May 2007? On what terms was he retained?

Professor Don Barry

The contract that was entered into by the university to retain the services of John O'Connor had two parts. The first was that Mr. O'Connor would avail of quite a substantial amount of accrued annual leave entitlement that he had built up over his 35 years working at the University of Limerick and that, following the commencement of pension, he would work for three days a week on the capital development projects and the medical school project. The second was that his total remuneration, including pension, would be equal to the president's salary rate.

Chairman

Does Mr. McCarthy wish to respond? Is that in line with normal practice?

Mr. Kevin McCarthy

It is not. I should say that UL did not seek sanction for the arrangements that were entered into, and the Department would not have been aware of these arrangements until the report of the Comptroller and Auditor General brought them to light. We did seek a report from the university on these matters in July on foot of the report and, as explained by Professor Barry, the situation with regard to Professor Downer was set out as described. The assurances given with regard to the funding arrangements for that have been noted at this point. We understand that the University of Limerick Foundation took on the full cost, including pension and PRSI costs and so on, for the duration of the secondment. Thus, there would not appear to be an issue in terms of a burden on the Exchequer in that particular case.

In respect of Mr. O'Connor's case, our view is that he should have reverted to his previous grade of vice president from 1 May 2007. That would be the norm in these circumstances. The arrangement under which he continued with an acting allowance certainly was not sanctioned by the Department and we still have questions about that arrangement.

Deputy Michael McGrath

And that process is ongoing?

Mr. Kevin McCarthy

We have had correspondence from UL in this regard and we have written back to university seeking further information on foot of that because we are not satisfied with the response at this point.

Deputy Michael McGrath

I thank Mr. McCarthy. My time is up.

Chairman

The Deputy may come in later.

Deputy Róisín Shortall

I welcome all our visitors to the committee. I would like to pick up on the issues raised by my colleague with regard to remuneration packages. It seems that while progress has been made in recent years in terms of serious engagement between the universities, the HEA and the Departments of Education and Skills and Finance, the payment of salaries substantially in excess of what is permitted is a practice that has been going on under the radar for many years, and it has not been dealt with in a serious manner until quite recently when there was pressure on budgets and everyone's attention had turned to cost savings. If we had not entered a recessionary period, for how much longer would these payments in excess of what was permitted have continued? We know from the Comptroller and Auditor General's report that as far back as November 1997 the HEA had requested details of all allowances and pay scales from all of the universities. Was a response received? Was all of this information provided shortly after the request was made?

Mr. Tom Boland

I believe it was. We have information on file on allowances.

Deputy Róisín Shortall

Mr. Boland lists the correspondence received during those years. The Comptroller and Auditor General refers to several occasions, including August 2001, July 2005 and February 2008, over a period of 13 years. That is a very long time to allow an unacceptable practice to continue. What action did the HEA, the Department of Education and Skills and the Department of Finance take to bring the matter under control? It seems extraordinary that the situation was allowed to drift in this way for so many years.

Mr. Tom Boland

I dispute the Deputy's characterisation that no action was taken until such time as the budgetary situation had become perilous and we were forced to do so. Very stern action began to be taken from early 2006 which predated any financial difficulties.

Deputy Róisín Shortall

What stern action was taken?

Mr. Tom Boland

There was a meeting in February 2006 at which the issue of allowances was discussed. From then on there was a clear line of correspondence that unauthorised allowances should not be paid, including my letter of November 2006 in which I clearly stated that the matter was ultra vires and should stop.

Deputy Róisín Shortall

I asked a question about the provision of information dating back to 1997.

Mr. Tom Boland

I will come to it.

Deputy Róisín Shortall

Perhaps we could start from there.

Mr. Tom Boland

My sense is that in 1997 there was an assumption — largely it was correct but clearly in some limited cases it was false — on the part of the HEA — I will not speak for the Department — that a university would operate within the law. That is a reasonable assumption for a State agency to make and an especially reasonable assumption in a situation where, under the law — the 1997 legislation — universities were deliberately given a high level of autonomy by the Houses of the Oireachtas to run their own affairs. It was perfectly reasonable for the HEA to assume that the law was being abided by in that situation. That is my understanding.

Deputy Róisín Shortall

On what was that assumption based? In 1997 the HEA requested details of all remuneration packages and it received that information shortly afterwards. What did it indicate to the HEA?

Mr. Tom Boland

Any allowances paid pre-1997 were, by definition, authorised. It was only allowances paid post-1997 which presented a difficulty. We can assume there was no issue about allowances. My understanding from reading the record is that there was no significant anxiety about the payment of unauthorised allowances until approximately 2005 or 2006.

Chairman

Did the HEA not receive an annual report from each of the universities? Would the reports not have contained such details?

Mr. Tom Boland

Certainly, we received reports on allowances. I cannot specifically state the annual reports——

Chairman

Was the assumption incorrect?

Mr. Tom Boland

No. The assumption was that any allowances being paid had been authorised. The HEA did not embark on an exercise of establishing whether individual allowances had been authorised. There was an assumption that any allowances being paid had been authorised.

Deputy Róisín Shortall

There was no basis for that assumption?

Mr. Tom Boland

The basis is the relationship between the HEA and an autonomous university.

Deputy Róisín Shortall

With all due respect, that does not provide a basis. The HEA had a responsibility to ensure public money was being spent properly, that the universities were not exceeding the maximum pay scales allowed and that they were not paying allowances or bonuses in excess of what was permitted. Did it perform that supervisory role?

Mr. Tom Boland

As far as I am aware, the HEA had no concern about the payment of unauthorised allowances until the middle of 2004 or 2005.

Deputy Róisín Shortall

Mr. McCarthy has quoted figures which indicate that the breaches were not significant in the early 2000s, but that they became worse in the mid-2000s. Can the HEA give us those figures?

Mr. Kevin McCarthy

For the purposes of clarity, this was not really an issue in the period immediately after 1997 for one very simple reason. Pre-1997 there was no requirement under the legislation to seek the sanction of the two Ministers. Under section 25(8) of the 1997 Act, all pre-1997 allowances were sanctioned. Effectively, in the early years the allowances paid would have been largely historical.

Deputy Róisín Shortall

Does the Department have figures to show the extent of the breaches since 1997?

Mr. Kevin McCarthy

The issue is with new allowances post-1997. We have some figures for the values of new allowances in each year since 1997 which we can share.

Deputy Róisín Shortall

Across all universities.

Mr. Kevin McCarthy

Yes. As I am using a chart, these are not precise figures. In 1998 it was below €100,000; in 1999 it was slightly more than €50,000; in 2000 it was below €100,000; in 2001 and 2002 it was less than €50,000, and in 2003 it was slightly less than €70,000. This chart is for UCD only; we will obtain full information. In 2004 the figure jumped to €400,000. The committee can see, therefore, that it really became an issue in that period. Again, the figure was above €450,000 in 2005, but it returned to under €200,000 in 2006 and 2007 and €50,000 in 2008. We will obtain precise figures. This is based on information provided by the university and illustrates the point that we expressed concern and indicated the extent to which the requirement under the Universities Act to seek approval for the payment of allowances had been exercised in the period between 1997 and 2000. This would have prompted meetings with the universities in 2000 to remind them of their obligations under the Act. There was the letter from the then chief executive of the HEA in August 2000 to remind them of the requirements to be met. The issue was not one of significant scale until somewhat later. The Department and the HEA would have sought information in the period 2004 and 2005. Clearly, the scale of increase in the number and value of allowances in that period would have given rise to concerns. This, in turn, would have led to a ratcheting up in terms of the level of activity in which the Department and the HEA were engaged with a view to trying to regularise the position.

Deputy Róisín Shortall

Do the figures cover allowances and bonuses?

Mr. Kevin McCarthy

Yes, although I understand the bonuses referred to in the report became an issue in 2006.

Deputy Róisín Shortall

That is the total for UCD. Is that correct?

Mr. Kevin McCarthy

Yes, as I understand it. It does not include bonuses.

Deputy Róisín Shortall

Are there figures for bonuses?

Mr. Kevin McCarthy

The bonus figures are included in the report of the Comptroller and Auditor General. I referred to a figure of €216,000.

Deputy Róisín Shortall

They were the figures for certain years. Did the matter not arise before then?

Mr. Kevin McCarthy

We are not aware of others.

Deputy Róisín Shortall

These are the allowance figures. Is that correct?

Mr. Kevin McCarthy

Yes.

Deputy Róisín Shortall

These are the total figures. Is that correct?

Mr. Kevin McCarthy

These are total new allowance figures for each of those years.

Deputy Róisín Shortall

Since 1997. Does the HEA have the corresponding figures for the other universities?

Mr. Kevin McCarthy

We would have to do an exercise in that regard. We would have received information from the other universities.

Deputy Róisín Shortall

Why has the Department not done that exercise sooner? It is very difficult to get a handle on the matter to assess the extent of the practice and the cost the taxpayer.

Mr. Kevin McCarthy

We would have information on the number of allowances and their value at a point in time for each of the universities.

Deputy Róisín Shortall

Is that information available?

Mr. Kevin McCarthy

We can provide it.

Deputy Róisín Shortall

That would be appreciated. I wish to move on to examine some of the figures provided in the report of the Comptroller and Auditor General. I refer specifically to figures for UCD. In 2006, the remuneration package for the president exceeded the limit by almost €57,000. In 2007, the salary for the bursar exceeded the limit by €47,000 and by €21,000 for the registrar. What specific action did the HEA take in respect of those very significant breaches of the maximum pay limits?

Mr. Tom Boland

As I outlined earlier, we engaged in fairly robust correspondence initially with the president, and following my letter of November 2006, he referred the matter to the chair of the governing body, given that the president himself personally had an interest in the matter. President Brady spoke earlier about a letter that the chairman of the governing body wrote to the HEA, following that letter in 2006.

Deputy Róisín Shortall

What role does the chair of the governing body have in all this?

Mr. Tom Boland

Ultimately, it is the governing body that has responsibility for the governance of the institution. Given that the president's own salary was at issue, a view was taken in the university that correspondence on the matter should not be dealt with by the president, but by the chair of the governing body. The chair of the governing body wrote to the HEA in response to my letter, and I subsequently wrote back to the chair, and I would like to read into the record some of the correspondence that is relevant. A letter dated September 2007 refers to his letter, and it states the following:

We have taken some time to consider the important issues you raise [He raised issues of legality and contractual arrangements, as well as the issues mentioned by president Brady a moment ago] and we have, in the meantime, also consulted with the Departments of Education and Science and the Department of Finance. To reiterate the view of the HEA and the Department of Education and Science, it is that the payment of allowances to the president, registrar, bursar and vice presidents was made without the sanction of the Ministers as required in law, that it therefore contravened the provisions of the Universities Act and amounted to an ultra vires action by the governing body.

My letter went on to state the following:

The governing body have, according to the advice available to it, entered into enforceable contracts that are in conflict with the legislation governing the affairs of the university. You will appreciate the seriousness of this from a public policy, governance and legal viewpoint... Given its governance role, it is primarily the responsibility of the governing body to resolve this matter, and I request your proposals to that end at the earliest possible opportunity... In the absence of satisfactory proposals, the HEA will have to consider the options, including restrictions on funding.

Deputy Róisín Shortall

The beginning of the letter states that the HEA had taken some time to consider the situation.

Mr. Tom Boland

Correct.

Deputy Róisín Shortall

I think that is a bit of an understatement. It took quite a considerable amount of time.

