New performance-based funding model raises concerns about motive behind Hungary’s university reform

A two-thirds majority in the Hungarian Parliament voted this week to put eleven Hungarian universities under the ownership and management of private foundations whose board members will be appointed by the government.

The government says the move will introduce a performance-based funding system that will improve the quality of higher education and research in Hungary. But academics have criticised the move, which comes on top of a number of other decisions that have raised questions about government meddling in higher education and research.

Critics warn this is a step towards privatising public universities, while the government insists the foundations will have a clear public purpose to serve the universities.

“All the assets that these foundations have can only be used for public purposes, for the activities of higher education, and they do not become private property in any form,” a government official told Science|Business.

The government has promised the universities that funnelling EU and national funds through the new management structure will mean they get more money. “That was in a way an argument that they used to convince university not to oppose this change,” Zsolt Enyedi, political scientist and former vice rector for Hungarian affairs at the Central European University in Budapest, told Science|Business. “If you agree to this transfer, then you would get much money than in the past,” Enyedi said.

The country is planning to raise €4 billion from the EU’s pandemic recovery fund to invest in higher education, which the government wants to route to universities through the new foundations. The plan is yet to be submitted for approval in Brussels. According to a government official, this would be the largest ever single investment in higher education in Hungary.

But any new money would come with strings attached. Under the new management structure, “Universities will be expected to be much more practical and meet the demands of the market and industry,” said Enyedi.

The change started three years ago, when Corvinus University was restructured on a model that has now become the template for the current reforms.

The government says each university senate was free to decide whether or not it wanted to switch to the new management model. For those that agree, the government will set up a “public interest trust”.

Enyedi admits the plan could help some universities become more flexible and able to attract star researchers, with higher salaries and budgets for research. But, he said, “It’s primarily a political project.”

The government will conclude long-term strategic agreements with the new foundations for 15 to 25 years, and will sign funding contracts for 3 to 5 years. According to Enyedi, there will be little public control over the new foundations, given all board members will be appointed by the government for life and are likely to be people loyal to the ruling party. The new set-up will enable prime minister Viktor Orban to “rule the country and higher education even if he loses the election in 2022,” said Enyedi.  

In a press conference last week, Gergely Gulyás, a minister in Orban’s cabinet said the 2022 elections have nothing to do with the changes to university funding, which the government says are designed to support application-oriented R&D policies.

Science|Business asked for comments from some of the universities affected by the new law, but did not receive any responses on what they see as the benefits.

A battleground for academic freedom

Over the past five years, Hungary has become a key battleground on academic freedom.

A law passed in 2017 has made it impossible for the Central European University (CEU), one of the highest performing social sciences institutions in the region, to continue its work in Budapest. The legislation was widely interpreted as a direct move against CEU, an institution founded by Hungarian-born philanthropist George Soros, a foe of prime minister Viktor Orban and his self-styled ‘illiberal democracy’. The CEU has since moved most of its operations to Vienna.

Another law stripped the Hungarian Academy of Sciences of its research institutes and gathered them under the oversight of the Eötvös Loránd research network, a new agency run directly by the government. The agency is expected to “make the most of the results of basic research, which can contribute to solving domestic and global social and environmental challenges.”

The government has also appointed new leadership at the University of Theatre and Film Arts, a move which prompted students to occupy university buildings and protest the appointment of a chancellor and vice rectors who are close allies of the prime minister, a self-proclaimed Christian-nationalist. Hungary also cut funding to all masters’ degree programmes in gender studies.