higher education finance living with uncertainty
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Higher Education Finance Living with uncertainty. Carol Prokopyszyn Assistant Director of Finance . Former United States Secretary of Defence Donald Rumsfeld. - PowerPoint PPT PresentationTRANSCRIPT
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www.le.ac.uk
Higher Education FinanceLiving with uncertainty
Carol ProkopyszynAssistant Director of Finance
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Former United States Secretary of Defence Donald Rumsfeld
“There are known knowns; there are things we know we know.We also know there are known unknowns; that is to say we know there are some things we do not know.But there are also unknown unknowns – the ones we don't know we don't know.”
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Known Knowns• Major shift in
government policy towards HE
• Not just motivated by the need for cuts, but shift towards more market based sector
• Students = market power (perhaps)
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Known numbers• Oct 2010- Department for Business,
Innovation & Skills announced 25% revenue budget cut and 44% capital cut in 2014/15.
• Higher Education funding will reduce by 40% from £7.1 bn to £4.2 bn.
• Lord Browne recommended higher fees- government announced £9,000 UG cap.
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Where have we been….2005 2010
Student numbers 2,287,595 2,493,460Total income £17.993 bn £26.679 bnOperating surplus 1.19% 3.09%International students 7.10% 9.05%
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Operating surplus
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
2006
/07
2007
/08
2008
/09
2009
/100.00%0.50%1.00%1.50%2.00%2.50%3.00%3.50%
Operating Surplus as % of Income
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The new H/EU landscape• Core and margin approach – 20,000
students moved around sector each year – an opportunity for some and a threat for others
• No limits on recruitment of AAB+ students – an opportunity for growth (for some!)
• Active encouragement for private providers to enter the sector
• Funding follows the student
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Known unknowns • What will students do?• Will they still want to come to University?• Will they want to come to the same
institutions and the same courses? • What will their expectations be?• What about PG funding?• What research funding will be available?
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Revolution or evolution? • Will we have the same number of
institutions?• Will we see mergers?• Will some become ‘for profit’?• More concentration – restructuring?• Can research be sustained in so many
institutions?
• Or will it all look quite similar in ten years?
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Unknown unknowns• Would you have
predicted this?• Still changing very fast• Other risks remain –
international students / the Euro / ???
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Implications
Institutional strategy
•Deciding where the institution fits in the new environment•Maintaining student experience and research excellence•Review of existing activities•Pace of change / management decisions•Opportunities for strategic partnerships and relationships
Financial strategy
•Focus on surplus and cash generation remains vital•Reduction in HEFCE capital funding requires further consideration of borrowing and partnerships•Continued focus on pricing and strong cost control•Management of risks and diversification of income streams
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Financing changing expectations....
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Generating funds• Opportunities for pricing
– Premium products / margins– Matching the ‘high – street’
• Cost control• Working with others? Partnerships with
other HEIs and the private sector• Replacing capital funding?
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The University of Leicester- 2010/11- Known numbers!
• Income over £260m• Expenditure over £250m• Surplus over £9m, a good
result• Capital expenditure almost
£40m• Good financial position to
face funding challenges
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Income 2010/11- Leicester knowns
Fees; 89.4
Grants; 74.9
Research; 48.7
Other; 47.7
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HE Finance – unknown future?
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What will HE Finance look like?
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