Mr. Tom Boland

To be exact, we took just over five months.

Deputy Róisín Shortall

HEA officials knew this was an issue going back to 1998 and that the scale of the breaches was growing. They knew that in 2004 around €400,000 in public money had been paid out in allowances in breach of the rules, and a similar amount was paid out in 2005. Why did it take the HEA so long to be robust in its approach to the universities?

Mr. Tom Boland

I do not for one minute contest the protracted nature of the process. The HEA has relatively few weapons in its armoury. That is rightly the case in many respects, given the importance of institutional autonomy. There are three significant weapons available to the HEA and the State. One such weapon is the appointment of a visitor to the university or the taking over of the governance of the university, both of which would have been disproportionate in the circumstances, in my view. Another weapon is the possibility of the HEA imposing financial restrictions on the university, although there is some legal doubt about this.

It was the objective of the HEA and the two Departments to end the payments, but not to penalise the universities. It would be an intolerable situation where unauthorised payments would continue, while we continued to penalise the universities, which could only have the effect of affecting services and students, and not the people who were receiving the unauthorised payments. The HEA always tried to find a reasonable, negotiated, agreed settlement to what was an unacceptable situation. For that reason, it took quite a bit of time.

There are two sides to the relationship. With most universities, the matter was resolved very quickly by the ending of the allowances, but that was not the case in UCD, where in accordance with the college's legal advice, it had contractual obligations that were difficult to break.

Deputy Róisín Shortall

Was it the case that everybody was being too polite?

Mr. Tom Boland

I think that——

Deputy Róisín Shortall

We know all about the criticisms of the university that it is a rarefied world and a law unto itself. We can see why that view might be justified, given the "softly, softly" approach that was taken by the HEA and by both Departments responsible for spending public money.

Mr. Tom Boland

Putting it in that crude way, what part of "No" did UCD not understand? That is the difficulty.

Deputy Róisín Shortall

OK, but the HEA would have known at an early stage that the universities did not understand the word "No". What action was taken to bring this to the attention of both responsible Departments and the Ministers? When was it first brought to the attention of the Departments?

Mr. Tom Boland

The Department of Education and Skills was aware of it as soon as we were.

We have very limited capacity to intervene directly in a university's affairs. Frankly, we were reluctant to use the weapons in our armoury, which primarily consisted of the funding weapon. Whether that is right or wrong, that is the reality.

Deputy Róisín Shortall

Can I put that question to Mr. McCarthy? What action, if any, did the Department of Education and Skills take when this problem became apparent?

Mr. Kevin McCarthy

We became aware, somewhat informally at the beginning, that there was a growing number of allowances in UCD. We would not have had the complete data on the numbers or the amount of allowances at that point, but we were sufficiently concerned to issue a notification in June 2005 that additional payments should not be made without sanction and to request an explanation for the allowances and steps to rectify the situation where they were not justified. Since then, there was a series of correspondences between the HEA and UCD seeking additional information and justification in respect of these allowances.

Deputy Róisín Shortall

What action did the Department take?

Mr. Kevin McCarthy

It culminated in the November 2006 instruction to cease the payments, but there was a requirement——

Deputy Róisín Shortall

The situation then drifted between 1998 and 2006. It will be interesting to see the total figure for the breaches that took place during that period. It seems extraordinary to me that over an eight year period, serious action was not taken by any of those bodies responsible for regulating the university sector in terms of public expenditure.

Mr. Kevin McCarthy

Instructions were issued to UCD via the HEA and the Department directly to the president and to the governing body. There was a series of correspondence in that period. The November 2006 letter sought immediate cessation of unapproved allowances. Subsequent correspondence occurred in December 2006, February 2007, again in February 2007, and March 2007, which related to legal advice that UCD had obtained at that point. There was a meeting in May 2007, followed by a further meeting between the Department and the HEA in June 2007. There was correspondence between the HEA and UCD in September 2007, seeking proposals from the governing body to resolve the issue.

Deputy Róisín Shortall

Did the Department of Education and Skills threaten at any point to cut the funding to any of the universities, unless these practices stopped?

Mr. Kevin McCarthy

In December 2007, the HEA wrote to UCD stating that it would be obliged to consider restrictions on funding. There were further requests for information in December and on 20 February 2008 the Higher Education Authority, HEA, wrote advising UCD that the restriction on funding will be implemented if remuneration is not regularised. On 10 March 2008 there was confirmation that UCD will not pay the additional allowances in the future without obtaining advance written approval.

Deputy Róisín Shortall

These practices that Mr. McCarthy was aware of continued for a ten year period.

Mr. Kevin McCarthy

It was not a ten year period.

Deputy Róisín Shortall

It was a growing problem of which all the people concerned were aware over a ten year period and it was not until 2008 that a direct sanction was applied, namely, a threat to withdraw or withhold pay increases.

Mr. Kevin McCarthy

It was from the 2005 period that the scale of the problem became an issue. There were issues in relation to a small number of allowances from the 2000 period. The allowances previous to that would have been largely historic — pre-1997 allowances. The concentrated period is from 2004-2005 onwards.

Deputy Róisín Shortall

The figure for UCD alone in 2000 was €100,000. Is that right?

Mr. Kevin McCarthy

That is right.

Deputy Róisín Shortall

That is a significant figure in the year 2000——

Mr. Kevin McCarthy

It is, yes.

Deputy Róisín Shortall

——in respect of one university.

Can I ask the Department of Finance officials what action, if any, did they take over——

Chairman

Before the Department of Finance officials respond I ask Mr. Boland to respond.

Mr. Tom Boland

I genuinely have sympathy with the Deputy's point of view as to why more direct action was not taken. What I have tried to inform the committee is that the capacity for direct intervention in a university by any arm of the State in its internal management is very limited. The one practical action we could have taken we were reluctant to take — which is to restrict funding — given that our priority was to end the allowances rather than to restrict funding. The issue of restriction on funding, as Mr. Ellison outlined earlier in the proceedings, is a matter still to be considered once the allowance situation has been brought under control, but that is the situation in which we found ourselves.

Deputy Róisín Shortall

What action, if any, did the Department of Finance officials take during that period?

Mr. Brendan Ellison

The Department of Finance did not have any direct control over individual universities and therefore that issue would have been left largely to the Department of Education and Skills and the HEA. However, when the——

Deputy Róisín Shortall

Did the Department express concern about it to the HEA and the Department of Education and Skills?

Mr. Brendan Ellison

The Department was engaged with the Department and the HEA on this on an ongoing basis.

Deputy Róisín Shortall

That was over a very protracted period. At some point did the Department of Finance not say this has to stop and put pressure on the Department of Education and Skills and the HEA?

Mr. Brendan Ellison

The specific action the Department took was when the review body increases from report No. 40 were being awarded to universities. Sanction was withheld from any university where the allowances had not been withdrawn and therefore the increases were only sanctioned when the allowances had been fully withdrawn. That was the main weapon, so to speak, that was available to the Department of Finance specifically and directly in relation to the allowances.

Deputy Róisín Shortall

I want to direct a specific question to Dr. Brady. The figures I have indicate that in 2003 his predecessor received allowances of €70,000 and the following year Dr. Brady was in receipt of allowances of €400,000. Are those figures correct?

Dr. Hugh Brady

No.

Deputy Róisín Shortall

Dr. Brady might clarify the position.

Dr. Hugh Brady

My base salary is below that recommended by the review body. To clarify something, Deputy Shortall made a statement that my salary exceeds the review body report. That is misleading. The report includes a deemed valuation around benefit in kind.

Deputy Róisín Shortall

Yes. Dr. Brady's package then exceeds——

Dr. Hugh Brady

My position is that I was offered the job of presidency by UCD, which I was delighted to be offered, and UCD said, "That goes with the review body salary". They said there is an historic allowance of what I believe was €12,000 at the time, which has now stopped, "and you are required to live in a house on the campus and to make it available to the university for fund-raising etc.". Eighty per cent of the BIK relates to that house and therefore it is misleading in the report to state that my salary exceeds the review body recommendations. I am required to live in the house.

Deputy Róisín Shortall

What was the total value of Dr. Brady's package in 2004?

Dr. Hugh Brady

I do not know how that calculation is done. I get the salary. At that time I was getting the €12,000 allowance and then they did this deemed valuation around benefit in kind. To take it to the extreme, if University Lodge, the house I live in, had been twice as big I would have had to reduce my salary by about €100,000 to accommodate it. It was the inclusion of the deemed valuation around the benefit in kind that gives that appearance but it is very misleading.

Deputy Róisín Shortall

Dr. Brady might supply the committee with the figure for his total package in 2004 and that of his predecessor the previous year at his convenience.

Dr. Hugh Brady

My predecessor would have also been on this kind of Buckley pay scale.

Deputy Róisín Shortall

Dr. Brady might just provide the figures for us.

I am aware of the time pressure, Chairman, but I want to ask about the discretionary pension awards. In terms of the examples provided to us in the Comptroller and Auditor General's report, the report covers the practice of awarding added years for pension purposes to certain professional and technical staff in five universities that had their own funded pension schemes. We know that the provision of top-up allowances up to one third of service gave a very considerable boost. It is difficult to understand how there is any justification for that practice when the pension funds for each of the five universities were in very serious deficit at that time. It would seem that some staff were allowed to retire early at, say, 60 with up to ten years added on. Clearly, allowances have to be made for circumstances where a person is in study possibly until their mid or late 20s and some provision must be made for that but the practice of added on years generally applies in circumstances in the public sector where people remain working until they are 65 but in many of these cases people were allowed to retire early at 60.

In the example provided in the Comptroller and Auditor General's report, he highlights the situation in UCD in the year up to September 2008 where 78% of staff retiring during that period were given an average of 4.2 years added on, bringing their average salary on retirement to in excess of €74,000. When the sums are done on that year alone that comes to a figure of approximately €4.2 million for those people who retired in that year.

Does anybody have any measure of the cost to the Exchequer of that practice of pension top-ups in the universities? It has been quantified in the report in one university in one particular year but if we are talking about a period of years in all of the universities, presumably the figure is quite substantial. Has anybody got any idea of the total cost of the practice of those added years for pension purposes? Do the Department of Education and Skills officials have any idea?

Mr. Kevin McCarthy

The pension funds of the five older universities prior to the decision to transfer them and the legislation that was enacted by the Oireachtas last year to transfer them to the State would have been private pension funds of the individual universities. We have information on the assets and liabilities of each of those funds at the date of transfer but we do not have information on the value of added years discretions awarded under those funds over previous years. We would not have had a role in administering those funds directly prior to the decision to transfer.

Deputy Róisín Shortall

What do contracts state about pension arrangements?

Mr. Kevin McCarthy

My understanding is that it would have varied from university to university depending on——

Deputy Róisín Shortall

Is there a current standard contract that applies now to all senior staff in universities?

Mr. Kevin McCarthy

Since 2005 all new entrants are part of the model public service scheme.

Deputy Róisín Shortall

What does that say in regard to added on years?

Mr. Kevin McCarthy

There are standard arrangements for added years in the public service. I believe it is a maximum of five years but I would defer to my colleagues in the Department of Finance who have responsibility for the overall public service scheme.

Deputy Róisín Shortall

Why was the practice allowed to continue over a number of years whereby the public service arrangements were exceeded?

