Governance-related trends in European higher education

With the massification of higher education, it uses an enormous amount of public resources in each country, and its quality impacts the socio-economic development of nations and regions significantly, thus, states and governments are permanently seeking the most effective setup and way of operation of their higher education system in the actual social, economic and political context. The relationship between the state and its HE system, and the external and internal governance of universities are continuously evolving along these lines.

In Europe, till the 1960s, the relationship between the state and higher education was based on trust and the belief that academics are the most competent to rule the universities. Later, the trust in the efficiency of academics-led universities evaporated, and the expectations of society changed (Carvalho, 2018). „Governments and other stakeholders are increasingly asking whether higher education is functioning efficiently, whether the sector is an effective tool for stimulating the economy, whether students learn enough during their studies, and whether universities and colleges can support national aims of modernisation of, and innovation, in our societies” (Stensaker & Harvey, 2001 p. xii). Thus, state control of higher education and its institutions became were more intensive till the beginning of the 1980s. Because of the budgetary consequences of the continuously increasing size of public higher education, higher education has become more politically salient. National governments have become more concerned about costs and the efficiency of higher education. This increasing focus on accountability and performance has led to the introduction of new funding arrangements: diversification of funding base, more performance- and competition-based financing and expanding student support systems (Bleiklie & Kogan, 2007).

Since the 1990s the relationships in governing universities have become more complex. In many countries, coordination has changed from a classical form of regulation dominated by a single actor, the state, to forms in which various actors at various system levels coordinate higher education. We can call it ‘multi-level multi-actor governance (van Kersbergen & van Waarden, 2004). Shift from state control to state supervision (Vught, 1989) has become the dominant philosophy of national governments (Teichler, 2019). Nevertheless, this does not mean the absence of government; through national agenda setting and macro steering mechanisms, governments still play a vital role in higher education (Goedegebuure et al., 1993).

In recent years, the following trends characterise the external governance of universities (based on Pruvot & Estermann, 2018).

1. -New legal status and institutional forms for universities (public foundations, public corporations, mergers, etc.).
2. -New ways of financing universities (diversification of funding base, performance-based contracts) with stricter accountability measures.
3. -Rationalization, centralization of higher education provisions.
4. -A series of reforms, implemented rapidly in some countries.

The abovementioned changes in the relationship between the state and its institutions and the alteration of external governance necessarily brought along the modification of the internal governance of the universities. Gornitzka, Maassen, and de Boer (2017) identified the following changes:

1. -Replacement of democratic councils by executive boards.
2. -Increased formal external involvement in university governance.
3. -Centralisation of formal decision-making power.
4. -Shift from collective to individual responsibility.

Practically it means the switch from the traditional, continental model of internal university governance to the Anglo-Saxon model of shared governance (see Chapter 2.2) in Western Europe, and lately in the Middle-Eastern European countries as well (For details see Keczer, 2020).

University governance models

In the modern history of universities, two models of governing systems have developed according to the possession of power: the traditional continental European system where academic actors possess the power and the shared governance in England and the USA where the power is possessed by several internal and external actors. The main characteristics of these systems are as follows.

In the traditional continental European model, the senate with the representatives of faculty members and students has authority in all types of issues, including strategic, financial and personal affairs. Rectors are rather ‘primus inter pares’ (first among equals) than an executive leader (Bleiklie & Kogan, 2007) elected by the senate, thus he is depending on the interests of the professors (Capano, Regini, & Turri, 2016). So are the other administrative leaders. There are no external stakeholders in the governance (Donina & Paleari, 2018). In the shared governance model, there are at least three authorities that share the power: the governing board (of trustees, regents, etc.), the faculty (represented in the senate) and the administrative leaders (president, provost, deans, heads of administrative units) (AAUP, 2022). The board has fiduciary responsibility for all that goes on in the university, decides on major strategic and financial issues and controls their implementation. It elects the president who reports to it. The president often appoints a team including central administrators and vice-presidents that oversees the university. The senate has authority only over academic issues. External stakeholders are present in the governance of the universities: they execute control in the name of the public via the boards.

