AU BUDGET 2019-22: SOUND FINANCES WITH CONTROLLED GROWTH
Aarhus University’s budget for 2019-2022 has just been approved by the board. The university has fundamentally healthy finances, which despite challenges provide the flexibility necessary to achieve the university’s strategic initiatives.
In the coming years, Aarhus University will be able to sustain its strategic initiatives by dipping into equity reserves. And so it was with satisfaction that the board approved the university’s 2019-2022 budget on 13 December.
“Aarhus University has shown solid budget surpluses for a number of years – despite stagnation in the area of grants and revenues. This is due to very strict prioritisation and financial management, and in this way the university has succeeded in maintaining financial latitude for the strategic initiatives. The board are very satisfied with that,” says chair of the board Connie Hedegaard.
Aarhus University’s equity currently amounts to 13.5 percent of its revenue, and it will be reduced over the next few years to approx. 10 percent of revenue, which is the university’s target for equity. By drawing on this reserve, the university will be able to further intensify its investment in the academic strategic initiatives – both ongoing and brand new – that will strengthen AU.
Finally, in coming years, AU will face significant non-recurring costs for relocations and redeployments – not least, facilities in connection with the gradual acquisition of University City (Nørrebrogade hospital area) and other major investments in the building area, e.g. the development of Katrinebjerg.
Share of external funding is expected to increase
In contrast to previous years of stagnation, the period 2019-2022 is expected to show growth in total revenues of over DKK 160 million, corresponding to 2.4 percent. The changed expectations are based on, among other things, increased graduation completion rates and productivity, as well as the university’s expectations to increase of external funding.
Basic research funding is expected to be stable in the budget period. In contrast, revenues from educational activities are a little more difficult to forecast due to the new funding model which will take effect from 2019. This means, among other things, that the basic subsidy will not grow with an increasing number of FTEs, which will have a strong negative impact on the strategic engineering initiative in particular. The budget has taken into account that the government’s 2 per cent annual reallocation contribution cutbacks will remain in force during the budget period, although with a certain degree of mitigation in 2022, when the university’s contributions will be pooled in a strategic fund. The criteria by which these funds will be allocated to the university sector is still unclear.
“The government and parliament must be aware that these across-the-board cutbacks are really hitting our degree programmes hard – and it doesn’t help much that the money will be pooled in a strategic fund in 2022. The uncertainty about future funding is a factor which makes it unnecessarily difficult for a university to think and plan long-term and strategically,” says Hedegaard.
The implementation of Campus 2.0
On the expenditure side, a significant item in the coming budget period will be extraordinary expenses for rent and other building expenses in connection with the implementation of Campus 2.0. The new Skou building and the phased renovation and takeover of the University City marks the beginning of a number of series of internal relocations of some research and teaching programmes.
The budget for 2019-22 is somewhat uncertain in relation to building costs. First and foremost on account of an announced reform of the state rent scheme 2020 – as well as the announcement of new and expected higher property assessments, which will mean higher rents. And it is unclear to what extent the universities will be compensated for the higher rent costs. Finally, there is uncertainty about a possible reform of the model for distributing basic research funding between the universities.
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Head of Press and Communication Anders Correll, + 45 28992235, firstname.lastname@example.org