Mr. Kevin McCarthy

Historically, these schemes, in the case of the three NUI universities, would have been established by statute laid before the Houses of the Oireachtas. In the case of NUI Maynooth and Trinity, they were governed by university statutes. I suppose these were historic entitlements related to these schemes and they were a matter for the trustees and administrators of the schemes in terms of the exercise of the discretions provided for within the schemes. What would have emerged over the years in terms of policy and practice would have been entitlements for individuals as members of that scheme, and, essentially, they became embedded over time.

Deputy Róisín Shortall

To sum up, we know many practices were going on in the universities in recent years which were ultra vires in respect of pay and pensions. We know that both the HEA and the two Departments were involved to a greater or lesser extent and took a certain amount of action in terms of writing letters and having meetings. At this point, can Mr. McCarthy tell us what is the position about people being employed in universities? Is there a clear contract that sets out the position regarding maximum pay scales, the point at which people start on a pay scale, and the issues of bonuses, special allowances and pension entitlements? Is there a standard contract that sets that out?

Mr. Kevin McCarthy

There is not a standard contract in the university sector. Each of the universities would issue its own contracts but there would be standard practice in terms of the requirements of legislation in respect of remuneration and the requirement to adhere to approved salary scales in respect of remuneration. There would be standard practice in regard to the pension arrangements on offer for new entrants from 2005. Prior to that, it would have been governed by——

Deputy Róisín Shortall

Is Mr. McCarthy in a position to say at this point, therefore, that all the universities are adhering to that standard that has been set?

Mr. Kevin McCarthy

There is a code of governance for the universities, which has been agreed between the universities and the Higher Education Authority, which requires an annual declaration to be signed by the chief officer and the chairman of the governing authority that they are compliant with all requirements, legislative and otherwise — essentially, all requirements of good governance. Those returns are made to the Higher Education Authority on an annual basis and we would expect that universities, as autonomous institutions responsible to the Oireachtas and regulated by legislation, would be complying with all the legislative requirements under which they operate.

Deputy Róisín Shortall

Mr. McCarthy is saying there is that adherence now.

Mr. Kevin McCarthy

There is a declaration of adherence on an annual basis, yes.

Deputy Róisín Shortall

There is a declaration of adherence. That declaration has been signed by each of the universities, is that right?

Mr. Kevin McCarthy

To my knowledge, yes.

Mr. Tom Boland

If I may be helpful, the answer is "Yes". There is no prevarication on that. There are procedures in place. Each of the universities has complied with them and, therefore, as an accountable person for the Higher Education Authority, my opinion is "Yes". They are compliant with all of the requirements of the legislation.

Deputy Róisín Shortall

Eventually. Regarding best practice, what does that say about the type of and provisions of the contract regarding the number of hours university staff should work?

Mr. Tom Boland

If I may reply, there is not specifically a code of that sort. Perhaps the issue might be better addressed to the universities but in all the universities, to a greater or lesser extent, there is now a process of workload allocation models being put in place to establish precisely what academics should do and what they actually do. That exercise is related to the one to which the Comptroller and Auditor General refers in his report on the full economic costing model, which is well advanced in its development and which will have the effect of allowing university management to have a greater knowledge of where money is being spent in the universities and how to manage those resources, including staff.

Deputy Róisín Shortall

Surely, a contract should stipulate the minimum number of hours a person is expected to work?

Mr. Tom Boland

It has not been the practice but there is an issue around this in the context of the Croke Park agreement as to reform of contracts in both the universities and institutes of technology. My understanding is that this has not been the practice to date.

Deputy Róisín Shortall

Therefore, in addition to all the irregularities that have been uncovered over the past decade, Mr. Boland is telling us that he does not know or that there is no requirement on any university staff to work a minimum number of hours?

Mr. Tom Boland

Generally there is a practice in the universities that they would require their staff to work a certain number of hours in teaching, research and so on.

Deputy Róisín Shortall

That is not set down in contract.

Mr. Tom Boland

I do not think the number of hours specifically is set down in contract.

Deputy Róisín Shortall

How is the expectation of what is required by staff relayed to a staff member if it is not in a contract? How does one let people know what one expects from them?

Mr. Ned Costello

If I may comment on that, the approach in universities is very much driven by outputs. Therefore, there is a clear understanding on the part of university management as to what, if one takes the example of a lecturer——

Deputy Róisín Shortall

How are those outputs measured?

Mr. Ned Costello

The fundamental output is the number of students the university generates, the amount of research income that is generated, the number of——

Deputy Róisín Shortall

I am not talking in general terms but about specific staff members. If a staff member is employed at whatever salary one would like to mention, surely it is set down somewhere what one expects of that staff member in return for that salary?

Mr. Ned Costello

Absolutely and contracts have fairly——

Deputy Róisín Shortall

How does one measure the performance of that person?

Mr. Ned Costello

Staff are supervised increasingly by their head of school on the basis of the restructuring of the universities that has happened. Therefore, the head of school is responsible for the management of the affairs——

Deputy Róisín Shortall

Specifically, in terms of hours, how many hours would a senior staff member be expected to work?

Mr. Ned Costello

My colleagues who are at the coalface can probably answer that question more directly than can I, but from extensive discussions I have had I can tell the Deputy that the normal working week, so to speak, and well in excess of that in many cases is what university staff work. The danger——

Deputy Róisín Shortall

Fine. I do not mean to be disrespectful but it is not enough simply to expect us to take Mr. Costello's word for that. What performance indicators are there in the universities? How do they measure the work a person is doing?

Mr. Ned Costello

It would be accounted for across a range of headings. There are three principal headings, namely, research, teaching and what we term "contribution", which includes contribution to the running of the university, to society and the wider economy.

Deputy Róisín Shortall

What is the breakdown in hours between those different activities?

Mr. Ned Costello

The breakdown in hours is roughly 40:40:20 in percentage terms.

Deputy Róisín Shortall

Percentage of what?

Mr. Ned Costello

Percentage of — if I can——

Deputy Róisín Shortall

Mr. Costello might clarify those percentages, 40%, 40% and 20%.

Mr. Ned Costello

Forty percent teaching, 40% research and 20% contribution. That would be broadly similar across the universities.

Deputy Róisín Shortall

In teaching terms, to what number of hours does the 40% apply?

Mr. Ned Costello

With respect, Deputy, the difficulty in this respect is that if one considers professional occupations generally, this is not factory work. Most professionals——

Deputy Brendan Kenneally

——work far more hours than people in universities do.

Deputy Róisín Shortall

Most workers have to do a minimum number of hours. I am asking if there any system in place to ensure that university staff do a minimum number of hours. That is a reasonable question.

Mr. Ned Costello

The work is monitored to ensure it is done. The work requires at least the normal working week to undertake.

Deputy Róisín Shortall

How many hours is a person required to work? What is the minimum number of hours?

Mr. Ned Costello

There is not a minimum requirement.

Deputy Róisín Shortall

There is not a minimum requirement.

Mr. Ned Costello

Indeed, in the other part of the higher education——

Deputy Róisín Shortall

How then does one measure a person's performance?

Mr. Ned Costello

The difficulty is that if one looks at the other part of the higher education sector, the institutes of technology sector, there is a minimum number of hours. With respect to my colleagues in that sector, that has tended to become a floor to which people work down. The benefit of not having a minimum number of hours is that there are reciprocal benefits.

Deputy Róisín Shortall

I am at a loss to know how Mr. Costello can possibly——

Chairman

I am at a loss too because Mr. Costello is being very vague. How many contact hours——

Mr. Ned Costello

Maybe I will pass over to some of my colleagues who——

Professor John G. Hughes

Perhaps I can make a comment as a president. The universities all have a performance management development system in place where each member of staff is appraised on an annual basis in terms of their outputs, research, teaching and so on. We are also engaged in putting in place workload models right across all the universities. Recently, as part of that exercise, my university of NUI Maynooth did a fairly detailed study of the workload currently being experienced by academic staff members. We came to the figure that the average academic in NUI Maynooth is working 59 hours per week, which is of serious concern to me because I am responsible for their health and safety. That is not untypical in the current university environment where we are working with student-staff ratios of nearly 30:1.

Deputy Róisín Shortall

We do not know whether it is typical or not because there is no measurement there.

Professor John G. Hughes

We are putting in place the measurements and we have——

Deputy Róisín Shortall

A situation where a person is given a very well paid job without any stipulation about the minimum number of hours required to be worked seems to be extraordinary. Does Mr. Boland have any view on that?

Chairman

Dr. Murphy has indicated——

Dr. Michael Murphy

Might I make some comments on that and provide some evidence? In 2008 we conducted a review of contact hours. We have a policy that academic staff should exhibit not less than 150 contact hours of teaching. The average established for the institution was over 180. In one of the colleges, medicine and health, it was 280. In the past year, we have also conducted an extensive review of research output where we invited 120 international experts in 16 panels to examine everything being conducted across the university under the research heading. As I recall, 12 of the 16 international panels made the observation that the teaching loads they saw being exhibited by UCC academics, although I think the picture is common, far exceeded the norms in their institutions across the world.

I reiterate the comment made by Professor Hughes that I believe there is far greater risk to the institutions in counting the hours which will place us in breach of our legal obligations with regard to the number of hours staff should not exceed. That should be seriously considered when we are addressing this matter in the coming year.

Deputy Róisín Shortall

It is not adequate just to review and to report back to us. There should be a minimum expectation on staff. Dr. Murphy said he found that staff had 180 contact hours.

Professor John G. Hughes

The reported average figure for the institution was 180 contact hours.

Deputy Róisín Shortall

Over how many weeks?

Dr. Michael Murphy

That is over the teaching year.

Deputy Róisín Shortall

Say 30 weeks. Would that be——

Dr. Michael Murphy

For us that is 24 weeks plus——

Deputy Róisín Shortall

Some 30 weeks. That is six hours per week.

Dr. Michael Murphy

The Deputy must always remember——

Deputy Róisín Shortall

In terms of the 40-40-20 referred to earlier, if six hours is 40% of the week, we are talking about the full week being 15 hours.

Dr. Michael Murphy

The Deputy must take into account as well that to teach, to have a contact hour, one must have extensive preparatory time. Figures internationally vary from three to four hours per contact hour of preparatory time. The complexity——

Deputy Róisín Shortall

This is a matter of considerable concern to parents. Many of us have had experience where young people having worked hard in the leaving certificate go to college, perhaps with a lot of points, and discover they do maybe six, seven or eight hours per week. Quite frankly, that is unacceptable. I would say it is quite dispiriting for the students themselves embark on a course in which they expect to be challenged but where it turns out they only have a handful of hours per week. It is very hard to see where the accountability comes in for the very substantial amounts of public moneys that go into the universities to pay for staff.

Dr. Michael Murphy

I think we have to address the complexity of modern education techniques. Most of us, particularly if we are parents, have a memory of universities that date back to the 1970s and 1980s when the institutions in Ireland would have been described internationally as colleges — in other words, third level institutions. We have evolved enormously over the past 20 years in the nature of our business. Beyond that, we have had extraordinary changes in the manner in which education is delivered, particularly now emphasising such things as ensuring they have the capacity and techniques to learn as opposed to sit and be talked at and that capacity can be translated throughout their lifetime because of the requirements in a modern knowledge society of techniques to remain abreast of knowledge.

The days of counting lectures and lecture time in universities by international standards have long disappeared. As universities and educators, we have a challenge to ensure society broadly understands the nature of this evolution, the pace of it and the manner in which we have had to adapt our techniques.

Deputy Róisín Shortall

What do we know about international best practice in this regard?

