Critics sometimes eye the capital held by universities and universities of applied sciences with suspicion. Why aren’t those millions in the bank being spent on education and research? After all, in these days of rock-bottom interest rates saving rather than spending seems like a very poor strategy.

One such critic was D66 MP Paul van Meenen, who told universities to stop whining about lack of funding. “The money is there, only the university boards are choosing to sit on it.”

Furious

Van Meenen’s remarks prompted a furious response from the universities, and now the government has produced a report backing their position. Based on figures supplied by the Education Inspectorate, Minister Ingrid van Engelshoven (D66) and State Secretary Arie Slob (ChristenUnie) state in a joint letter to parliament that there is “hardly any evidence to support the view that universities are maintaining reserves without good reason.”

In fact, the Inspectorate discovered that the number of universities of applied sciences with significant reserves has fallen: from nine in 2015 to three in 2018. In total, these reserves amount to an excess of ten million euros while higher professional education has a total of 1.7 billion euros in capital.

Among the universities, the inspectorate singles out two universities established on a religious or ideological basis which are holding onto reserves totalling three million euros. That sum represents 0.08 percent of the total capital in the university sector: 3.8 billion euros.

And who’s to say what counts as excessive? It’s impossible to tell at a glance whether an institution’s reserves are irresponsibly high. It may have perfectly sound reasons for keeping some money on hand, an imminent new building project for example. Or in case a global pandemic breaks out.

Buffer

“It’s a good thing that administrators opt to maintain a financial buffer, as is evident now that the education sector is being hit hard by the coronavirus crisis,” the ministers write. “Financially sound institutions now have the scope to continue to provide students with the best possible quality of education.”

In spite of such considerations, the Inspectorate has nevertheless come up with a formula to signal excessive reserves. In doing so, it warns that this should not result in a standard. Instead, it intends the outcome to provide a basis for discussion between the executive board on the one hand and employee participation bodies and the supervisory board on the other.

And where necessary, the Inspectorate will also demand an explanation. “After all, we too want higher education administrators to use public money as effectively as possible to fund high quality education for their students,” Inspector-General Monique Vogelzang writes in her foreword to the report.

But for the time being at least, the balance in higher education appears to be a healthy one. Universities and universities of applied sciences are not letting much-needed funds gather dust.