Brazil Launches “Future-se”, Designed to Increase Private Funding in Federal Universities

RIO DE JANEIRO, BRAZIL – The Ministry of Education (MEC) officially launched, on Wednesday, July 17th, a program to restructure the funding of public higher education.

The project, called “Future-se,” (join the future) expands the possibilities of private funds becoming a much more significant part of a university’s budget.

Institutions will be able to enter into Public-Private Partnerships (PPP’s), lease buildings, establish funds through donations, and even sell names for campuses and buildings, as is common in football (soccer) stadiums. There will be a public consultation before the program is put into effect.

Education Minister Abraham Weintraub said students would not have to pay tuition at public universities, regardless of income.

The launching of the program takes place amidst budgetary contingencies for universities, announced in late April by the government.

According to the association representing federal university rectors, Andifes, the measure accounts for between fifteen and 54 percent of the resources that can be cut from federal universities.

Under the Program, the Universities can:

• Enter into contracts for the shared management of real estate assets owned by the universities or the federal government.
• Enter Public-Private partnerships (PPPs), loaning or leasing buildings and lots;
• Establish endowment funds, with corporate or alumni donations, to fund research or long-term investments;
• Assign the naming rights of campuses and buildings, as in football stadiums that bear the names of banks or insurance companies;
• Promote cultural actions that can be included in the Rouanet Law or other cultural subsidy legislation.

Financial Market Solutions

The “Future-se” project, as introduced this Wednesday, is based on a range of financial market tools. According to the MEC, this “share portfolio” includes a real estate fund. MEC reports having received R$50 (US$13.5) billion in lots, real estate and buildings from the federal government.

These assets will be converted into a fund, and the lots will be transferred to the private sector. All rents received from the buildings will go to the fund, which would be available for financing.

As an example, MEC mentioned a 65,000 square meter lot next to the JK Bridge, one of Brasília’s landmarks.

Micro-credit for Startups

The ministry also wants to include a line of “targeted productive micro-credit” in university funding. Today, according to MEC, two percent of demand deposits are held by the Central Bank, and there are now credit lines for micro-entrepreneurs and people at risk. The plan is to extend the model to start-ups.

Sovereign Knowledge Fund

According to MEC, all this money will be managed in a “sovereign knowledge fund.” Private capital, in addition to direct investment in each institution, could be included in this fund, from whence it would be redistributed to universities. Royalties, patents, and technology parks would also provide money for this fund.

‘All or nothing’ model

The minister also noted that where “Future-se” alters legislation, the universities joining the program will be required to comply with the entire program — and will be penalized if they fail to implement specific points.

“The universities’ situation is not good. The program will not be tailor-made or structured case-by-case. This is a unique model project. With regard to what universities can already do, we will not penalize those doing it or not doing it,” said Weintraub.

“We will look at the university’s performance, for instance, the dropout rate. Today, more than half of all students fail to complete their course work,” he said.