Mr. Tom Boland

I will try to address the Deputy's first question as to what the HEA thinks about all of this. The management of staff and the allocation of staff within a university is exclusively a matter for the management of the university. Overall, I would have considerable confidence that human resource within the universities is being well utilised. I base that on two things.

The quality assurance processes referred to in the Comptroller and Auditor General's report demonstrate that there are good processes in the institutions which are very reliant on staff and that, in general, they produce a very good result. I would also place that confidence on what the universities are delivering to Irish society and the economy which is a very significant number of high quality graduates.

The conditionality I would attach to it is that I believe we have to work much harder — some work is being done — on the issue of transparency which is, to some extent, what this committee is getting at. It is opaque, to say the least, as to exactly what academics spend their time at. I am aware there is some resistance among some academics to reducing that opacity. It is an unwise position for them to adopt because in the absence of better knowledge on exactly what academics do and how they spend their time, all manner of prejudice can prevail and grow.

From a HEA point of view, staff management and allocation is a matter for the institutions. By and large, I believe the resource is well utilised but there is a serious issue which needs to be addressed about the confidence in the system and that can only be done by much greater transparency. One mechanism which can achieve that is a more effective workload allocation model which, as I said earlier, the universities are working towards. We very much want to see that developed.

Chairman

I would like to ask a question of each of the universities. What pension deficient did they hand over to the State since 2005? What was the cost of the top ups on pensions and the cost of the allowances since 2005?

Professor John G. Hughes

The pension deficit in NUI Maynooth was approximately €19 million. There were no top up payments and no allowances paid in NUI Maynooth. I am sorry I do not have the answer to the Chairman's question on the pension top ups. I would have to provide that separately.

Professor John Hegarty

I will have to supply the same information. We can do that.

Chairman

Does Professor Hegarty not know?

Professor John Hegarty

I do not know the exact figure off the——

Dr. Hugh Brady

The most recent valuation was carried out in 2005 and showed a 5% surplus. It has not been valued since then. The average number of added years was 4.2 — this was alluded to in the report — which is less than the ten maximum and the five maximum in the current model scheme. The allowance is 0.3% of our total.

Chairman

Was there a pension deficit or a surplus?

Dr. Hugh Brady

In 2005 it was in a healthy position and was in surplus.

Chairman

What was the position when it was handed over to the State?

Dr. Hugh Brady

I am sure it was in deficit. I can obtain the relevant information in that regard for the Chairman.

Professor Brian McCraith

I will also be obliged to provide the numbers subsequently. However, in the context of the pension scheme itself, in September 2005, the governing authority of DCU adopted the public service pension reform scheme outlined in Department of Finance Circular 10/05. We are not in a position of offering allowances.

Dr. Michael Murphy

I do not have the relevant data with me. I will submit them to the committee.

Dr. James J. Browne

Nor do I. However, I am in a position to indicate that in the year 2008-09, the average added years was 3.82 to a total of 12 staff. I can provide the information the committee requires.

On a point of clarification, the term "handing over the pension scheme" suggests that we approached the State and asked it to assume responsibility for it. That was not the case. The State actually required us to transfer the scheme to its control.

Deputy Róisín Shortall

So our guests were not making——

Dr. James J. Browne

To be frank, I do not know. This is an extremely complex area. The pension scheme in Galway was in surplus for a long period. In recent years, however, it had certainly taken a hit. I would expect, in normal circumstances, that over a cycle——

Chairman

But surely——

Dr. James J. Browne

The handover took place at a time when pensions were in extremely poor shape.

Chairman

Dr. Browne stated that the handover was not done by choice. However, it has relieved the universities of a total of €790 million.

Dr. James J. Browne

It depends on how one values pensions. However, it is the case that the State took the initiative to take the pension scheme into its control.

Professor Don Barry

The University of Limerick has always operated on an unfunded pension scheme according to the model scheme. In such circumstances, we never handed anything over to the State.

Mr. Brendan Ellison

On that point, I wish to make it clear that the State did not take the initiative. The State was approached by the universities in respect of a problem they had because the pension funds were in difficulty. The Government agreed to make an offer to the universities to take over the pension funds. There was no way that it was a mandatory deal. It was only on condition that all the universities accepted this deal that the State assumed control of the assets and liabilities. There was nothing in it for the Exchequer because it was taking over a deficit rather than a surplus. If the universities had been happy to remain as they were, the Government was perfectly happy to leave matters as they stood.

Chairman

In light of the fact that the universities are not in a position to supply the figures, is either the Department of Finance or the Department of Education and Skills in a position to provide an absolute indication of the deficits that obtain in respect of each of the universities?

Deputy Brendan Kenneally

I have in my possession figures that were previously supplied to the committee by Ms Brigid McManus.

Chairman

Just for the record, I wish to clarify those figures.

Deputy Brendan Kenneally

If the figures to which I refer are correct, the long-term deficit for the State in this regard will be €750 million.

Mr. Kevin McCarthy

It is certainly something of that order. We will confirm the figures for the committee. We have aggregate figures and also a breakdown in respect of each of the universities. I will confirm the actual figures for the committee.

Deputy Róisín Shortall

Surely the Department of Finance can supply the relevant figures.

Mr. David Owens

We do have some figures. The funds have transferred now but they must be audited in order that the absolute and final figures can be obtained. The total estimated value of the assets the universities transferred was €1.36 billion. The breakdown was that Trinity College, Dublin, transferred €280.5 million in assets, NUIM transferred €58.5 million, UCC transferred €312.1 million, UCD transferred €496.5 million and NUIG transferred €216.7 million.

Deputy Róisín Shortall

What were the liabilities?

Mr. David Owens

Again, the figures for liabilities are estimated but Trinity College transferred €595 million, NUIM transferred €155 million, UCC transferred €456 million, UCD transferred €598 million and NUIG transferred €348 million. These are provisional estimates supplied by the universities, the total of which comes to €2.15 billion.

Chairman

So this takeover is similar to a bank guarantee scheme.

Deputy Darragh O’Brien

During this discussion, reference has continually been made to legal advice. I wish to focus on the pensions aspect, a matter which I raised in June with the Secretary General and in respect of which Mr. Ellison was able to provide clarification on a number of points prior to that. It is quite telling that, with the exception of the President of NUIM, the heads of the universities are not in a position to outline to the committee the value of the transferred assets and liabilities. This indicates that, in the context of pensions, the universities were adding years of service without having any regard whatsoever to the increasing liabilities this would have for the Exchequer or, prior to the transfer, for their pension schemes.

Will Mr. Costello indicate the number of occasions on which the Irish Universities Association has discussed the pensions issue as it relates to the universities, particularly since April 2008, when a precondition to the transfer of the schemes — to the effect that the assets and, in particular, the liabilities were not to be enhanced or increased — was put in place? Was the pension issue discussed by the heads of the universities prior to the transfer?

Mr. Ned Costello

The matter would have been discussed by the university finance officers who meet as a group under the aegis of the council of the IUA. In respect of the stipulations which were laid down and to which the Deputy refers, the pension schemes continued to be managed as previously and the entitlements provided continued to be those that were provided historically. There was no change in practice.

Deputy Darragh O’Brien

We discussed this matter in great detail in June. Examples relating to UCD and other universities — with the exception of NUI Maynooth — were provided in this regard. It was clear that prior to the introduction of the Financial Measures (Miscellaneous Provisions) Act — the relevant information is contained in the Comptroller and Auditor General's report — a precondition was in place to the effect that pending the finalisation of the legislative provisions for the transfer of the assets and liabilities to the State, the universities and the trustees-administrators of the funded pension schemes would continue to take all possible action to ease pressures on the pension funds in the intervening period. Is Mr. Costello honestly of the opinion that this happened?

Mr. Ned Costello

As already stated, the schemes continued to be administered in the manner in which they were administered historically. There was not a good basis to depart from that.

Deputy Darragh O’Brien

So there was no change at all. It is clear that the circular issued by the Department of Finance in January 2009 — Mr. Ellison clarified this at our meeting on 3 June last — indicated that where there was discretion, such discretion was to be exercised in favour of the State, that is, the Exchequer. It is also clear that post-2008 — namely, the period following that considered by the Comptroller and Auditor General — added years continued to be allocated.

As already stated, reference has continually been made to legal advice. The previous occasion on which I heard legal advice mentioned was in the context of that given to NUIG and the Athlone Institute of Technology, AIT, which indicated that one individual could be paid two pensions for doing two jobs when neither institution was aware that the person in question was double-jobbing. It was only after our meeting in June that this legal advice was checked and it emerged that the man in question was not entitled to two pensions. This is only tip-of-the-iceberg stuff. Some 78% of staff in UCD——

Dr. James J. Browne

With respect, that is not accurate.

Deputy Darragh O’Brien

It is accurate. If Dr. Browne reads the transcript from our meeting on 3 June, he will see that the Secretary General of the Department said that legal advice had been sought and that it indicated that, based on the fact that he was in receipt of two salaries and was paying two pension contributions, the individual in question was entitled to two pensions. He was in receipt of two salaries and making contributions to two pension schemes. That is fact. It was later stated he was not, but I will not go down that road.

Dr. James J. Browne

I would like to put the record straight. As I do not have the documentation in front me, I am at a disadvantage. However, I am clear in my recollection that our initial understanding was that pension rights were invaluable and that an individual who had acquired pension rights was entitled to receive them. That was the advice that each institution had received separately. Galway university was advised by its legal advisers that the person concerned who had broken the law and engaged in egregious behaviour was entitled to receive his pension. The same advice was given to Athlone university. However, that university checked further and discovered that its pension scheme had a provision — unique, as I understand it, to its scheme — which did not allow an individual to receive more than one pension. Our advice was that under our scheme the individual was entitled to receive his entitlements, if he sought them, irrespective of any other provision in place. The information on the Athlone university scheme was discovered before June. I recall that I told this to the committee when I appeared before it on 2 or 3 June. There was never a situation where the legal advice changed. There were two pieces. The situation is complicated.

Mr. Kevin McCarthy

The two pieces of legal advice were cited at a meeting of the Committee of Public Accounts in November and the position was clarified before the June meeting.

Deputy Darragh O’Brien

The confusion was not created by the Committee of Public Accounts. I am using it as an example and do not wish to dwell on the specific case mentioned. However, I thank Dr. Browne for his clarification.

The figures illustrate the discretionary nature of the pension schemes. I understand the Comptroller and Auditor General has stated in his report that each university involved has mentioned custom and practice. What was the view of the universities when the circular was issued by the Department of Finance in January 2009 and what did they do at the time to manage the liability so as not to increase the liabilities within the fund?

Mr. Ned Costello

I will make one comment, following which my colleagues may wish to comment further. It is important to say there were two conditions in the transfer of the schemes, of which the second was that to which the Deputy has alluded in relation to the management of the schemes in the interim period. The other condition was that the terms and conditions of entitlement of members would be no more or less favourable than those applying. The two provisions must be seen together. What happened was that the schemes were operated on the basis of like entitlements for members in the transitional period and not varied.

Deputy Darragh O’Brien

Is Mr. Costello saying that because of the practise the universities followed there was a compulsion in terms of the granting of added years, that it was not discretionary? The rules governing the pension schemes state that, for the purposes of computing the pension of a pensionable member of staff, the governing body shall have the power to add to the number of actual years of pensionable service such number of years — this is the important part — as the governing body, in its absolute discretion, may think fit. What happened was that all senior staff members were granted added years.

