• The Ministry has therefore recommended that the outstanding PAYE be waived, because the government has not provided the Sh147 billion to universities.
• Machogu said said the amount owed by the government to universities is higher than the PAYE owed to the Kenya Revenue Authority.
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Education Cabinet Secretary Ezekiel Machogu has revealed that the government owes universities a sum amount of Sh147 billion.
In a meeting with the National Assembly Education Committee, Machogu said the amount owed by the government to universities is higher than the PAYE owed to the Kenya Revenue Authority.
“The Ministry has asked universities to provide details of their current PAYE debts. These debts largely arose because the government did not optimally fund universities to 80 per cent of Differentiated Unit Cost (DUC) as had been agreed. The government owes universities Sh147 billion,” Machogu said.
The Ministry has therefore recommended that the outstanding PAYE be waived because the government has not provided the Sh147 billion to universities.
“Going forward, with the sustainability projected to arise from the New Funding Model, universities will be remitting PAYE as and when due,” Machogu said.
He called on the universities to provide details of their current PAYE debts so that the government can release the dues.
In addition, he said universities are indebted to the tune of Sh61 billion in unremitted statutory deductions, bank and SACCO loans, and unpaid suppliers.
“Our public universities accumulated a huge debt portfolio, consisting of unpaid salaries, unremitted statutory deductions, bank and SACCO loans, and unpaid suppliers,” Machogu said.
“In total, public universities were indebted to the tune of Sh61 billion as of June 2023 and continues to grow every month.”
In 2017, the government adopted the DUC formula as a funding model for universities.
It was agreed that the government would provide 80 per cent of DUC per student. The balance of 20 per cent was to be funded through loans from the Higher Education Loans Board (HELB) based on the level of need, and household contributions.
However, the government's funding of DUC never attained the agreed 80 per cent. The highest ever funding that was provided in the Academic Year 2017-18 was 66.4 per cent of DUC.
Machogu said the DUC contribution by the government has been declining every year, recording a low of 48 per cent in 2022 and 2023.
He said with the new funding model that is student-centered, the funding will be awarded to students according to their level of need, unlike the DUC model where universities used to receive a uniform grant based on the DUC of a programme.
“The Model will increase cash flow to universities and TVET colleges and will also eliminate the risk of under-funding universities because funding is student- centered and is based on the actual cost of a programme,” Machogu said.
The CS further said the model will motivate universities to raise additional resources and enhance the quality of education so as to attract more students in a competitive environment.
He, however, recommended the government to increase funding for continuing students to 60 per cent of the DUC.
Continuing students in their second, third, fourth and fifth year have been funded at Sh34.1 billion which represents 42.6 per cent of the DUC.
“To support these students, the Ministry recommends increasing funding for continuing students to 60 per cent of the DUC. This will require an additional Sh11.1 billion to enable the universities to meet costs of salaries and operational expenses,” Machogu said.
He said without such an increase, universities are likely to continue facing financial challenges for a longer period.