sense of ownership to the system. In the 1997-2002 cycle, campuses were for instance permitted to choose two performance indicators, one related to their own educational interests and one directed to the State’s strategic goals. Yet, the system has been criticized for involving too many people and using an excessive amount of resources on calculating indicators that are of limited use in tertiary institution internal decision-making (Bogue 2002).

The **Argentine** resource allocation model for tertiary education is designed to close gaps between the real budget need in ideal quality and efficiency conditions and the actual budget allocated based on historical criteria. Based on three criteria, the model matches the estimated minimum necessary resources to finance the current level of scientific, academic and administrative activities.

# **Box 9. The Argentine AR-model**

<mark>Allocation of funding through the AR-model (</mark> _<mark>Asignación de Recursos</mark>_ <mark>) is based on the ‘objective’ budget. The calculation of this budget draws on the following criteria:</mark>

- <mark>Number of effective students</mark>

- <mark>Pedagogically adequate teacher per student ratios</mark>

- <mark>Teachers' salary scales</mark>

_Source: World Bank (2003b)_ Rather than targeting existing base funding of Argentine tertiary institutions, the model is applied to increases in public subsidies for tertiary education. Due to Argentina’s economic crisis, the model currently only comprises about 4 percent of the public budget for tertiary education.

The **South African** funding model – applied to 89 percent of the core budget for higher education – is another example of a multi-criteria approach. Block grants for public tertiary education are divided into four categories reflecting teaching, research and specific institutional issues. The Ministry of Education publishes an annual statement, which determines how performance criteria will be calculated and weighted. This provides clarity to institutions on how they will be evaluated while ensuring a degree of flexibility despite the use of pre-selected indicators.

# **Box 10. Performance based grants in South Africa**

<mark>The funding formula is based on four input and output weightings:</mark>

**<mark>1. Teaching inputs:</mark>** <mark>Total number of enrolled second year students is passed through a grid, placing enrollees into four study categories, which are weighted according to a) course material, b) course level and c) instruction-delivery mode.</mark>

**<mark>2. Teaching outputs:</mark>** <mark>Number of enrolled students multiplied by graduation benchmarks. Benchmarks are approved by the Minister of Education on a rolling three-year basis.</mark>

**<mark>3. Research outputs:</mark>** <mark>Actual totals of doctoral and post-doctoral graduates and research publication units for a specific year compared to a normative total according to national benchmarks.</mark>

<mark>4.</mark> **<mark>Institutional factors:</mark>** <mark>(a) grants for institutions with large proportions of disadvantaged students and (b) grants related to the size of institutions based on the number of enrolled students.</mark> _Source: Ministry of Education, South Africa (2004) and Government Gazette (2003)_ An interesting feature of the South African model is the operation of a competitive fund for institutional development to supplement the multi-criteria funding system. Critics of resultsbased funding often charge correctly that removing resources from institutions with poor performance will only make improvement more difficult, if not impossible. In South Africa, under-performing institutions are not necessarily destined to declining budgets. By gaining

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