Colleges to face penalties over financial irregularities

Colleges that make unauthorised payments to staff or make misleading or false financial reports could be hit with financial penalties from the end of this year, the Government has decided.

The measures are part of a funding overhaul aimed at making universities and institutes of technology more responsive to economic and societal needs.

However, while those who meet targets in those areas will be eligible for a greater share of public funding, they will also be expected to be more accountable for over €1bn of taxpayers’ money they receive annually.

A new system of monitoring performance under several governance headings is among the plans being announced today by Education Minister Richard Bruton and Higher Education Minister Mary Mitchell O’Connor.

A further incentive for third-level institutions to toe the line, following a series of high-profile spending and oversight failings dealt with at the Dáil Public Accounts Committee last year, will see a penalty system introduced.

The level or range of financial sanctions is yet to be determined, and will be the subject of discussions by the Department of Education and Higher Education Authority (HEA) with bodies representing the universities and institutes of technology.

However, the Cabinet has approved the proposal, which is recommended in an 82-page report for the HEA by an expert panel tasked with proposing reforms to how individual colleges’ share of the higher education budget is decided.

The panel, chaired by Bank of Ireland Pension Fund trustees chairperson Bríd Horan, recommends a penalty system for serious breaches of compliance with governance.

They suggest this could be used for issues such as:

• Unsanctioned payments to staff;
• Failure to provide timely and accurate submission of required information or data;
• False financial statistical, or governance reporting;
• Wilful breaches of the relevant codes of governance.

A number of unsanctioned payments were the subject of grillings for several university chiefs over the last decade, when they acknowledged senior management or researchers were being paid salaries or packages outside agreed caps.

The expert panel’s report, also published today, says constraints over industrial relations and capital borrowing are critical impediments to the market responsiveness needed for a fully internationally-competitive Irish higher education system.

“These constraints are unlikely to be eased without full confidence over the governance of, and accountability for, exchequer funding,” it says.