The Ministry of Education is currently engaged in discussions with the National Treasury and various stakeholders regarding the potential reduction of the pending bills that public universities owe, which amount to Sh63 billion.
Education Cs Ezekiel Machogu recently announced that they are in the process of collecting reports from different universities.
The reports will be presented to relevant government agencies and other stakeholders as part of a collaborative effort to consider the possibility of the Kenya Revenue Authority (KRA) waiving certain dues owed as statutory deductions that have not been remitted due to financial constraints.
If this proposal is approved, universities will still be required to settle their debts with suppliers.
Machogu explained that the accumulated pending bills of Sh63 billion have accrued over the past six years across 32 public universities.
The financial strain results from inadequate funding, primarily attributed to a decline in admissions for parallel degree programs, a significant source of university revenue.
In this period, only 68 per cent of the total funding required by public universities was disbursed, leading to the accumulation of debts.
The previous funding model, dubbed Differentiated Unit Cost (DOC), did not consider students’ economic and social backgrounds. However, the new funding model, categorized based on students’ vulnerability and needs, is expected to address these financial challenges for universities and Technical and Vocational Education Training (TVET) institutes.
Under the new model, 82 per cent of fees will be covered by government scholarships, while the Higher Education Loans Board (HELB) will fund 18 per cent of the costs, with Sh29 billion allocated for this purpose in the current fiscal year.
As per Ministry of Education data from 2021, public universities were burdened with a total debt of Sh62 billion as of the previous year, with some universities facing financial insolvency.
Despite these financial challenges, the number of students enrolled in public universities increased slightly from approximately 562,100 at the beginning of the 2021/22 academic year to around 563,000 during the 2022/23 academic year.
Public universities heavily depend on government subsidies, and the high number of admissions has strained their finances due to inadequate funding and delayed disbursement of funds by the government.
For the current fiscal year (2022/23), the National Treasury allocated approximately Sh80 billion for higher education, although universities had requested Sh180 billion in their budget plans to operate effectively.