THE FINANCIAL AND ECONOMIC MODEL OF HIGHER EDUCATION INSTITUTION DEVELOPMENT UNDER RISK AND UNCERTAINTY
Keywords:the financial and economic model, risk and uncertainty factors, scenarios, HEI development
The article explores the specifics of budget management in higher education institutions (HEIs) along with providing a rationale for the need to upgrade financial and economic models. It is observed that the methodology of HEI budget planning has not undergone significant changes over the past decade, whereas the modern realia challenge Ukrainian universities to operate more effectively in a competitive and dynamic environment. Adapting approaches to financial and business performance management under risk and uncertainty to the specifics of HEI activities, the study offers a relevant management framework that assumes certain stages. The article also presents the author’s understanding of the financial and economic model of HEI development which involves simulation of actual economic processes in HEIs in the form of mathematical relationships between components that are exposed and not exposed to the influence of university top management. The findings present a list of core components of the financial and economic model of HEI development under risk and uncertainty, visualizing the logic of model construction against the specified components and tasks it addresses. In the context of this study, the components of the financial and economic model of HEI development are the indicators of HEI development affected by internal policy, risk factors that may transform subject to different scenarios, and financial performance indicators that render ripple effects of management decisions in different scenarios. For each of the model’s components, mathematical relationships are provided to estimate revenues from educational services, R&D and other types of income, including entrepreneurial activities. To simulate different scenario conditions, it is recommended to use sensitivity analysis or the Monte Carlo method. The benefits of the financial and economic model of HEI development under risk and uncertainty are specified as well as software products that can be used for its practical implementation are presented. The proposed model is a ready to use tool that can be applied in practical settings using MS Excel.