In practice, both models have different configurations. Pruvot and Estermann (2018) differentiate between unitary and dual systems. In a unitary system, one body – be it a senate or a board – makes the decision on major issues and oversees the operation of the institution; in a dual system, a senate-type and a board-type body share the power. A dual system may be traditional, where the powers of the senate and the board are approximately equal, or asymmetric, where one body has a larger share of the responsibilities (Pruvot & Estermann, 2018). Universities with boards may have a one-tier system where there is only one board, or a two-tier system, where there is both an executive and a supervisory board (see the governance of Dutch universities). Trakman (2008) distinguishes the different systems according to the dominant actors in the governing bodies. There are faculty; corporate; trustee; stakeholder; and amalgam systems.

Higher education in Portugal

Until the beginning of the 1970s, there were only four – and only public -- universities in Portugal, and until the mid-1980s, Portuguese higher education had been small and elitist. After that, the expansion was significant both in the number of institutions and of students enrolled, several public and private universities and polytechnic institutes were created (Assunçăo & Teixeira, 2018). As a result, in 2021 14 public universities (including those operating as a foundation), 7 private universities, 20 public politechnics, 40 private politechnics and 4 military and police HEIs provide higher education in Portugal.¹

Portugal is a centralized state; local authorities have limited responsibilities. The central government holds exclusive responsibility for higher education, which is under the control of the Ministry of Science, Technology and Higher Education. The Directorate-General of Higher Education holds responsibility for the design, implementation, and delivery of policy. The ministry holds a central role in the administration of the higher education system (OECD, 2021).

The autonomy of public universities is sanctioned by the constitution and the University Autonomy Act of 1988 guarantees that public universities have statutory, scientific, pedagogic, administrative, financial, and disciplinary autonomy. They have the right to elaborate their statutes. The staff of public universities are civil servants. Private institutions have complete autonomy on financial and personnel matters. However, private institutions are also obliged to get permission from the Ministry before starting any new degree or changing their study programs (Ministry of Science, Technology & Higher Education, 2006). Quality assurance is based on the evaluation and accreditation of higher education institutions and their study cycles. Independent external evaluation is mandatory, through the Portuguese Higher Education Evaluation and Accreditation Agency (EC, 2010).

Before 2007 the governance of the Portuguese HEIs was based on short-term decision-making processes coming from large university assemblies (in some cases, with more than 300 members), members elected by direct voting from academics, students and non-academic staff (Rendas, 2019).

The new governance system of universities

Law 62/2007 imposed a new configuration on higher education governance and management structures and a new institutional division of power (Santiago & Carvalho, 2012).

According to the new governance framework, universities are governed by the following bodies:

1. -general council,
2. -rector,
3. -management board.

The university statutes may provide for the creation of an academic senate consisting of representatives of the organizational units, which acts as an obligatory advisory body to the rector on matters defined in the institution's own statutes (EC, 2010). In foundation universities, there is an additional body, the board of trustees (see later).

The general council is the most important decision-making body. The law guarantees its rights in several issues, item by item. As Amaral, Tavares, and Santos (2013) summarize, the council ratifies alterations to the statutes, elects or dismisses the rector and appraises his decisions. The council ratifies the proposals presented by the rector on matters such as the plan of action for his mandate and medium-term strategic plans, annual activity plans and reports; budget proposals and annual consolidated accounts; creation, transformation or closing of organizational units; the purchase or sale of the institution's assets and its credit operations; the value of tuition fees.

General councils consist of 15–35 members: representatives of teachers and researchers, students and “individuals of recognized merit who have the relevant knowledge and experience but who do not belong to the institution”. The general council may include members elected by non-teaching and non-research staff. Representatives of teachers and researchers must constitute more than half of the total number of members of the council. They are elected by all the teachers and researchers in the higher education institution using a system of proportional representation. Students' representatives must constitute at least 15%, and external stakeholders at least 30%. External stakeholders are co-opted by teachers-researcher and student representatives by absolute majority. The mandate for general council members is four years, except for students, for whom it is two years (Act 62/2007 Article 81).

The rector is elected by the general council for a 4-year mandate that can be renewed only once. In the case of universities, rectors may be professors or researchers from within the institution or from other Portuguese or international institutions. The rector presents proposals to the council and holds decision power on matters that were previously under the remit of the senate (Law 62/2007 Article 86, Amaral et al., 2013).

The management board is appointed and presided over by the rector and consists of a maximum of five members, including the vice-rector and a director. The management board is responsible for the administrative, asset and financial management of the institution, in addition to the management of human resources and for establishing charges and salaries (Law 62/2007 Article 94).

