Papers presented at the Symposium on 'THE FUTURE OF UNIVERSITIES' 5 December 1996, Santiago, Chile (held in conjunction with the 43rd Session of the Council of the United Nations University)

UNIVERSITIES AND THE CHALLENGE OF THE FUTURE: THE CHILEAN EXPERIENCE

Jaime Lavados Montes
Rector, Universidad de Chile

Since the last century and until 1981, the Chilean university was in quite a stable situation. Chilean university life came to be in the time of the colonies. Convent universities became the so-called Real Universidad de San Felipe, both a teaching institution and a cloister. A common juridical thread can be traced between this institution and the Universidad de Chile, founded in 1842. The Universidad de Chile was a public, state, and national institution, which in its initial years dealt with nationally relevant problems, such as how to organise the education system at every level. In the last years of last century, the Pontificia Universidad Catolica, the Catholic University, was founded, and later, in the twentieth century, seven other universities came to being. In general terms, it can be said that all these institutions were based on the same structure as the Universidad de Chile. Their major functions included undergraduate teaching, research, and what for many years has been called in Chile extension services, that is to say cultural dissemination and development. This involved some degree of intervention in order to generate a certain demand for art and culture products in the population.

All along their history, Chilean universities have shown to be different from universities on the rest of the continent. It is not relevant to examine the reasons for this here, and in fact, they are not really well understood. One of the major differences is the size of universities. Contrary to what happens in other American countries, Chilean universities have always been rather small, even during the fifties, a time of expansion for universities when campuses were set up in several provinces. These rapidly gained a certain degree of independence and became regional university centres and then headquarters; thus, although the Universidad de Chile had 70,000 students, it was really a kind of federation of very autonomous units, none of which actually had over 15,000 or 18,000 students.

In 1981, there began a process of separation which I shall comment on later. The fact is that, at present, the University that I head, which is the oldest and largest in the country, has only now reached 19,000 undergraduate students and 3,500 postgraduate students. We do not believe that we can extend the number of students beyond 5 or 10 per cent of those figures in the coming decades.

The second general feature of the Chilean higher education system until 1981 and still present today, is the numerus clausus, which was always applied in every career. Thus, we were different from the rest of the continent. Then and now, the entry system to higher education in Chile was selective: only a certain number of students is accepted in each career or academic programme. There never was a free entry system, nor was there any major pressure to establish such a system in the country. In the face of increasing demand for higher education, the response has always been to create new campuses in traditional universities-which sometimes involved duplicating the development of knowledge areas, faculties, and careers-or to establish new universities, though never with an immense campus.

Since before 1981, another feature of universities in Chile has been that our students have been members of the council, without a right to vote. Furthermore, between 1971 and 1973, the councils of several universities allowed students the right to vote, and the student sector had a weighted vote in the election of the rector and general secretary. But that was only a brief interlude. Under the present democratic government laws-that is not a law enacted during the military government in Chile-rectors are elected only by academics who are actually professors. Those who are classified under other categories, such as instructors, assistants, etc., do not have the right to vote in the appointment of the rector.

The fourth component, which distinguishes our universities, is the fact that they have always had a practical orientation, as recorded in several of the founding speeches and documents. Chilean universities have always included in their mission the endeavour to solve society's practical problems. Naturally, these solutions have come from the culture, education, science, and technology approaches in which these institutions could make a relevant contribution. Thus, for example, during the nineteenth century, universities, and the Universidad de Chile in particular, took charge of problems related to the establishment of the country's institutional and juridical structure, the public health structure, the natural resources inventory, or the education system, propelling the rising social mobility on the basis of intellectual talent and merit. A consequence of this was the emergence of a cultured and professional middle class. During this century, universities have dealt with the development of the production and energy infrastructure and later with the computer infrastructure, telecommunications, biologically grounded engineering, and other advanced technologies. Despite the fact that basic sciences were included in the inaugural university curriculum of 1843, several factors influenced the late development of these sciences, which were always based in more practical faculties, such as Physical Sciences and Mathematics where engineering was taught, or Medicine.

Now then, 92 to 95 per cent of the work of universities has been financed by the state. This group of eight universities, today called "traditional universities," underwent dramatic changes in 1981, as a consequence of the military government's reforms of higher education. I shall now present the model established from that date. Several things happened at the same time.

Firstly, private universities appeared. Some of the previous system universities, those that we call "traditional universities" today, were private institutions. But, in spite of this, they were recognised by law and the state had as important a share in their financing as it had in state-run universities proper. This group consisted mainly of three Catholic universities and three regional ones in Valparaiso, Concepcion, and Valdivia in the south. The state universities were the Universidad de Chile and another one, known today as the Universidad de Santiago, established originally under the name of Universidad Tecnica del Estado, with the purpose of offering careers in the technology field and of carrying out technological research. In 1981, "real private" universities were established, which received no state contribution. Initially there were only four or five such institutions, but their number increased and, in 1989, there were almost forty of them. These universities greatly differ in nature, order, size, quality, efficiency, etc.