Mr. Ned Costello

The provisions varied somewhat among institutions. It is fair to say——

Deputy Darragh O’Brien

Most were granted added years.

Mr. Ned Costello

Recognising, as the Deputy stated, that the provision in respect of added years in a university context arises because most come into the university system far older than to other jobs.

Deputy Darragh O’Brien

How much older, on average?

Mr. Ned Costello

One needs a PhD, which takes four or fives years to complete and probably several years of postgraduate work experience. The average would be somewhere between 25 and 30 years of age.

Deputy Darragh O’Brien

If one takes the average as being five added years or 4.2 years in UCD and across the other sectors, that is the average figure based on all staff. Taking UCD in 2009 as an example, at the lower grades added years were not granted, but they were at the higher grades. Can any of the representatives of the universities tell me where at the level of senior lecturer and above, including head of department, added years were not granted? What is the average percentage for the senior grades? I would put it at approximately 18%.

Professor John Hegarty

In the case of Trinity College, the number of added years is not unlimited. It is not purely at the discretion of the governing body.

Deputy Darragh O’Brien

One cannot have more than over 40 years anyway.

Professor John Hegarty

That is true.

Deputy Darragh O’Brien

That has nothing to do with Trinity College; that is the law.

Professor John Hegarty

The maximum number of added years equates to one third of one's working years or a maximum of ten years. It is not unlimited in that sense. The Trinity College scheme was established in 1972 with a board of trustees and so on. The conditions of the old scheme which has been replaced by the modern scheme in all universities were set at that point. It was a different world then. These were entitlements granted.

Deputy Darragh O’Brien

New rules.

Professor John Hegarty

In our case, when a person was recruited, an outline of the added years one could expect was included as part of the deal.

Deputy Darragh O’Brien

In the contract.

Professor John Hegarty

Yes.

Deputy Darragh O’Brien

The added years provision of the scheme remains discretionary.

Professor John Hegarty

Yes, for the old scheme which has since been replaced. Approximately 50% of our employees are covered by the new scheme.

Deputy Darragh O’Brien

The added years provision remains part of the 1972 scheme.

Professor John Hegarty

Yes. It is fading out.

Deputy Darragh O’Brien

What is the position in respect of UCD?

Dr. Hugh Brady

The added years provisions are the same as those which apply in TCD, namely, one third of one's working years up to a maximum of ten. Again, the statutes date back to the 1970s. To return to the Deputy's opening point, there was no change in practice in 2009. What prompted more people to retire early, as they were entitled to do, was the discussion in political and public circles of the taxing of a person's lump sum payment.

Deputy Darragh O’Brien

I was speaking of a change in practice in the management of pension schemes. Did the trustees of the various schemes pre-transfer adhere to what they had been asked to do by the Department and have they done so since?

Dr. Hugh Brady

Yes, we did. We took the matter seriously. As Mr. Costello said, we had to balance not increasing liabilities and meeting individuals' entitlements. When appearing before the Joint Committee on Finance and the Public Service we would go through each case.

Deputy Darragh O’Brien

What does Dr. Brady mean by "we would go through each case"?

Dr. Hugh Brady

We would have taken great care in going through each individual's case to see if there was a legitimate expectation. The legal advice was — this is not dissimilar to the Trinity College case — that, from the way one advised staff from the moment they entered the institution, the vast majority, if not all, were aware of the provisions of the scheme and their entitlement to receive added years. With that in mind, we engaged in a process before the hand-over of going through the detail. That was the case because at various times during the year UCD HR informed staff of the conditions attaching to provisions of the scheme. There was no change.

Deputy Darragh O’Brien

What percentage of UCD retirees in 2009 were granted added years post-issue of the circular by the Department of Finance?

Dr. Hugh Brady

I think it was almost 70%, a high percentage. Senior staff who had been in the institution for a long time were concerned their lump sum payment would be taxed following the forthcoming budget.

Deputy Darragh O’Brien

That is not what I am talking about. That has not transpired. My question is not about the number of staff retiring and I do not mean to use UCD as an example, as this provision applied across the board. Has UCD ever exercised discretion not to provide added years for senior staff, or is everybody granted added years? If so, from whom did the college receive legal advice?

Dr. Hugh Brady

I will have to revert to the Deputy on which senior counsel gave us the legal advice. As is noted in the report, the Attorney General came to approximately the same conclusion. The situation in which we find ourselves is that we a scheme containing statutes dating back to the 1970s, with a practice that has been consistent since then. We are now in a very different environment, admittedly, but with no room to manoeuvre. That discretionary power now transfers to the State and there is no indication yet that the State will behave in any different way. The 4.2 years is significantly less than the maximum of ten years and significantly less than the five years that is the tradition for the——

Deputy Darragh O’Brien

The 4.2 year average includes all staff who retire. Is it all grades or senior grades?

Dr. Hugh Brady

All grades.

Deputy Darragh O’Brien

All grades, people who are post-2005 or more junior grades. What is the average for those at a senior level?

Dr. Hugh Brady

I will have to get that number for the Deputy.

Deputy Darragh O’Brien

They are the more significant numbers. When one considers added years as a one-off cost of €4.2 million mentioned earlier, that permeates right through into a guaranteed annuity for life and the basis for this.

I have a question for the Department of Finance. What is the view of the Department since the transfer of the scheme? We discussed this matter in June with regard to the transfer of the schemes and in particular the operation of the schemes prior to the transfer.

Mr. David Owens

I refer to what has happened since the transfer. The transfer orders for Maynooth and Trinity were made at the end of last year. The orders for UCD, NUIG and UCC were made and the funds transferred at the end of March this year. All cases involving the operation of discretion must now be submitted to the Departments for both Ministers to approve. It is not simply the Minister for Finance — as I think may have been stated earlier — it is also the Minister for Education and Skills. The Minister for Finance and the Minister for Education and Skills act jointly. The cases are being examined to see that they fall within the existing scheme rules. We are not altering the rules; we are not making them more restrictive or more generous but rather we are applying the rules. The Ministers have seen and approved this policy line and cases have been put to them and agreed by them on this basis.

Deputy Darragh O’Brien

We are still in agreement on the basis that it has been a de facto part of the scheme rules.

Mr. David Owens

If there is a written commitment, a contractual commitment around added years, where somebody may be told not that they could not take out an AVC, an additional voluntary contribution, because they would have an added years award and they had acted on that, the advice is that the added years award cannot be taken away in a discretionary way.

Deputy Darragh O’Brien

Since the operation of those schemes have come under the Department of Finance, have added years been refused?

Mr. David Owens

There are cases which are under review at the moment and added years are not being awarded in all cases.

Deputy Darragh O’Brien

Has this area been clarified further with regard to new entrants into the schemes or, in particular, new entrants since the transfer of the scheme? The scheme rules seem to be pretty clear that it is at the discretion of the trustees. Is it now time to clarify the situation once and for all?

Mr. David Owens

Any new entrants to either the unfunded universities or to the other universities are all in the 2005 model scheme.

Deputy Darragh O’Brien

And the maximum entitlement is five years.

Mr. David Owens

Yes.

Deputy Darragh O’Brien

Mr. Costello dealt with this matter. In the case of a person following on from doctoral studies it is understood there would be a period whereby they could not actually be working or contributing to a pension scheme. In the case of any new entrant post-2005, this time is restricted to five years and there are no exceptions.

Mr. Ned Costello

That is the scheme.

Deputy Darragh O’Brien

When did the HEA, Higher Education Authority begin to deal with the matter of the pensions in the universities? Has the HEA any dealings with the universities on this matter?

Mr. Tom Boland

On the issue of pensions, because it is a very complex area, I am very relieved to leave the matter primarily to my colleagues in the Department of Finance and the Department of Education and Skills. However, I do not recall the precise date but it is probably about four or five years ago when the HEA became aware through the accounts of the universities that some of the university pension funds were either in deficit or going into deficit. We identified this as a problem for the sector. At that stage we set up a committee under the chairmanship of the chair of the governing body and involving the Department of Education and Skills and the Department of Finance, to see what kind of solution might be brought about to avoid what would be a very difficult situation, a situation where ultimately, given the nature of universities as publicly funded bodies, the problem would probably revert to the State. It was in that context that the solution to which Mr. Ellison referred, emerged, which was, the transfer of the pension funds to the State. There was not a compulsory transfer in any sense but the implications for a university which sought to stay outside that arrangement would have been very difficult. As Mr. Ellison said, the nature of the solution formed at that point was that all universities were to be comprehended within it. It was a composite solution to an emerging problem with regard to pension funds.

Deputy Darragh O’Brien

Due to the underfunded nature of the schemes.

Mr. Tom Boland

I am not an expert in this area. I am not quite sure whether it was due to the underfunded or the under performing nature of the schemes but in any case, there were deficits either current or looming at some point in the future in the schemes.

Deputy Darragh O’Brien

I have two final questions. I will not go back over the issue of the allowances as this has been dealt with in detail today. I presume the special allowances or performance allowances that were paid are non-pensionable. Is that correct? They were one-off payments in a given year that are not taken into account in the final salary.

The committee has discussed the issue of staff contact hours with students. Will Dr. Murphy comment on any international comparison from Britain or other jurisdictions? He referred to 180 contact hours in UCC over, I presume, a 30-hour week. I take his point that preparatory work must be done before lectures. How do the contact and contract hours in Irish universities compare with universities in other countries?

Dr. Michael Murphy

When we began the process of considering workload allocation modelling about a year ago, there was a strange paucity of information available on the web in that regard. That was the first place we visited. I know that work is ongoing in other systems which we are currently examining. I refer the Deputy to our website for the observations made by 116 international academics on what they saw when they came to review what UCC was doing last year. Twelve of the 16 panels made the comment on their experience but without giving us facts and data; they simply observed that the workloads they encountered here, the teaching workloads, exceeded and in some disciplines far exceeded the norms in their own countries. That is all I can say at this point.

Deputy Darragh O’Brien

Is there any evidence from Trinity College, UCD or NUIG in that regard? Do those universities look at their peers across the water?

Professor John Hegarty

We do so all the time, partly because we recruit staff from across the world. They bring the experience of what they have been doing. The negotiation process is partly to do with what they are used to and what they expect and what we expect. I spent time in the United States. It would be quite standard practice in US universities with the same balance of research and teaching, that an academic would teach perhaps two courses a semester. A course consists of about three hours a week which is roughly six hours a week and this would be standard. We are comparable to that. In the UK it varies. Different types of universities have different balances of activities.

Deputy Darragh O’Brien

I ask Dr. Brady, Professor Barry and Dr. Browne to comment. There is a view abroad or here that our university lecturers have less contact time than their counterparts in other countries. That is why I am asking the question. I would like to have the witnesses' views on the record because this matter is very important. I would not like there to be an impression that our students in universities are not receiving the requisite time they require. My question is to allow the witnesses to give their view on this.

Dr. James J. Browne

I am speaking with NUIG in mind. To confirm what has been said, my experience of the UK and the United States is that there are normally two courses per semester. Six hours per week is the norm for research-intensive universities. That is an important phrase to add in — that we are all research-intensive universities.

Let me make my second point. There is a misunderstanding in the sense that lecturing for six hours per week and giving two courses means taking total responsibility for those two courses, as in designing the course, designing and preparing the material, identifying and augmenting the textbooks, and writing and correcting the examination papers. It is the totality of the responsiblty for those two programmes. It is not simply a matter delivering a set course defined by a third party. The lecturer must take responsiblity for the full design, delivery and assessment of the programme. That is an important point to remember. The preparation issue is not simply one of preparing one hour's teaching but of preparing a programme and an examination.

