Abstract
The obligation of meeting current and future mandate of public universities remains a big challenge as the universities are required to work within very tight budgetary constraints. Thus, the objective of financial sustainability is to ensure an institutions goals are reached by ensuring there is sufficient income for investment in academic and research activities. The costs of universities activities are rising which leads to the financial sustainability of universities being a primary issue of concern to stakeholders. The declining allocation to public universities from government exchequer has led to inadequate facilities and stalled projects in many universities. As a result, public universities in Kenya need to diversify their revenue sources through commercialization activities and developing market-oriented programmes. Public universities in Kenya are currently in a deep financial crisis that could lead to a closure following the decline in revenues thus the need for the universities to identify ways in which they can continue to remain financially sustainable. The study sought to assess the effects of budgetary controls, revenue mobilization and corporate governance on financial sustainability among public universities in Kenya. The study was anchored on the resource dependency theory, stakeholder theory and agency theory. The target population was the 31 public universities in Kenya as at the year 2019. The study relied on secondary data which was collected from published audited financial statements from the auditor general’s report. Data was analyzed using both descriptive and inferential statistics. To determine the nature of the panel data and the best model for analysis, specification tests for multicollinearity, autocorrelation, Hausman, heteroscedasticity, and normality tests were carried out. The study established that the administration of the public universities was able to spend the universities funds in accordance with the budgets for the years 2014/15 and 2015/16, and this enhanced financial sustainability. However, for the years 2016/17, 2017/18 and 2018/19, the case was different, as the universities were operating on budget deficits as a result of low amounts of Module 2 funds, and thus the universities were financially unsustainable. Further, the management of the public universities were able to mobilize the resources for the universities, especially in the years 2014/15 and 2015/16. However, for the years 2016/17, 2017/18 and 2018/19, the universities resource mobilization went down, as a result of reduction in the number of students that enrolled into the universities. The study further concluded that the universities adhered to the stipulated rules of corporate governance and this contributed to the financial sustainability of the universities. Based on the findings, the study makes the following recommendations; the budgeting committee should readjust the budgets to cater for the amount of the funding that is available. This will reduce wastage, and ensure that the university runs on optimal budgets, thus enhancing financial sustainability. The administration of the public universities should embark on alternative revenue sources, so as to bridge the gaps in the shortfalls of the funding from the Government. Income generating projects should be geared at generating revenue to cater for the budget shortfalls. The universities should consider establishing strong alumni base that will help the universities in consultancy services, funding of research and sourcing for donor funding.