The second element of the new higher education scene is the fact that regional campuses of the large state universities, such as the Universidad de Chile or Universidad Tecnica del Estado, and also of one of the Catholic universities, Universidad de Santiago, became independent regional universities. Thus, the number of state universities grew from two to sixteen. But this apparent growth simply occurred through the division of universities that had regional campuses.

The third major change occurring in 1981 was that universities took charge of their own costs. Among other factors, this had an influence on the substantial increase of registration fees and study fees payable by students. Until 1981, students paid universities much less money, particularly to state universities. Traditional private universities, Catholic universities among them, did receive contributions from the state but they could also set slightly higher fees. However, from 1981, the tuition gradually rose in all traditional universities. Thus today, students in universities that receive state contributions pay between $1,000 and $3,500 and up to $4,000 a year for the career or programme they have taken up. I must point out that per capita income in Chile is slightly below $5,000 per annum, which means that students are paying a very high price in national income terms.

The system has also changed with time but it still holds true to the same conceptual principles. The state still offers loans to the young people who lack their own resources to pay. Settlement of such loans may begin two years after the end of their studies. In 1990, several changes occurred in the management of such loans. Thus, the reimbursement was no longer tied to the cost of the career chosen, but rather to the student's income. In fact, the law provides now that students finishing their studies should pay 5 per cent of their professional income for a period of fifteen years. This is all that is required from those who have signed on for these loans, whatever their career and whatever the amount that they earn from their professional practice.

The system also features a dramatic drop in the state contribution to traditional universities-a change that came about in 1981. In 1973, the state contributed approximately one per cent of the gross national product. In 1981, this dropped to 0.4 to 0.5 per cent, and it was due to two reasons: on the one hand, part of the resources spent on the so-called university institutions was used to establish a competitive research fund known as FONDECYT today, and, on the other hand, the country went through a very severe economic crisis between 1981 and 1982. In 1982, the national product dropped 17 per cent, which led to a transitory decrease in the contribution made to universities. The gradual recovery began, but Treasury authorities and the government at large realized that universities had, somehow, managed to finance their activities-either by increasing their student fees or by selling services or with resources coming from national or international competitive funds. The transitory drop in contributions had become permanent.

Another factor began to emerge and mould the new reality of universities: it was precisely the sale of services. Universities, major ones in particular, because of their greater laboratory, workshop, computer infrastructure, information, staff capacity and tradition, resorted to selling services as part of their funding strategy. Let me illustrate this situation with an example from my own university budget. Our budget is made up of, in round figures, 30 per cent state contributions, 20 per cent payment of student fees, and almost 35 per cent of service sales. These are services of all kinds and from practically all sectors which produce some goods or service. Our Faculty of Architecture, for example, has a good urban planning department, which collaborates with municipal councils in the preparation of regulatory schemes for the respective communities. Other sectors include health and education, agriculture and forestry, animal production, chemistry, and engineering. The list is too long to quote all the types or areas of services offered by the Universidad de Chile. We also have 15 per cent of resources from national research grants, and national and international competitive funds. As you can see, this budget comprises of elements which are entirely different from those making up the budget of most universities on this continent and indeed, in the world.

Furthermore, it is noteworthy that our expenditure is not distributed in the same manner as our income. For example, student fees only cover 20 per cent of total expenditure. But the university spends close to 35 and 45 per cent of its resources for undergraduate and postgraduate areas, respectively. We allocate a not negligible 10 per cent of our budget to what we call cultural extension. The university has several permanent groups, such as the Symphonic Orchestra, a dance ensemble, a theatre group, which spend more than they earn.

This means that Chilean universities are on the market today, a knowledge-based market, a market supplying careers and academic undergraduate and postgraduate programmes, a service supply market. All the players in the system are competing in this market, i.e., the so-called traditional universities and private, the real private universities and other non-university institutions, as well as post-secondary education institutions. This higher education sector has thus become the second largest advertiser, in terms of the country's advertising expenditure. In fact, when studying the advertising expenditure in newspapers, radio, television and other media, universities are the second largest advertiser.

The "business," if I am allowed to use this term, the business of higher education in Chile, a small country of 14 million souls, with only 300,000 students aged between 18 and 24, represents $2.3 billion per annum, a major share of the GNP. The state only contributes 15 per cent of this amount, and universities receiving a state contribution contribute approximately 30 per cent. It must be taken into consideration that many universities do not receive any financial contribution, but are also computed in the size of the country's higher education "business." The state only contributes 15 per cent of that global amount.

It cannot be said that the market works well because it includes very diverse institutions of very diverse complexity and dimension. This group of traditional universities is an example: some of these universities offer all research areas and have developed specialised institutes, postgraduate programmes, cultural extension tasks, etc., while other private universities only offer two or three undergraduate careers, only have 500 to 600 students and hire their teachers by the hour. Thus, the system is enormously heterogeneous, a fact widely unknown to the "consumer" public, if I may call it that way. It is, therefore, necessary to resort to advertising and marketing to inform the "consumer" public of the quality of the courses offered and the condition of the universities offering it.

