The impact of EU funding on real estate asset management of public universities in Estonia

Abstract

The main research object of the paper is real estate owned, used and disposed by universities in Estonia. The main research question asked within the paper is, how to achieve the financing sustainability and avoid the potential financing gap in keeping up the set of real estate in terms of universities’ limited budgetary conditions after the major cut of the support via the EU structural funds in Estonia? Three main autonomous public universities in Estonia are analysed as a case study – University of Tartu (UT), Tallinn University of Technology and Estonian University of Life Sciences.Universities real estate asset management (UREAM) model implemented in Estonia is rather straightforward – public universities own and manage their real estate assets and they have the whole autonomy to decide over their sets of real estate assets’ acquisition, management, development, maintenance and disposition. Therefore, the primary mode of UREAM in Estonia is non-rental and decentralized, which by universities’ law is not seen to be change in the future. At the same time, the universities see real estate as a supporting service to their primary service – they have established a real estate department to deal with the operational real estate decisions, but the strategic and financing decisions are made on the level of universities’ board.From the financing side, the universities are largely dependent on the governmental budget and its limits; e.g., approximately 90% of the origin of the UT revenues is from public sector. During the Estonian Research and Development and Innovation Strategy (RD&I strategy) Knowledge-based Estonia, phase II at 2007-2013, universities used extensive amount of the EU structural funds for developing several new buildings. As the development and maintenance of the infrastructure require long-term budgetary stability, then one of the main concerns for the universities is, how the budgetary limits support the achievement of goals of the Estonian RD&I strategy on its 3rd stage, during 2014-2020?The aim of the paper is to evaluate the impact of the EU funding to UREAM on the universities’ budgets in Estonia during the Estonian RD&I strategy phase II and III (2007-2020). The implemented methodology involves mainly the document inquiry with the quantitative benefit-cost analysis, but also the interviews with universities-level elites. The research results are the basis for further managerial and policy implications of UREAM in Estonia.