by IAN MARSHMAN and FRANK LARKINS

The 2020 annual reports for Victorian universities were tabled in the Victorian Parliament on Wednesday 5 May 2021. They provide important insights into the impact the COVID-19 pandemic is having on the finances and staffing of universities that experienced prolonged lockdowns and disruptions during 2020.

In aggregate, Victorian universities reported total revenue in 2020 of $9.8bn, compared to $10.3bn in 2019, a decline of 5.5 per cent.  Aggregate expenditure was around $9.4bn in each of 2019 and 2020, resulting in a decline in aggregate operating surpluses of around $0.58bn. Nevertheless, the combined surpluses were $0.35bn compared with $0.92bn in 2019. Only two universities, RMIT (-$75m) and La Trobe (-$51m) reported deficits for 2020.

A significant factor contributing to the decline in revenue was fees and charges to which international student fee income is the biggest contributor. In 2020 fees and charges revenue declined by $314 million or 7.8 per cent.

On the expenditure side, staffing reductions made a major contribution to Victorian university cost containment initiatives. At the aggregate level, staffing numbers have declined by some 14 per cent on a head count basis, i.e. from 53894 to 46 356, a reduction of 7538 employees. On a full time equivalent (FTE) basis employee numbers declined by 7 per cent from 36 092 to 33 564.

Data on the financial performance of individual universities are shown at Appendix A. (NB Consolidated level reporting has been used.) Data on staffing levels are shown at Appendix B.

Percentage variations between 2019 and 2020 appear the most appropriate manner of comparing financial and staffing outcomes at the individual university level. These are shown in summary level in the following graph:

* Federation (9.8 per cent) and La Trobe (9.3 per cent) were the universities most impacted by a decline in revenue. On the other hand, Victoria U (1.5 per cent) and Monash (1.6 per cent) incurred only a marginal loss in total revenue. (Notably, Monash is the only university to report an increase in Fees and Charges for 2020.)

* While Melbourne and Federation appear to have minimised the impact of a decline in revenue on staff numbers, the percentage loss in staffing FTE for other universities broadly matches or exceeds the loss in revenue.

* La Trobe, RMIT and Victoria are the universities that have made staffing reductions well in excess of loss of revenue. La Trobe reported a 13.9 per cent loss in FTE and a 9.3 per cent decline in revenue, RMIT a 12.4 per cent decline in staff FTE compared to a 4.9 per cent decline in revenue and Victoria a 11.8 per cent decline in staff FTE compared to a loss of 6.6% in revenue. The percentage losses in staff numbers are much greater for all universities.

From these data it would appear that:

* universities have generally proven resilient in minimisng the reductions in revenue in the first stage of the pandemic. In particular, they have managed to retain the great majority of international students, at least for the short term, and offset part of the loss in fees and charges through other revenue, including increases in domestic enrolments.

* expenditure reduction measures have proven more elusive in the short term, perhaps in part because of the high upfront cost of reducing staff numbers.

* Victorian universities are adopting differentiated approaches and timeframes to tackle the challenges presented by the pandemic. Melbourne’s 3.4 per cent decline in FTE staff compared to a loss in revenue of 6.6 per cent contrasts to the 11.8 per cent FTE reduction in staffing at Victoria which incurred only a 1.5 per cent decline in revenue.

* the aggregate greater loss in staffing FTE compared to revenue loss indicates that in 2020 Victorian universities have not been focused solely on reacting to the immediate impact of the pandemic but are seeking to readjust their expenditure bases (to which staff costs have generally comprised an average 57 per cent) to the anticipated longer-term decline in revenue as international student recruitment remains compromised as a result of indefinite Australian border closures.

* casual staff and employees on fixed term contracts appear to have borne the brunt of university cost-cutting measures. The ratio of headcount to FTE staffing losses is 3:1 At Victoria headcount losses amount to 30% of total staff employed. Staff with the least employment protections in terms of tenure and superannuation and redundancy entitlements have taken the biggest hit.  This will have enduring implications for the nature of university employment and the delivery of learning and teaching and research.

* 2021 and ’22 are likely to be more financially challenging for Victorian universities than 2020, principally because of the prospect of lower international student enrolments.

Ian Larkins and Frank Marshman, Honorary Fellows, University of Melbourne Centre for the Study of Higher Education

Appendix A Consolidated Victorian Universities Financial Performance 2019 and 2020 $ millions

Appendix B Employee Numbers and Full Time Equivalent (FTE) at Victorian Universities 2019 and 2020

Melbourne

Monash

Deakin

RMIT

2020

2019

Change

2020

2019

Change

2020

2019

Change

2020

2019

Change

Numbers

11376

12195

-819

9576

10024

-448

5632

6226

-594

9510

12467

-2957

FTE

9189

9514

-325

8018

8347

-329

4259

4535

-276

6112

6976

-864

La Trobe

Federation

Victoria

All Victorian Universities

2020

2019

Change

2020

2019

Change

2020

2019

Change

2020

2019

Change

Numbers

5509

6795

-1286

1618

1700

-82

3135

4487

-1352

46356

53894

-7538

FTE

2876

3339

-463

1238

1258

-20

1872

2123

-251

33564

36092

-2528

Source 2020 University Annual Reports