Now then, some of the real private universities are only education businesses advertising their products, sometimes more with the purpose of selling rather than informing the precise truth. Others are organizations responding to defined doctrinal or ideological trends. For example, some eight to nine Catholic universities can be found, both traditional and private, with the private ones representing different philosophical and social thought trends in the Catholic Church. There are also universities for the armed forces, in a ratio of almost one to one. There is also one which is clearly a Mason's university, and two or three which answer to the ideology of certain political parties, although this is naturally not acknowledged in the university statutes.

Competition among universities occurs in several areas. Traditional universities receive a certain amount of money, a contribution called indirect fiscal contribution, for snatching the best performing students in a national applicants' selection test. Therefore, there is competition vying for the best students. There is also competition for the sale of services. For example, our Food and Nutrition Technology Institute (Instituto de Nutricion y Tecnologia de Alimentos, INTA) must persuade companies in the sector that the food technology developed by Universidad de Chile is better than that developed by other universities. Likewise, we must promote the quality of the urban planning management carried out by our corporation and the virtues of the services provided by our clinical hospitals, or the fact that our business administration courses are better than others. Anyway, you can imagine already all kinds of competition for the services provided. Lastly, there is competition for competitive funds for research projects, which the country has developed these last few years.

What problems does this model have? At present in Chile, higher education coverage-including universities, professional institutes, and technical education centres-is somewhere above 100 per cent of people aged between 18 and 24. Naturally, this increases competition among universities. Many of them, in fact, are not filling all their vacancies now. Each one of those empty positions involves a loss of economic resources for that institution.

Furthermore, the loans system, which I described earlier, works well for students who lack the resources. But the same does not happen, however, with middle-class students whose incomes are very close to the levels at which the annual expenditure for student fees is at present: $1,000 to $3,000, even $4,000. They find it very hard to pay these fees with their families' income levels.

This system has another problem: it does not take into account the possibility of enough resources for further investment. Most universities, the Universidad de Chile fortunately among them, have managed to balance their operating budget despite the dramatic drop in state contributions. But they do not have any available resources for further investment to open new disciplines, for example, or to create an institute, such as INTA, from scratch. To do so, we would have to go into debt over our future cashflow and Chilean banks do not see quite clearly what future cashflow means for the university system.

There is a third problem: not all areas of knowledge exert the same attraction on the market. It is very difficult or impossible to sell philosophy services for example, or pure sciences, genetics, molecular biology, history or theory of art services.

Certain interference and distortion arise then as the fourth problem among-and please excuse me again for using this term-the various "businesses." Certain faculties are much closer to this market I have described, such as economics or engineering. For them, the potential increase of sales of courses or services is very large. This tends to decrease the quality of their non-marketable research. That is why we have had to create a very strict accreditation and qualifications system for our personnel, in terms of their academic performance, so that they are not all attracted by the market, and they may continue developing, for example, economic theory or other disciplines which are not marketable at present but rather could be in the future. The same goes for undergraduate education. Our best researchers prefer to devote their attention to procuring the resources-and this entails some remuneration advantages-provided by competitive funds, rather than to dealing with first- or second-year students. Therefore, a certain contradiction occurs between the different kinds of the institutions' income or business.

But the model also offers advantages today. Firstly, collecting money from the students generates regressive redistribution: some students come from very wealthy families, and they do not need free education. Furthermore, regressive redistribution is not a problem brandished as a battle cry by student organizations. This is not a source of conflict in Chile. The problem is the volume, value, and number of scholarships, loans, and other facilities that can be offered to those students who are unable to pay for their university education.

Secondly, I believe that those researchers who are more practically oriented have a greater knowledge of reality. Personally, I feel that we, as university academics, tend to be rather arrogant. We think that our knowledge of reality is greater than the one we actually have and that, therefore, we are better qualified to tell municipal councils, companies, business, industries, how they should run things. So if there is some kind of relationship with a more demanding reality, our relationship with it will be more adequate and better. That is why nobody in Chile wants to go back to the 100 per cent state contribution system of finance. For the reasons I have given on future investment in areas that are not marketable today, we feel that 30 per cent is too low a contribution and that if it rose to some 50 or 60 per cent, it would have very favourable effects.

A certain degree of professionalisation has also been generated, as well as a greater management streamlining. We discovered that we wasted many resources in the past. The truth is that no rewards or penalties were available for the people in charge of managing those resources.

I would like to end by saying that we are at present making inroads into a newly discovered reality. Some areas of innovation are being developed, the institution's administration is being decentralised, and credit and internal student transfer systems are emerging. In all these areas, we do not have any previous expertise, neither have we found many experiences of it elsewhere in the world. The American universities we know-and which are the most advanced in this field-receive considerably more federal or state support than we do, and their students have, on average, five times the income of ours.

Therefore, this new, distinct and probably unique model of higher education in Chile presents us with a number of enigmas that I hope I have succeeded in highlighting for you in this presentation.

Thank you.