The second point to remember is that there has been a huge change in recent years in the education and teaching process. All of us have engaged with that. It would be worth the committee's while at some point taking the time to look at how university teaching proceeds these days and to see, for example, the huge amount of work done by individual staff members in preparing material for virtual learning environments that are in use in all of our systems now. We must look at what is available to students in terms of their access to material, all prepared by the lecturer and not taken from a standard textbook or standard set of notes bought from a commercial organisation. The point I am making is that six hours per week is the norm internationally in our equivalent institutions. It is misunderstood in the context of the totality of the work required.

Dr. Hugh Brady

I have similar comments. To return to an earlier conversation by Professor John Hughes, we at UCD also surveyed academics. The average number of hours worked per week was in the 50s. Using the workload model, the proportion of teaching is approximately 40%, the proportion of research and innovation is approximately 40% and the proportion of contribution is 20%.

The recent OECD review of the public service suggested Ireland should focus more on the outputs that the taxpayer is getting for investment and the quality of those outputs. They should be benchmarked according to international standards. In that context, it is worth going back and saying we are routinely being measured and measuring. The latest university rankings, about which Mr. Tom Boland had some reservations, place most of our universities in the top 10% in the world. There are 5,000 higher education institutions and most of our universities are in the top 500. They look at teaching, research and innovation parameters. There are 13 parameters in all. The ECOFIN study, which has been mentioned, shows that we perform as a sector with Finland more efficiently than with all others in the EU. As a sector, we know that, by comparison with relevant UK comparators, we do this with less funding per staff, fewer academic staff per student and fewer support staff for academic staff.

One can go through a process as we are doing — I certainly welcome the engagement — but one can end up being quite depressed and thinking, "My God, the thing is a mess." The UK comparators have the HR toolkit that we were talking about. There is much more HR flexibility, not just to handle the under performers. What is even more of an issue is managing excellence, the top performers, and keeping them here. It is important that we have a good news story to tell during very difficult times in this country. It is important that the balance of the discussion is such that we identify not only the issues that need to be addressed but other issues, irrespective of whether they concern approval mechanisms, in such a way that we do not shackle ourselves in the future or impede our ability to compete at the very top level. If we cannot compete at the very top level internationally, the knowledge economy will go out the window.

Deputy Darragh O’Brien

I do not know whether Professors McCraith and Hughes want to contribute. One of the reasons I asked about this is that it is linked to monitoring. One can spend all day every day monitoring but greater transparency is desirable. I welcome the opportunity the witnesses have to get their points of view across. I am not saying there is a cloud over this but more clarity would be to everyone's benefit. There are many good news stories, which the witnesses have mentioned.

Chairman

Will the last two contributors make their comments, including on the allegation this year that grades were being awarded to students that were higher than those they earned? Would the witnesses like to refute that? On the issue of quality assurance of university graduates, what are the multinationals and the pharmaceutical companies saying? Can the witnesses take that in tandem with the other questions?

Professor Brian McCraith

Could I just go back to one point in the interest of the accuracy of the record and to avoid ambiguity? I refer to the question on pension funds. DCU, like UL, had no transfer. We are not in that situation.

I would like to reinforce one point Dr. Brady made in terms of performance. We have to recognise the situation we have come from and where we are. In the lead-up to my taking the position at DCU this summer, I got an analysis done on rankings. I looked at universities that were in the top 300 last year, such as ours. We looked at newer universities. Of course there is a reputational aspect to rankings; it is a significant part of it. We looked at all universities in the top 3,000 that were established worldwide in the past 30 years. Only four worldwide that were established as young universities were in Europe. That was DCU. In the context of all we are hearing today, the actual performance and achievement at a time of great challenge has to be recognised.

In terms of so-called grade inflation, we are very happy in terms of the maintenance of standards internationally through the appropriate choice of external examiners from quality universities across the world. Every exam paper and every set of results is scrutinised with the highest degree of professionalism. Our annual grades are attributable largely to the commitment of staff and the enhanced experience of students themselves. We find a great correlation between the maturing process of students and sandwich placement in industry. Students come back much more mature and have a much greater focus on real-world performance. We are quite happy to stand over the quality of the grades.

To link this to the other part of the Chairman's question, we are constantly assured by our employers on the quality of the graduates. Data I obtained for those who graduated last October show that fewer than 9% are unemployed. This number speaks for the approval of the employers. As members will know, universities such as DCU, which interacts very directly with the enterprise sector, get significant comments from the sector. Over recent months, I have been speaking with the CEOs of at least 40 multinationals with which we deal. They all speak very approvingly of the quality of the graduates. They are looking at this across the Irish sector and comparing internationally. We can hold our ground very strongly in that context.

Chairman

Arising from some of the questions posed by Deputy O'Brien on the pension fund and the pension deficit, this week in my area of Cork, a major company, the Examiner group, announced a pension deficit and stated the corrective action it must take. Today I have heard no evidence that any corrective action is being taken to deal with the pension deficits in the five universities. The five universities continue to give top-up pensions to retiring staff. Was there any attempt to take corrective action?

Professor John G. Hughes

Speaking for NUI Maynooth, when I became president in 2004 and realised the deficit at the time was being projected as €70 million, we stopped immediately the practice of early retirement, for instance. No one was allowed to retire before 65. We started seriously examining the added-years situation. Unfortunately, there are legal issues with custom and practice associated with this which have already come out in the discussions. Much of the legal advice at the time told us this was not at our discretion and that these were entitlements rather than discretionary payments.

We examined every case and took a much harder line than had been previously the case. We took a serious approach to our pension deficit. It was that action by NUI Maynooth, which can be confirmed by the Higher Education Authority, HEA, to deal with its pension deficit that ultimately led to the State taking it over.

Professor John Hegarty

Trinity College Dublin had a similar approach. We got rid of early retirement in the 1990s. The board of trustees took on its responsibility by taking a pretty hard look at what the fund could afford.

Deputy Brendan Kenneally

I compliment the Comptroller and Auditor General on this excellent report. As he knows, I would like to see a similar report on the institutes of technology compiled.

I am intrigued by these illegal top-up payments and allowances and the lack of action to correct them. UCD seems to have been the biggest culprit in this regard.

In the Comptroller and Auditor General's report, a similar situation arose in NUI Galway and its former president agreed to pay back his unauthorised allowance, for which he must be commended. Why were none of the others who received these unauthorised allowances required to pay them back? Are there plans to recoup the allowances? Given that the law is there to enforce such action, why did the HEA not take steps to get the individuals in question to repay moneys? I accept budgets could not be reduced as it would affect students unfairly. Those who benefited from allowances that they should not have received should have been targeted.

Mr. Tom Boland

There is advice from the Attorney General's office that to seek the repayment of these allowances would be of very doubtful legal provenance. In other words, it would be very unlikely to succeed.

Leaving aside the law, there is an issue of fairness. In all of these cases, people in good faith accepted contractual arrangements which they believed were in the remit of the governing body and senior management of their university to offer. That they were wrong was no fault of theirs.

There was clear legal advice that seeking repayment would not be the course to go. In NUI Galway, the former president made a refund of his overpayment. That situation was quite different from a personal point of view. He was in office when the actual unauthorised payment was approved. Under the Universities Act, the president of a university, as its chief officer, has a duty to inform a governing body if it is doing something ultra vires or outside the law. It is clear the president of NUI Galway did not do so.

It is also germane that he was chair of the governing body although he did not chair the governing body meeting that made the decision. I must stress nothing improper or inappropriate in a personal sense was done by the president at the time. The fact, however, is that the governing body acted ultra vires in a situation where its chief officer would be one of those to benefit from such action.

The legal situation, therefore, was entirely different. He was in a position vis-à-vis the university and, therefore, his obligation was entirely different. An action to recoup the funding would, in all probability, have succeeded.

Deputy Róisín Shortall took the Chair.

Deputy Brendan Kenneally

If it were the case the governing body in UCD acted ultra vires, was it removed?

Mr. Tom Boland

No.

Deputy Brendan Kenneally

Why?

Mr. Tom Boland

That would have been a disproportionate action in the circumstances. Mr. Ellison indicated earlier that this book is not closed. There is still an issue to be addressed as to how and whether the university as an institution may be compelled to make some restitution for this expenditure.

The removal of a governing body, however, from a university would be extraordinarily damaging not just to the university's reputation but to higher education generally. In the circumstances, given we were moving towards a resolution of the problem, albeit over a long time, it would have been disproportionate.

Deputy Brendan Kenneally

Therefore, it does not matter what they did with taxpayers' money.

Mr. Tom Boland

Ultimately there may well be consequences for the university. There does need to be a situation where a message is given that this cannot be lightly engaged in by a governing body. The only meaningful stricture available to us is in the area of funding, a matter still under review.

Dr. James J. Browne

I wish to confirm the situation in Galway. I was appointed president of NUI Galway in March 2008 and was more or less immediately informed by the HEA and the then Department of Education and Science that there was a particular allowance paid to my predecessor. Later on that year, I received a letter from a principal officer in the then Department of Education and Science informing me the salary of the former president was not to be augmented in line with review 42.

Following a long discussion, which I was not party to but which I was certainly aware of, the former president agreed in March this year to make a full and voluntary repayment of the allowance made to him.

He stated in a letter to me that he understood the decision to pay him the allowance in question was taken in good faith by the governing authority of the university in his absence. He did not chair the meeting at which the decision was made. He further stated he was prepared in the interests of the university to fully reimburse the university for the net amount he received. In effect, he agreed and effected a repayment on the basis he wished to see the issue resolved.

I must confirm he received and accepted the allowance in good faith. The decision was made by the governing authority on foot of a report by one of its committees which made the recommendation.

Deputy Bernard Allen resumed the Chair.

Deputy Brendan Kenneally

I have no problem with what happened in NUI Galway.

Dr. James J. Browne

I appreciate that but it is important to put the situation on the record.

Deputy Brendan Kenneally

An error was made and it was corrected, with which I have no problem.

Are academic staff in universities allowed to do private consultancy work?

Mr. Ned Costello

Yes, that is correct.

Deputy Brendan Kenneally

How come staff in the institutes of technology sector are not allowed to do consultancy work?

Mr. Ned Costello

It is difficult for me to comment on policy in the institutes of technology sector. Terms and conditions in that sector are entirely different from those in the universities.

Deputy Brendan Kenneally

It is an almost universal condition for all State employees that they cannot take other outside work but university staff are somehow different.

Mr. Ned Costello

Yes. As I said in my opening statement it is confirmed public policy that it is desirable both for the economy and for the benefits that accrue to education from the interaction between universities, industry and the commercial world that academics should undertake external work. It is widespread practice in the university system internationally for precisely those policy reasons.

Deputy Brendan Kenneally

If they are allowed to do it and they can do it, that is fine. If they become involved in doing outside consultancy work, is their salary from the university reduced to reflect that?

Mr. Ned Costello

It is part of their work so their salary is not reduced.

Deputy Brendan Kenneally

So they are being paid twice.

Mr. Ned Costello

That depends on where the money ultimately goes.

Deputy Brendan Kenneally

When university staff engage in outside consultancy work, does the money go to person doing it or to the university?

Mr. Ned Costello

There are different practices but in many cases it goes to the university.

