Third-level colleges will face financial penalties for misconduct such as unauthorised payments for staff, filing late accounts or giving misleading reports of governance issues.
The measures are contained in reforms to the way higher-education institutions are funded from this year onwards.
The changes will also provide increased money to colleges for the delivery of Stem (science, technology, engineering and maths) courses, which are more expensive to run than many others.
Colleges will receive more money for students from disadvantaged backgrounds as part of a wider strategy to help narrow the class gap in higher education.
For the first time, there will be a competitive “innovation fund” to reward institutions that excel in particular areas that have potential for application across the system.
The importance of research will also be emphasised through an increase in the proportion of funding allocated to universities on the basis of their performance in this area.
In addition, the delivery of life-long, part-time and flexible learning opportunities – where Ireland falls behind many other European countries – will be incentivised.
National priorities
Overall, the reforms aim to help deliver national priorities by tying funding to delivery in these areas. There will also be three-year “compacts”, or performance targets, set for each higher-education institutions.
Minister for Education Richard Bruton said these "really important" reforms will provide clarity on the expected outcomes for higher education over the next three years.
It also reflects Mr Bruton’s personal aim to introduce more competitive funding and for higher education and stronger links with the needs of industry.
"A high quality, responsive higher education system is crucial to delivering on our ambition to make Ireland's education and training service the best in Europe by 2026," he said.
“Today’s announcement will ensure innovation, good governance and excellent research are prioritised by our institutions, in line with our overall national goals.”
The funding model was developed by an independent expert panel, in consultation with third-level institutions. The process was managed by the Higher Education Authority.
The move to introduce penalties for governance issues follows a number of controversies involving higher education institutions over recent years.
This penalty-based system will be introduced for “clear and unambiguous breaches of governance”.
Unsanctioned payments
These include unsanctioned payments to staff; failure to provide timely and accurate submission of required information or data; false financial, statistical or governance reporting, and wilful breaches of codes of governance.
The new reforms also do away with a 60/40 funding split between universities and institutes of technology. Instead, funding will be adjusted annually based on the proportion of students in different sectors.
The Technological Higher Education Association, which represents the State's 14 institutes of technology, welcomed the reforms and said they will deliver a "more equitable and innovative" higher-education system.
Dr Joseph Ryan, the association's chief executive, said its members have met the skill and research requirements of both their regions and the national economy, and will continue to "play their part in serving their communities through enhanced and innovative provision".
The new funding model will provide an additional €250,000 for institutions with multiple campuses, subject to meeting certain criteria.
This will be welcome news for colleges such as Galway-Mayo Institute of Technology (GMIT), where the Castlebar campus has been under threat for some time.
Among the targets set for the overall sector are a 15 per cent increase in the numbers in lifelong learning by 2025, and a 25 per cent increase in numbers studying on a flexible basis.
A 40 per cent increase in “spin out” companies is also proposed, along with an overall doubling in higher education research income derived from industry.
