How Kenya plans to deal with Sh61bn pending bills facing varsities

University of Nairobi main entrance. FILE PHOTO | NMG

The State has started to craft a plan to resolve the pending bills crisis facing Kenya’s public universities which hit Sh61.1 billion by May.

Higher Education Principal Secretary Beatrice Inyangala has revealed ongoing discussions with the President’s council of advisors to prepare a marshal plan to resolve the ballooning crisis.

Institutions of higher learning are struggling to honour obligations such as payroll taxes, retirement benefits, and insurance premiums for staff following a dip in government capitation over the recent past.

“A component of this marshal plan is a question to the government on its failure to release up to 32 percent capitation to the institutions and where universities were expected to get money to settle the PAYE and other obligations,” she told Parliament during consideration of the 2023/2024 budget estimates.

Unremitted pension tops the list of pending bills by institutions of higher learning at Sh24.5 billion, followed by PAYE at Sh17.7 billion and unpaid suppliers at Sh7.7 billion.

Other bills include unremitted payroll deductions (Sh3 billion), deferred salaries (Sh2.9 billion), unpaid part-time lecturers (Sh3.2 billion) and overpaid fees refundable to students (Sh900 million).

Under the differentiated unit cost (DUC) model that is being phased out, the government was expected to cater for 80 percent of the unit cost while 20 percent is borne by students and institutions.

The funding ratio has, however, been dropping in the past five years to the current 48.1 percent of the unit cost on stagnant State funding.

Universities Fund, –the State agency managing the financing of universities— has started discussions with other State agencies to find modalities of separating the actual pending bills, the penalties and the interests thereof.

“Once we get those figures, then we shall be able to negotiate with these agencies including Kenya Revenue Authority (KRA), the National Health Insurance Fund (NHIF) and the National Social Securities Fund (NSSF),” UF chief executive Geoffrey Monari said.

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