Deputy Brendan Kenneally

When Mr. Costello states there are different practices, is he saying that in some universities, the money goes to the academic but in other universities it goes to the university? Could Mr. Costello clarify that?

Mr. Ned Costello

It is desirable that there be some element of reward because it incentivises people to do the work.

Deputy Brendan Kenneally

Mr. Costello has said, however, that there are different practices. Is he willing to outline which universities allow the academics to retain the payments and which universities collect the fees for themselves?

Mr. Ned Costello

I will ask my colleagues to comment on that.

Professor John Hegarty

I think it is probably true that all universities have a mixture. Sometimes individuals get personal remuneration and sometimes the money goes back into the university for various activities. The issue is the incentive to do this work. It is now recognised as a good thing for academics to be involved in external affairs with business for the benefit of the university, the students and research. That is a norm internationally for academics. In Ireland we were doing less of that. The question was why there was not more engagement in consultancy. I think there was a concerted attempt a number of years ago to induce academic staff to be more involved in the affairs of the State and not just engaged in debate.

Deputy Brendan Kenneally

Does any part of the fee that academics charge go back to the university?

Professor John Hegarty

It varies. It is at the discretion of the individual.

Deputy Brendan Kenneally

We can take it by and large that they are being paid twice. Is the private consultancy work conducted by academics considered as part of their 40% research work?

Mr. Ned Costello

That is separate. I might mention that a stipulation of the regulatory requirements of this is that it does not interfere with the regular work of the academic. It must not be in substitution for his or her duties.

Deputy Brendan Kenneally

The major problem I have is what appears to be a working week of 15 hours, based on a ratio of 40:40:20. I accept the points made earlier that preparatory work must be done, but I suggest that one does the preparatory course work in year one, that it may have to be tweaked for the new intake in the following year, but that there is not as much work involved in the second and subsequent years and, as a result, the workload is reduced. Our problem as Members is that we do not know if the public is getting value for money from the academic staff in universities. As far as I know, NUI Galway tried to introduce an evaluation process but I understand that there is resistance to this among academic staff in other universities. Reference was made to a survey that was carried out. Should a survey not be done as a matter of course, so that there is evidence of what a particular person has done each week? I do not expect staff to clock in and out, but there should be some means of recording the level of effort they have made on behalf of the institution for which they work. We are not saying they are not doing the work, but we cannot see they are doing it.

Dr. Michael Murphy

May I take up the points made by the Deputy? He is making some very valid points, we would share his view on those and we have said earlier that there is a need for much more transparency in this regard. We have been making strong and serious efforts to achieve it. The full economic cost, FEC, exercise which is ongoing is a very important element of it. In my own institution, UCC, when we initiated that process, we had good co-operation from staff, but it is fair to say that our efforts were subsequently undermined by an instruction to staff from their union not to engage any further with it. I am looking forward to that matter being addressed urgently as the Croke Park agreement is implemented. From our perspective, as leaders of the universities we share the Deputy's view that transparency is more important.

On the specific point of consultancy work, we all have policies and practices in place to keep a handle on it. There is a reference to UCC in this regard in the report because in the course of normal risk assessment in the institution I asked the internal audit section to conduct a review of the consultancy work in January of last year. I share the concerns of the Deputy on the need to know the scale of the work and the moneys involved to ensure it is not in conflict with our primary responsibilities in teaching and research. We have followed through on that. The audit found that our policies which were set out in the 1990s were in part no longer fit for purpose and there was less than satisfactory compliance with annual returns and so on. We have put new policies in place. We have conducted a survey, completed only three months ago, across the entire institution on the matter of 2008-2009 consultancy activity and the data are interesting in that we learned that approximately 17% of our staff engage in remunerated consultancy. The average reported is about ten days in the year and that is less than 5% of the academic time that is devoted to this matter. The information also guides us in the steps we are taking and they address the matter of the management of this consultancy so that we can put new policies in place in regard to where the benefits should lie and the balance between the individual and the institution. Let me assure the Deputy that this is an important matter. We are complying with State policies to make ourselves as relevant as possible to the economy and to society while protecting the taxpayers' investment in the teaching and research agenda.

Deputy Brendan Kenneally

The heads of the universities have made a comparison between the practice in the UK and other places on the number of teaching hours worked. Is there a comparison on the levels of pay between academics in Ireland and elsewhere? Does anyone have the figures on pay levels?

Mr. Tom Boland

I am afraid I do not, but certainly it is a job we could do for the committee. This is purely my impression but I think in general our salaries may be higher but there may be a considerable number of instances where they are considerably lower. Let us bear in mind that the salaries in the higher education system do not stand in isolation. They are based on a successive series of negotiations with social partnerships. It is not the universities that set salary levels. The universities would argue that, if allowed, they would set lower levels, but the salary scales are set centrally. Our salary levels may be higher in some instances than some universities in the UK, but that is a symptom of higher salaries more generally in our economy.

Deputy Brendan Kenneally

It might be a worthwhile exercise at some stage to get that kind of comparison. In every institution of education, no matter what the level, there will be good teachers and bad teachers. There will be good academics and bad academics. Some people will do their job while others will bring things down. Is there the same level of difficulty at third level in dismissing staff as there is in first and second level education?

Dr. James J. Browne

We certainly have difficulty in dismissing people, but tremendous progress has been made in the past ten years in improving teaching quality. All our institutions now have centres that promote good teaching. We all have programmes for staff to improve their pedagogical skills. We all have worked on new methods of teaching. We are implementing systems where students are required to give feedback to the lecturers and teachers on their courses. An applicant for promotion in Galway is required to provide independent evidence of the quality of his or her teaching. There has been tremendous change in recent years and there is much greater emphasis on teaching quality, student feedback and on ensuring staff have the requisite skills for traditional teaching and for access to the most modern systems. It would be useful if members of the committee saw some of this in practice. They might be surprised at what is happening locally. I say that with full respect to the committee.

Deputy Brendan Kenneally

I have one last question. There is a student service charge of €1,500. Can someone give me a breakdown of what that money is for? We must have some students here today.

Chairman

There is an interest in the back.

Mr. Ned Costello

Broadly speaking, it covers exams, registration, other student services such as counselling, pastoral services, and so on. These are services provided directly to students. We discussed this fairly extensively with the Joint Committee on Education and Skills earlier this year. In addition, new areas such as the library have been brought under coverage of the student services charge. We have never been equivocal about the fact that part of the student services charge covers broader services to students than simply direct services to students. Clearly, the library offers a service to students but there is certainly a view that this is a service to students that should come from the core grant to the universities.

There were two big jumps in the charge for student services. The most recent jump raised the charge from €900 to €1,500. That was directly mirrored by a fall in the estimates of that year in the core grant. That is the reality. The student services charge has increased and is compensating for falls in the core grant. It is not a desirable situation, but we are not left with any option.

Deputy Brendan Kenneally

In other words, it is being used for unintended purposes.

Mr. Ned Costello

No, that would not be a correct characterisation of it. The Universities Act is clear that the universities may impose fees and charges for any activities of the university that they so determine. The universities are operating within their statutory mandate to charge a fee for activities that they deem to be services to students. All of these things are services to students.

Deputy Brendan Kenneally

Is Mr. Boland happy that they are operating within the law?

Mr. Tom Boland

Yes. Following a discussion at the Joint Committee of Education and Skills and at the request of the Minister, the HEA conducted a review of the student service charge and made a report to the Minister. I will not discuss the details of the report because I cannot remember them at this stage. One of the more important elements was that we would wish to see a clearer agreement involving the institutions — the IUA, the IOTI and the HEA — on accounting for the service charge. It has been a key principle for some time that students would be consulted on the expenditure of the service charge.

The charge is a significant part of the income of the sector and there are difficulties with putting excessively inflexible parameters around any particular pot of money in operating an institution. That in itself could create inefficiencies. Broadly speaking, there is no illegality or impropriety with the charge but there is a need for greater clarity.

Deputy Brendan Kenneally

I was going to ask a question about accounting returns. Do the universities make a return each year showing they got a certain amount of money for the student charge and how it is spent?

Mr. Tom Boland

It is not quite as clear as that.

Mr. Kevin McCarthy

The point was made that the most significant increase in the charge was as a result of a cut in the core grant. That is not to suggest that core activity that is inappropriate to the charge is now coming under the remit of the charge. Rather, it reflects the situation that the core grant was covering the cost of services to students in each of the universities that can justifiably be covered by a student services charge. One of the purposes of asking the HEA to conduct the recent review was to satisfy the Minister that the €1,500 charge at each of the universities is justifiable by reference to the value of services that are covered by that income in each case. I think that a core finding of that review will be that it is justifiable in each case.

There are separate issues about how all this is presented and there are obviously accounting issues that the Comptroller and Auditor General has raised about how it has reflected in each of the accounts. There are also important transparency issues on how that information is shared with students' unions in each of the institutions. It is important that such transparency exists on how the income is used.

Deputy Brendan Kenneally

Mr. McCarthy has very cleverly turned the whole thing around.

Mr. Kevin McCarthy

That reflects the reality of the position. There is no denying the fact that there were budgetary pressures which gave rise to cuts in core grants. We all recognise those budgetary realities, but we are satisfied that the €1,500 charge in place is justifiable by reference to the value of services covered by it.

Mr. Tom Boland

We would like to see greater transparency in respect of the charges accounted for in the accounts of the universities, and the Comptroller and Auditor General has indicated that. However, it is accounted for fully.

Deputy Brendan Kenneally

I take it that in future it will be possible to see that.

Mr. Tom Boland

That would be our recommendation.

Deputy Róisín Shortall

To follow on from that point, I have concerns that this is a recommendation rather than a requirement for a university. The Comptroller and Auditor General drew specific attention to the problem that it is not possible, from the looking at the accounts of the different universities, to identify how much they have taken in from the student service charge and what they are spending it on. We have to do a lot of digging, but we still cannot find the answers. What is the difficulty with the universities disclosing how much they take in from service charges?

Mr. Tom Boland

They already disclose their service charges. The word "recommendation" is perhaps a misnomer. It is a recommendation in the report but we now expect to work with the system and students to make that a reality.

Deputy Róisín Shortall

With all due respect, the Comptroller and Auditor General had difficulties in identifying income and expenditure on student service charges.

Mr. Ned Costello

The amount of the charge is covered in the notes to the accounts.

Deputy Róisín Shortall

Is it set out for each of the universities?

Mr. Ned Costello

My reading of the report is there is not complete consistency in the funding statements across the institutions.

Deputy Róisín Shortall

What is not clear is how many students are paying the charge in each of the universities.

Mr. Ned Costello

That is clear.

Dr. James J. Browne

That is public information.

Professor John Hegarty

The issue of transparency was raised last year and extensive discussion is ongoing within the universities. The students also wonder what happens to this money. Last year, we developed a protocol with the students' union for how the full student charge would be used. That has been worked out and agreed with the students. A consultative group has been established to examine the income from the student charge and how exactly it is disbursed. That disbursement will be done by agreement with the students and the process will continue on to the governing authorities.

Mr. Ned Costello

It might help the committee if we were to provide it with a table we have prepared outlining some of these key dates, consolidated for the universities. We have that prepared and can provide it.

Deputy Róisín Shortall

Perhaps that can be circulated to us. A large number of issues have arisen today. In some ways, it has been difficult to get basic information. The Comptroller and Auditor General also has had difficulties in establishing exactly what is going on. We are in a new era of austerity and the present culture demands greater transparency from all institutions in terms of the manner in which they do their business. The older the institution, the greater the difficulty in modernising it. I hold my own hands up in regard to the institution of the Oireachtas. We have had to address the public's concerns about us and, for example, we now clock in every day, which would have been unthinkable a few years ago.