HEIs have room of manoeuvre to develop their own statutes, including the definition of the structures at the middle management level when the sub-units (faculties, schools, departments) have self-governing bodies. “This brings to the fore the institutional leadership in determining the internal governance structures of their institutions” (Magalhaes, Veiga, Ribeiro, & Amaral, 2013, p. 252).

Within the framework provided by law, there are differences between the institutions in designing their governance structures. Carvalho and Santiago observe that the presence of the senate in four out of six of the universities that they surveyed “may be interpreted as an attempt to mask the presence of a more linear way of decision-making in these universities, and in this case, one can infer that the new managerial model is not completely institutionalized, and institutions are making an effort to demonstrate to their members that they are still ruled as a loosely coupled system and not as an integrated, unitary organization” (Carvalho & Santiago, 2010 as cited in Bruckmann & Carvalho, 2014, p. 200).

Foundation universities

A major change brought by the new legal framework is the possibility of a public HEI transforming into a public foundation status. The objective was to give HEIs greater operational autonomy, particularly in the areas of financial management and staffing, by allowing them to make use of the greater flexibility afforded by the employment, accounting and procurement legislation applicable to the private sector in Portugal (OECD, 2019).

According to the regulations, following a duly justified proposal from the rector approved by an absolute majority of members of the general council, public higher education institutions may request alteration of their status to foundations governed by private law. To attain foundation status, the HEI (either a university or a polytechnic) must propose the transformation to the government, which decides if it accepts that. The transformation should be justified based on the advantages of adopting this managerial model and legal framework for the pursuit of its objectives. The proposal should be supported by a study of the implications of this institutional change for the organization, management, financing and autonomy of the institution or organizational unit. After the government has agreed to this institutional change, an agreement is signed with the entity which is to be the object of the transformation which covers the institution's plan, the development program, the statutes of the foundation, the basic organizational structure and the transitional process, in addition to the circumstances under which it may return to non-foundation status. (Law 62/2007 Article 129) After the economic crisis stroke, a new requirement has been added as a condition to transform to a foundation. Since then, evidence is needed of the institution's capacity to raise half of its annual income² through sources other than government transfer through the funding formula (Assunçăo & Teixeira 2018; OECD, 2021).

In other aspects of the higher education provision, the same regulatory framework applies to foundations, regarding for example access and quality assessment. According to Assunçăo and Teixeira „the government was quite cautious in the institutional variability it was allowing when setting the framework for the new system. Most of the regulations defined for other public institutions also apply to public foundations” (Assunçăo & Teixeira, 2018, p. 140)

Taking up the foundation status has been slow and limited. By now, five public universities have obtained foundation status – University of Porto, University of Aveiro, University Institute of Lisbon in 2009, and two others, University of Minho and New University of Lisbon in 2015 and 2016. Most recently, the Polytechnic Institute of Cávado and Ave attained foundation status in 2018. The requirement of the 50% non-governmental income challenges the ability of some HEIs to meet the qualification threshold, particularly those with fewer links to the private sector, and as a result, lesser capacity to generate investment. Though, it is noteworthy that the institutions that have attained foundation status include five of the country's ten largest universities (representing 25% of the country's HE student population in 2016 and employing 29% of the public higher education faculty workforce in 2018) (OECD, 2019, 2021).

Foundation universities operate under private law, while public universities under public law. The intention, as we mentioned before, was to ensure a greater autonomy in financial matters, multi-annual public funding on a contract basis, and greater flexibility for staff recruitment and management (Bruckmann & Carvalho, 2014). When RJIES was adopted – and in the early years of its implementation – it permitted foundation institutions to operate with far wider financial and managerial autonomy than was previously the case and created a new framework of financial management that was substantially outside the fiscal perimeter of the state. Key aspects of this wider autonomy included certain exemptions from public procurement; authorization to manage real estate, physical assets, and financial assets by private financial management rules; exemption, in part, from the obligation to render accounts according to the Official Plan of Public Accounting for the Education Sector; authorization to make financial investments according to the best offers on the market (rather than holding assets in cash or government bonds); exemption from the requirement of annual budgetary balance, permitting the institution to carry forward a surplus or deficit from one fiscal year to the next; permission to borrow without authorization by ministries; authorization to hire teaching and non-teaching staff under private law and authorization to buy and sell real estate with the approval of the institution's board of trustees instead of the ministry (OECD, 2019). The new legal status does not imply that the HEIs are independent of the government in terms of funding (Rendas, 2019). They receive state transfers through pluriannual performance contracts lasting not less than three years (Amaral et al., 2013).

