Description
Governments are interested in the relative efficiency of institutions, and in addition, information on efficiency can be used by individual institutions to benchmark themselves against their peers. The main factor that was found to affect efficiency, as defined in this paper, was degree of remoteness. Further, institute size is an important factor, with smaller institutes tending to be less efficient. This paper employs a mathematical technique known as Data Envelopment Analysis to examine the efficiency of TAFE institutes.Summary
About the research
The interest in efficiency comes from two angles. First, governments and systems have an interest in the overall efficiency of systems, and the relative efficiency of institutions within a system. Second, individual institutions may wish to benchmark themselves against their peers.
This paper employs a mathematical technique—Data Envelopment Analysis—to compare the efficiency of 58 TAFE (technical and further education) institutes across Australia. Efficiencyis measured as the 'ratio' of outputs to inputs, with outputs being the combination of successful full-year training equivalents (that is, adjusted for load pass rates) for trade/technician and non-trade/technician courses, and the inputs being expenditure on salaries and related expenses, and other expenditure, excluding capital costs.
Efficiency scores, which take into account the size of the institution, are derived for each institute, and peer institutes are identified. However, there are likely to be environmental factors that impact on efficiency, and these need to be taken into account in any comparison of institutes.
The following are the main findings:
- According to the analysis, 17 institutes are efficient, relative to their peers.
- The environmental factor that most significantly affects efficiency is the degree of remoteness.
- Size matters, with efficiency being lower for very small and very large institutes. On the whole the penalty is greater for very small institutes.
While it is acknowledged that the technique has many limitations, it does allow institutes to benchmark themselves. The results should provoke questions, if not answers. In addition, the analysis should be helpful to those considering structures that impact on the size of an institute. Readers will note that, as dictated by the National Training Statistics Committee's data protocols, institutes are not identified. This type of analysis would be rather more informative if institutes were identified, and the protocols are currently being reviewed with this in mind.
Tom Karmel
Managing Director