In light of the investigation by the Comptroller and Auditor General and the publicity attaching to the publication of his report, what efforts are the universities making to bring their practices up to modern day standards to prevent any future breaches of regulations on pay and pensions and to introduce modern accountability in respect of what people do for their salaries? I am surprised the witnesses have not told us about work that they have entered into in this regard. We all have to face the reality of modern life and adjust accordingly, but I do not see evidence to suggest that the Irish Universities Association is being proactive in this. Now that the light has been shone on these matters, this committee certainly will be returning to them to see what progress has been made and we will be seeking progress reports from time to time. Are plans in place by the universities to get their own houses in order?

Mr. Ned Costello

Absolutely. As has been pointed out by several speakers, and based on my personal experience of working in a different sector before coming to the university sector, universities engage in an extraordinarily multifaceted variety of work and it is difficult to give full ventilation to it unless one is part of it. Having said that, a number of initiatives have been undertaken. Several are alluded to in the report but I would like to emphasise some of them.

The full economic costing project will provide a major advance in transparency of costing and, more critically, improve management information to the universities. This represents a huge step forward. To the best of our knowledge, nowhere internationally has it been done for all academic activities. It was done for teaching in the UK and it is now being extended to research. We are doing it for all academic activities and this is a major locus of activity. The issue of workload modelling has been progressed significantly and will be further improved upon. We are comfortable with the recommendations made by the Comptroller and Auditor General in regard to transparency, including accounting for the student services charge. In regard to the question to Mr. Boland on whether universities will be compelled to meet the recommendations, they are more than happy to do so. The recommendations on greater transparency for guidelines on external work are desirable and we will be progressing them.

The agenda set out in the Croke Park agreement has been mentioned already in our discussion. This is essentially a human resources modernisation agenda and we were happy to see it in the agreement. I will not gainsay the fact that the industrial relations climate is somewhat difficult at present but there is an agenda for the contract issues and we will reflect on today's discussion in this regard.

These issues come within the area of modernisation and transparency, which I suppose is the remit of this committee, but one other small example of our work is the radically different approach we have introduced in recent years to allowing access by disadvantaged students and those with disabilities through the HEAR and DARE scheme. This year applications have increased by almost 60% under the scheme, which will allow more disadvantaged students to attend universities. Of relevance to this committee is that the scheme introduced a new multi-indicator approach to the assessment of disability and disadvantage. This approach goes way beyond what applies in the student grant system. It is a good example of a structured and transparent approach that delivers a better outcome for students. As Dr. Browne noted, the committee would need to see the area of teaching and learning in action to understand it fully. Teaching and learning are only words and paper here, but the student experience is undergoing a revolution through modularisation, semesters and the use of e-learning technologies. While there have been some industrial relations issues on the margins, making this happen within the universities in a stable industrial relations climate has required considerable effort on the part of university management, both individually and in concert.

Deputy Michael McGrath

Are the salaries of vice-presidents in universities set by the review body or capped at the professorial rate?

Mr. Ned Costello

They were covered in report No. 43.

Deputy Michael McGrath

I ask the university presidents how many vice-presidents are employed in their respective universities.

Professor John G. Hughes

In my case there are two.

Professor John Hegarty

I have a deputy and five vice-presidents of various areas.

Dr. Hugh Brady

Six.

Professor Brian McCraith

Two.

Dr. Michael Murphy

Two.

Dr. James J. Browne

Four.

Deputy Michael McGrath

Does each university have complete discretion on the appointment of new vice-presidents? Is the salary capped or is ministerial approval required when a decision is made to appoint a new vice-president? The number of vice-presidents appears to vary widely across the sector.

Mr. Kevin McCarthy

They have freedom under the Act with regard to the number at any given level and the structures. The role of the Minister is in the level of remuneration of staff.

Deputy Michael McGrath

Should there be a greater level of uniformity in the number of vice presidents that each university has, or is it acceptable to have such diversity? It seems to be very broad; it is almost a case of one for everyone in the audience.

Mr. Tom Boland

It is infinitely better for a university to make the decision rather than to have it made by a central agency such as the Higher Education Authority or the Department. There are controls with regard to pay, as Mr. McCarthy said. The Higher Education Authority does have a function, in the event of concerns in this area, of carrying out a review of staffing levels in the universities. A concern that might prompt this, for example, would be that if we considered there were excessive numbers of senior staff as opposed to junior staff. Our information to date would not indicate a particular difficulty. The divergence has to do with allowing universities to manage their own affairs rather than imposing a straitjacket of conformity on them. By and large, the system benefits from this.

Deputy Michael McGrath

I accept that point fully, but would there be any point at which the Higher Education Authority would become concerned about the number of vice presidents in a university? Is there a maximum that would be deemed appropriate or acceptable, given the variety of specialties and the different departments and schools that have been set up? It is such a broad church. Where is the line drawn on appointing a new vice president in a particular area? It seems to be ad hoc.

Mr. Tom Boland

There is no absolute number. To date, nothing has triggered anxiety on the part of the Higher Education Authority that a review of a particular university in this area is necessary. One could imagine such a scenario, but there would be very little point in it from a practical point of view.

Dr. Michael Murphy

A comment that could valuably be made in this regard — I speak as somebody who worked in the United Kingdom and the USA for a number of years — is that, contrary to an impression that might have been given by Mr. Boland, our international comparator universities in countries such as these would be horrified by the extent of regulation we endure in the Irish system. As somebody with a fair degree of international experience, I must say we will not be able to reach the competitive position the State wants us to reach by continuing with the existing set of management tools. A valuable outcome of this discussion would be for us to identify stresses that have been difficult to manage at institutional and individual level in the past ten years because of our efforts to meet international best practice, while at the same time living within frameworks established many years ago in a very different environment.

Deputy Róisín Shortall

In response I point out that it is only in an atmosphere of transparency, in which people are absolutely open about the situation, that we can actually discuss these issues.

Dr. Michael Murphy

I fully agree. As I said, people at this table are committed, individually and collectively, to bringing that about.

Deputy Róisín Shortall

I trust what Dr. Murphy is saying, but in terms of what we have been looking at in recent years, the record would not point to this.

Dr. Michael Murphy

It is selective——

Deputy Róisín Shortall

That is the difficulty. There is a certain refurbishment of people's reputations and records to be undertaken.

Dr. Michael Murphy

It is an incomplete record. I could equally say to the Deputy that in my institution we have deviated from Department of Finance rules on travel and subsistence by using a much more stringent policy which has resulted in a saving of €400,000 this year. There is a whole range of matters that have not come out in this exercise which, if they had come up for discussion, would have ensured more balance. That is what we need in the future. This is a valuable but selective component of the whole picture.

Dr. James J. Browne

I can offer a short comment on the issue of vice presidencies. It is almost suggested a vice presidency is a gift. I am not saying anyone said that, by the way, but one could infer it. Essentially, the structure is designed to follow strategy and engage people. A structure is required at a point in time for a particular strategy. In our case, in Galway, there are four vice presidencies, two of which are on what one might call a term basis. One of these vice presidents is a vice president for performance because we have an issue with ensuring performance and transparency. That post will not be necessary in two years' time. The second is the vice president for the capital programme because we have a particular issue in that we have a very large capital programme and need somebody to oversee it. Essentially, our strategic plan talks about the capital programme and performance and in order to deliver on these two issues we need somebody to take responsibility for them. My point is that, ultimately, the structure created at a management level is designed to implement a strategy by engaging people and, therefore, it will change from time to time. I would be happy at any time to offer anybody an explanation of our structure and believe it would be convincing. It will be different, I expect, in five years' time.

Chairman

I think we will come to——

Mr. Kevin McCarthy

Just for the record, I wish to clarify one issue that arose earlier. I do not want to return to the discussion, but I must clarify this in case a misleading impression was created. I refer to a question asked by Deputy Shortall about declarations of compliance. It should be noted that there are still some outstanding issues with regard to unsanctioned payments. We referred to a couple of the cases in which there was still ongoing correspondence. I mention this in case the impression was given that there were no further outstanding issues.

Deputy Róisín Shortall

Mr. McCarthy might update the committee on the progress——

Mr. Kevin McCarthy

Yes.

Deputy Róisín Shortall

——of these outstanding matters, perhaps on a quarterly basis. We will keep an eye on it.

Chairman

The higher education strategy review group was set up in 2009. What is the position in that regard?

Mr. Kevin McCarthy

The group was established by the then Minister under the chairmanship of Mr. Colin Hunt to develop a strategy for the higher education system for the next 20 years. It has completed its work and presented its report to the Minister which is under consideration. The intention is to bring it to the Government in the coming weeks. It will address many of the issues regarding autonomy and accountability in the system — accountability for performance at system level, at institutional level and at individual level.

Chairman

We have had an in-depth session. I was nervous about this session because of the number of witnesses due to come before us; I was afraid it would become unwieldy. However, we have been given answers to most of the questions we asked, or answers are to be supplied to us in written form. I thank everybody who attended, including members, witnesses and support staff. Even though we have asked some hard questions and there have been many negative headlines about universities in recent times, we cannot ignore the fact that many positive things are happening, as we heard today. I do not think the reality should be buried by some of the headlines we have seen. I thank the witnesses for co-operating with us.

I almost forgot to ask Mr. Buckley to comment, for the second time today.

Mr. John Buckley

No, it is all right.

Chairman

My apologies — Mr. Buckley would like to say something.

Mr. John Buckley

We have ranged over the issues of remuneration and pensions, but there were many other matters included in the report, including many positive things. Measurability is the key to rational allocation and decision making. In that respect it is desirable at this stage to push forward with full implementation of the recurrent grant allocation model and the full economic costing model because it would provide that kind of information to inform decision making.

Another matter that is included in the report but on which we did not pick up on is the need to rationalise the audit relationships in order that duplication is minimised and accounts can be finalised early. Accounting must also be brought up to date, as it is somewhat behind. This would be best done through access provisions in contracts.

The report outlines many new approaches to teaching and learning. There would be merit in finding some mechanism not only to share these among the institutions but also to make them available generally, as one of the university presidents said. This would inform people about what was actually happening in a modern university and how education was delivered, including the movement away from lecturing towards other modes of delivery.

We have carried out a project on the strategic innovation fund. It involved the allocation of approximately €150 million for a set of forward-looking measures designed to examine institutional restructuring, how universities were handling fourth level education, the teaching and learning approaches I referred to already and access to life-long learning. We have just finished the report which is with the Minister and will be laid in the next two months and then be available to the committee. It will be useful and give us another opportunity to look at how universities operate and the direction in which they are moving from a strategic point of view.

There are many other issues on which we could pick up, but since we have focused mainly on remuneration and pensions, I wanted to mention those other issues dealt with in the report that would probably need to be looked at more deeply at some stage.

Chairman

Is it agreed to dispose of special report No. 75? Agreed. On next week's agenda is our consideration of the 2008 annual report of the Comptroller and Auditor General, special report No. 71 which deals with the Department of Transport, driver testing and the Road Safety Authority. We will also consider Vote 32 — Department of Transport; chapter 28 — barrier free tolling on the M50.

The witnesses withdrew.

The committee adjourned at 3.50 p.m. until 10 a.m. on Thursday, 30 September 2010.