As far as human resources are concerned, the degree of freedom of HEIs to recruit and manage human resources has been traditionally rather limited in Portugal, restricted by the legal framework applied to civil servants. It prevents HEIs from negotiating individual salaries, specific duties, and possible fringe benefits and makes it impossible to hire specific academics and pay them differently according to their quality. The foundation status has opened an opportunity for greater institutional autonomy in staff management (Assunçăo & Teixeira, 2018). It permits HEIs to employ academic and non-academic staff independently under private employment law, outside the scope of civil service procedures, pay-scales, and without centralized ministry approvals for staffing level changes. It is important that the adoption of foundation status does not result in the automatic conversion of current staff to private sector employment law. Specific action on the part of the institution has been required to change the status from civil service to private or to hire new positions under private law (OECD, 2021). Thus, foundation institutions may establish parallel careers with different conditions only for new staff members or those renouncing their civil service status (Assunçăo & Teixeira, 2018). For faculty hired before the transition to the foundation status had the right to maintain their careers within the general regime of public institutions (EC, 2010). Nevertheless, the law defined that both carriers must be ‘comparable’, strongly reducing the scope for introducing significant differentiation (Assunçăo & Teixeira, 2018).

To confirm the above-listed opportunities opening up for institutions with the adoption of foundation status, we obtained information from one of the foundation HEIs. They confirmed what other sources state -- that the institution opted for foundation status with the goal of having large autonomy and flexibility from the rules for public administration in terms of employment of human resources, acquisitions, and budget.

The governance of foundation universities

The only difference between the governance of a foundation HEI and a public institution is that foundations have one extra governing body: the board of trustees. Trustees are appointed by the government on the recommendation of the institution. Trustees must be external; the office of trustee is not compatible with any other simultaneous binding employment relations with the institution. They have a five-year mandate which may be renewed once only and may not be dismissed by the government without due cause. As far as the composition of the board is concerned, the law defines its members “of high merit and professional experience recognized as being particularly relevant” (Law 62/2007 Article 131).

The role of the board of trustees lies primarily in ratifying decisions and directions set by the general council, such as the election or removal of the rector, approval of the annual plan and the report of activities, the budget and the financial report -- some of which, in the case of non-foundation universities, are subject to ministerial approval (Amaral et al., 2013; Bruckmann & Carvalho, 2014). The board of trustees is responsible for appointing and dismissing the management board (under the recommendation of the rector), proposing or authorising operations of real estate assets and credit operations as well (Amaral et al., 2013). These duties do not interfere with daily management, at least in nominal terms (Assunçăo & Teixeira, 2018).

According to Assunçăo and Teixeira, the fact that the university leadership can handle some issues directly with the board of trustees instead of the ministries creates some advantages and has the potential for greater autonomy in critical aspects, as long as there is reasonable alignment between the rector, the board of trustees and the general council. Initial experiences indicate that boards of trustees “tended to adopt a low-profile attitude, but with time those HEIs that adopted foundation status have been learning to deal with it and to take advantage of it.” (Assunçăo & Teixeira, 2018, p. 140)

It is noteworthy that the foundation status has not modified the governance of the universities radically. On the one hand, it has not been compelled by the law, on the other hand, the institutions have not opted for a fundamentally new setting even within the flexibility of the law. As Bruckmann and Carvalho observe, even foundations “avoided a radical departure from previous organisational models, maintaining some traces of collegiality” (Bruckmann & Carvalho, 2014, p. 204). It is manifested for instance in the suspension of the senate (even in universities transformed into a foundation³), the high participation of teachers/researchers and in some cases even students in the general council. In line with it, several studies show that the differences in the chosen governance models of Portuguese universities are not related to their legal status, but to other characteristics, such as size and tradition. Bruckmann and Carvalho (2014) compared the statutes and regulations of 3 foundation and 3 non-foundation HEIs and found that elements of a managerial and a more collegial model of governance are to be found in both types of institutions. Donina and Hasanefendic concluded that “the room for manoeuvre left by the law … mostly translated in conservative institutional interpretations, namely in solutions that represent a continuation with past tradition” (Donina & Hasanefendic, 2018, p. 13). This is in accordance with the observations of Rendas (2019): although the new law allows for the rector to be external to the university, to be non-academic and even be recruited internationally, this has not occurred until now.

As a summary, Table 1 below shows the difference between the pre-RJIES and post-RJIES governance of Portuguese universities, including foundation institutions.