Cause Analysis And Counter Measures On Debts Of Anhui Provincial Colleges

Due to the enrollment expansion policy, the higher education in Anhui Province has been transformed from the "elite" education into "mass" education. Consequently, this historic leap helps to make people rich and the province more prosperous with powerful intelligent and technical support. With remarkable achievements, the higher education in Anhui Province, however, is now facing some negative factors hindering its sustainable development. The huge debt burden is one of them. Because of the lack of fiscal input, unchanging tuition standard, the provincial colleges are now found in a dilema where they can only survive with the fiscal allocation, run by fund collection, and develop on loans. According to the research done by the Office of Education of Anhui Province, by the end of 2008, the 91 provincial colleges have a total loan of 8.55 billion yuan. The debts of provincial colleges to banks have the following six characteristics:firstly, among all the debtors, the undergraduate colleges and key universities have more loans than the common ones. Secondly, the total amount of loans in Anhui is small compared with that in other province in China. Thirdly, most of the loans are short-term and floating. Fourthly, most of the loans float into the infrastructure projects. Fifthly, all the debtors are still in bad need of more loans.In order to seek the counter-measures against the debts of provincial colleges, this paper analyzes the cause from four different perspectives. From the perspective of the property right, we find that the obscure educational property right widely exists and the power and responsibility between the government and the school is not well-defined. From the perspective of supervision, we find the supervision weak or absent in many cases, such as the delayed supervision from the government, weak supervision form the colleges and society, and no supervision from the banks. From the perspective of rent-seeking, we find that all parties intend to seek rent, motivated by different interests. The local governments are usually motivated by the belief that a college in a city brings prosperity to it. Provincial colleges are triggered by the greet assessment to promote college running. Commercial banks are driven by profits. All these causes together result in the rapid increase of college loans. Fourthly, from the perspective of public finance, the inadequate fiscal input of the provincial and local governments is found to be the indirect cause of the debt crisis.This paper draws on the successful experience and measures used home and abroad to solve the debt crisis of Anhui provincial colleges. Take the United States for instance, the federal and state governments encourage colleges to make full use of the market mechanism to collect more funds by issuing educational bonds and lotteries, establishing educational foundation, and encouraging social donation. At the same time, the government provides fiscal support with subsidized interest. The government of HKSAR increases fiscal allocation and puts forward policies for donation to help universities collect more funds. On the mainland of China, some provinces have already adopted different measures to help local universities and colleges to solve the debt crisis, such as the increase of fiscal allocation per student and financial input, subsidized interest, land replacement, and debt conversion. Apart from those mentioned above, some provinces have stabilized the loan scale, restricted the additional loans and established loan alarm system and repayment foundation to hedge the debt risk.Based on the analysis of the cause of debt crisis of Anhui provincial colleges with reference to successful experience used home and abroad, this paper puts forward the counter-measures from the following five aspects. Firstly, the property right system should be perfected and the governance structure should be optimized. Through clear reasonable arrangement of property right, the social capital can be guided and encouraged to invest in the higher education, stimulating the development of private colleges. With the optimization of governance structure, a new college governance structure will be established, where decisions are made in a scientific way, and the college will run more efficiently with democratic management and strong supervision. Secondly, supervision should be strengthened, and the monitoring system should be improved. To begin with, the government should enhance supervision by reinforcing the coordination and interaction among the different departments of education, finance, planning and construction. With sharing information resources, any change or abnormal state of college debts can be detected soon in a dynamic way. And then, the repayment awareness of colleges should be enhanced to conquer the false concept that "colleges get loans, governments foot the bill". Besides, the professional assessment of banks should be well used to control the scale of loans to colleges arid hedge the credit risk. Thirdly, debt structure should be adjusted and reorganized. According to the new concept of debt resolvent, the government cannot sit by and do nothing, colleges cannot give up their duty while society should not give, them too much pressure. The basic thought of working is to find solutions for present problems with long-term objectives. The government can play an active role in guiding the colleges to choose different paterns to reorganize their matured debts such as changing the short-term debts into long-term debts or vice versa. Provincial colleges, consiering their own development planning, can choose appropriate ways like land replacement to activate their deposited assets and ease up the shortage of funds, by which their debt risk can also be resolved. Fourthly, standards of assessment should be improved, and the patterns of development should be changed. To begin with, the assessemnt indexes of educational quality should be reformed by adding the index of governmental support for college development and the performance evaluation of fiscal expenditure. The fiscal allocation should also be reformed by exploring a new pattern which fits the development of colleges as well as the public finance. The efficiency of found utilization can be improved by sticking to the scientific and fine management of fiscal funds and establishing the goals and assessment system of performance management. Fifthly, the market mechanism should be well used to widen financing channels. The educational cost should be reassessed. Provincial colleges can introduce the accrual basis to devide the expenditure range and period in a scientific way. The reassessment of the cost of talent traning per student will be used as the basic standard for tuition as well as the state fiscal appropriation. The government is advised to issue educational bonds and lotteries to collect funds for college construction. Colleges are encouraged to creat new cooperation projects. Through project renting, they can transfer the management risk and relieve the fund pressure and mitigate financing cost, realizing win-win cooperation with enterprises.