Uni Melbourne cries poor

“while the impact in the first two years of the pandemic has not been as sharp as anticipated, revised forecasts suggest revenue will be down $1.4 billion from 2020-2024 compared to pre-pandemic estimates”

Uni Melbourne warns staff of “a large operating deficit” this year, “with further losses” in ’23 and ’24.

how come? A staff briefing states that there will be a $113m operating deficit this year, “mostly due to increased investment in student support, spending linked to our return to on-campus teaching and learning, and student income levels remaining below pre-pandemic levels.”

The net deficit is expected to be $194m, with the extra $80m coming from investment losses.

This contrasts with a $147m operating surplus last year, driven by a $254m spending cut and an $111m “unexpected funding grant” (presumable the university’s share of the COVID emergency research support provided by the previous government).

And it appears the $584m net surplus in 2021 was more apparent than real, including $252m in “unrealised investment gains” which are “required to be recognised as income.”

what’s next: Management warns, several “headwinds” are “impacting the university’s ability to recover,” including

* student fees increasing less than inflation. Plus, “the strong labour market” is “leading to weaker demand from domestic students”

* “cost of return to campus, “including facilitation of dual delivery”

* inflation “and the current geopolitical climate”

*  “the potential for further lockdowns domestically and internationally”

it could be worse: The university reports it will manage the ’22 deficit by using accumulated surpluses and investment reserves.

And learned readers suggest whether all is as bad as appears is a matter of interpretation. For a start, the university, “removes items from the accounting result that distort core operating performance,” including investment and endowment income, infrastructure grants and on the downside interest. But such income reduces demands on available funds.

As for the university’s surplus, James Guthrie argues, that the bulk of it is, “unavailable for general operational expenses is a matter of choice, not accounting logic or calculations,” (CMM August 31 2021 HERE).

what isn’t mentionedEnterprise bargaining. The National Tertiary Education Union’s wage claim for a new agreement  at all universities is 15 per cent over three years. Perhaps Uni Melbourne management hopes to establish a context for claims to come that it can’t afford such.