In the two years since Japanese national universities were reorganized into independent administrative corporations, government grants for their operating expenses (personnel and equipment costs) have been slashed by 1 percent each year.

Under the new system, national universities make budgetary requests to compete for grants for “special education and research expenses.” They also vie for outside funds for scientific research, research on behalf of industries, and scholarships. For operating expenses, universities also depend on tuition and revenues from attached hospitals.

Government policy calls for increasing the proportion of competitive grants in national university budgets, but this is likely to expand the financial gaps between universities.

For efficient distribution of financial resources, universities must have equal initial opportunities. However, in practice, the former Imperial universities of Hokkaido, Tohoku, Tokyo, Nagoya, Kyoto, Osaka and Kyushu have long dominated other national universities in terms of budget and size of teaching staff. It is unclear why these inequities were retained. Initial gaps in operating expense grants were accepted as fait accompli when the universities were reorganized as independent administrative corporations.

Competition based on initial inequities is unfair, as universities with an initial advantage are certain to win the battle. In fact, privileged universities have decisively won the grant competition for large-scale scientific research. The divides between universities continue to widen, with the University of Tokyo the overwhelming favorite in competition. Although second-tier universities will not disappear anytime soon, the financial gaps among them will remain.

In free-market competition, the University of Tokyo would be the decisive winner. Battling for grants, though, is not an example of free-market competition; results are determined by a screening committee of a dozen members. The process is akin to a court trial.

Sympathy for the underprivileged and a sense of balance combine to prevent an overwhelming victory by a sole contender. In this way, second-tier national universities and private universities manage to get a lesser share of competitive grants.

Although humanitarian considerations prevent the University of Tokyo from winning the lion’s share of grants, an overall increase in competitive grants tends to make the strong even stronger, a reflection of the initial inequities.

Generally speaking, private universities inevitably fall behind national universities in the competition for outside funds. Although they are eligible for special government subsidies, private universities depend on tuition for most of their revenue. Therefore, they must place emphasis on education rather than research. Short on research expenses, their chance of obtaining outside funds is limited.

In several years, some Japanese private universities with declining student enrollments are likely to go bankrupt. Furthermore, falling birthrates have caused a sharp decrease in student enrollment, seriously affecting universities’ financial viability and touching off an internecine battle for survival among universities.

If educational corporations that run private universities made better use of their huge assets, they could raise billions of yen in research funds. Some U.S. colleges and universities, unlike their Japanese counterparts, have a staff of fund managers with skills in “grantsmanship,” the art of winning grants. To compete with national universities, private universities should hire skilled U.S.-style fund managers to improve their asset management and bring in extra revenue.

It saddens me to think that the survival of universities these days depends on how much money they make. As a scholar, I hoped to live in a world where moneymaking was not their purpose. These days, though, university management is becoming a task for scholars.

In addition to teaching and performing research, today’s scholars must have management skills and be able to prepare persuasive application documents for winning outside funds. This is ironic when one considers that many scholars chose their profession because they did not want a management job.

Management skills are essential for candidates for university president and administrators. In the U.S., prominent scholars are rarely appointed university president. A rich scholarly background may be helpful but not required.

In Japan, however, outstanding scholars are often appointed university president and must deal with unfamiliar management tasks. At private universities and national universities as well, professors with excellent management skills should be the ones appointed president to run the institution.

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