Major universities reveal radical cost-cutting measures
Three major universities have announced sweeping cost-cutting savings to deal with massive budget shortfalls.
Three major universities have announced sweeping savings to deal with massive budget shortfalls, including cuts to casual staff, recruitment freezes and the postponement of capital works.
The University of Sydney, Monash University and the University of NSW all sent messages to staff this week outlining planned cuts, following the loss of international students due to COVID-19 travel bans.
UNSW has effectively sidelined its ambitious 2025 strategy, which aimed to raise it to a global top 50 university, announcing on Tuesday that a new taskforce would plan for the post-COVID recovery phase.
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Vice-chancellor Ian Jacobs told staff the Taskforce 2021+ initiative would “explore the university’s optimal future size and shape and prepare us for a markedly changed higher education landscape”.
UNSW estimates it will have a $600m revenue shortfall this year, followed by revenue reductions of about $450m in each of the following two years.
“The painful truth is that it will almost certainly mean a reduction in staff numbers,” Professor Jacobs told staff. He said he and his senior team would take a 20 per cent salary reduction and he thanked more than 1000 university staff who had voluntarily shortened their working hours, saving an estimated $13m over 12 months.
Monash University vice-chancellor Margaret Gardner told her staff on Monday that the university would fall short of its revenue target by $350m this year, made up of a $220m decline in international student fees and another $130m lost from other areas including research funding, commercial revenue, donations and property and investment income.
She said the university had also budgeted $30m to support Monash College, which prepares international students to enter degree courses, and $15m to assist students suffering hardship.
Monash will reduce its operating costs this year by about $200m, including $80m saved from reductions in casual staff, a freeze on recruitment and a 20 per cent pay cut taken by Professor Gardner and senior executives. She said the university had tried to minimise the cut to casual staff. Also, about $100m would be cut from capital works spending this year.
Both Monash University and UNSW are hopeful that their wholly owned pathway colleges, which teach international students, will be eligible for the federal government’s JobKeeper scheme, which will ease some of the financial pressure.
Monash College employs about 1000 staff and UNSW’s equivalent, UNSW Global, has about 700 staff. Under JobKeeper, the federal government would pay the organisations $1500 a fortnight toward the wages of each eligible employee.
Another pathway college, Insearch, owned by the University of Technology Sydney, also believes it is eligible for the JobKeeper scheme.
University of Sydney vice-chancellor Michael Spence told his staff on Tuesday the university needed to find another $270m in cost savings in 2020 and 2021, on top of $200m savings announced earlier, to deal with the university’s expected $470m budget shortfall this year.
The extra $270m savings will come from postponing building upgrades and investment in new technology ($127m), deferring and extending some projects ($52m) and savings on staff ($93m).
“The hiring pause will continue, with tightened controls over any proposed new hires for continuing or fixed-term staff. Casual staffing budgets will be reviewed by each faculty and school to reflect expected student load,” Dr Spence said.
The University of Sydney believes is it eligible for the JobKeeper assistance because it recorded a revenue fall of more than 50 per cent in a defined period earlier this year, compared to the same period last year.
JobKeeper could save the university up to $140m on its wages bill this year, which would greatly improve its budget position.
“If we get that assistance from the government, we would offset that against our savings measures,” a university spokesperson told The Australian.
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