By GARRY CARNEGIE and JAMES GUTHRIE
Campus Morning Mail has posted various stories on the roll-out of cost-savings measures at Australian public universities, specifically in response to the predicted downturn of incomes from fee-paying international students and particularly from onshore overseas students, due to COVID-19 impacts.
In this feature, we address three such instances concerning the following universities: James Cook University, University of Adelaide, and the University of Queensland.
James Cook U: in its 2019 annual report JCU did not make any COVID-19 pandemic disclosures of the potential impact on university finances. Indeed, in the note to the financial statements on the topic of “events occurring after the balance sheet date” (note 26), the following statement appeared; “there were no events occurring after the balance sheet date of material nature”. However, our analysis indicates that James Cook had a major risk exposure, as 25 per cent of total income from continuing operations was generated by fee-paying international students, both onshore and offshore students, during the year ending 31 December 2019, (CMM May 20).
Last week James Cook U told staff savings talks with unions had failed and that the university would put an enterprise agreement variation to staff, (CMM September 9,10).
University of Adelaide: Staff are advised that “second semester enrolments were higher than budgeted, so the University will ‘recoup’ $40m this year” (CMM September 9), which sounds like “an each way bet”. On the surface, this news is positive. It was also reported that “international commencements for semester two are down 26 per cent on 2019.”
However, our analysis indicates that the University of Adelaide had a significant risk exposure as almost 26 per cent of total income from continuing operations was generated by fee-paying international students during 2019, [CMM September 9].
University of Queensland: the university originally told staff of the Institute for Continuing and TESOL Education that 46 of 87 positions would end. [CMM August 25]. However, it later announced it was putting on-hold disestablishing 22 teaching and academic manager positions, “in light of higher than forecasted student numbers for the remainder of the calendar year” (CMM September 8).
Is it possible for university staff to feel confident in such decision making and related announcements? Announcements of the kind would typically cause alarm among the people and families impacted by actual or potential redundancy.
This “on-again, off-again” instance seems to further confirm, in our view, that it is time for more timely accounting for performance, financial position and cash flows. For the University of Queensland, this is particularly important as total fees from international students, both on-shore and off-shore students, was substantial, contributing almost 31 per cent of total income from continuing operations for 2019
Our argument is for university executives to cease providing such piecemeal information to staff in terms of cost savings initiatives, such as voluntary and compulsory redundancies and in reducing casual staff, and to better inform their stakeholders. These initiatives can indeed be challenging and present life-changing courses for those affected.
Concerning dialogue on cost savings, we propose several ideas;
* universities need to be transparent when it comes to financial management, especially during a crisis, and particularly in amending enterprise agreements which specify terms and conditions of employment
* there needs to be transparency about future cash flow scenarios driving future sustainable pathways under both firm and full appreciation that cash is of paramount importance.
* universities need to be transparent as to the cross-subsidy that exists between teaching and research funding, as governments, industries and the professions may need to step-up to support academic research in future.
This contribution builds on our earlier call for interim financial reporting from our public universities on a six-monthly basis (CMM August 30). We propose a first round for January 1 to June 30 2020, as the initial COVID-19 impacted period.
As we stated in CMM “if there is no public release of financial information for the six months ending 30 June 2020, then there will be ‘no accounting’ and a lack of informative and adequate risk disclosures”. Without interim reporting, the public will need to wait until April-June 2021 (or even later) before having 2020 annual reports and updated accounting in the form of financial statements dealing with performance, financial position and cash flows. In our view, interim reporting constitutes timely public accountability by universities in this global crisis. There is indeed significant taxpayer investment in these institutions.
Therefore, we make this call particularly to Vice-Chancellors, who have COVID-19 financial risk issues, to open-up the books by publishing, voluntarily, interim financial statements for the six months ending 30 June 2020.
In our view, the adoption of this proposal would demonstrate a commitment to the ideal of a significant public enterprise to act in the public interest and to, furthermore, keep the various groups of stakeholders adequately informed on a strictly timely basis.
Let us await the first volunteer university to make public disclosures in the form of interim financial reports for the half-year ending 30 June 2020.
Emeritus Professor Garry Carnegie, FCPA, RMIT University
Distinguished Professor James Guthrie AM, FCPA, Macquarie University.