Aarhus University Seal

TECH to regain financial balance in 2022

The Aarhus University Board has adopted a plan for the Faculty of Technical Sciences (TECH) entailing savings on public sector consultancy and adjustments in the engineering area to maintain its growth strategy. The financial imbalance was caused by several years of reduced grants for public sector contracts and new requirements for the AU engineering initiative.

It costs to develop new engineering degree programmes, and the public sector consultancy area has suffered cutbacks for many years. This will have consequences for TECH, which faces the prospect of annual deficits in the period 2022-2024. The Aarhus University Board has recently agreed on a plan to straighten out the faculty's financial imbalance. The plan includes spending cuts, additional funding from the university's strategic funds (USM), drawing on reserves and slowing down the phase-in of the engineering initiative.

Chair of the Board Connie Hedegaard says:

"Overall, Aarhus University is well-consolidated. However, TECH is facing a serious financial imbalance, and it’s therefore vital that the university has a plan to correct this. I fully understand employees’ concerns about their jobs and the future when cutbacks are announced. For this reason, the board has also stressed – and has every confidence – that Aarhus University will manage the process in an orderly manner and in accordance with the rules and agreements for these processes."

The chair also points out that AU’s goals are to ensure that public sector consultancy rests on a solid financial foundation and to realise the university’s engineering initiative.

"The engineering initiative is crucial for society and the university, and this is why the board has decided to draw on the university's strategic funds once more," says Connie Hedegaard.

Public sector consultancy to break even

The challenges at TECH centre on public sector consultancy and the engineering area. The grants for public sector contracts are reduced by two per cent every year, and even though departments with public sector consultancy have managed to attract significant external funding, streamline work processes and cut costs on buildings and facilities, this can no longer compensate for a reduction of DKK 150 million since 2009.

Brian Bech Nielsen comments:

"It's a paradox. We have a great deal of expertise and knowledge in the field of environmental and agricultural sciences, and we’re much in demand by government agencies, but at the same time, the area is incurring financial losses. Over the years, we’ve invested in academic environments in order to provide highly qualified consultancy and to make the field attractive to researchers. The academic levels of these areas have received great international respect and recognition . Politicians have been economising on this area for years, while at the same time demand from the ministries for consultancy tasks is increasing. Unfortunately, we now have to find a sustainable economic model so that public sector consultancy can break even.”

The faculty management team at TECH have explored the options to economise on buildings, joint costs and administration, and to reduce the faculty's PhD pool for co-financing PhD scholarships. Together, these total DKK 15 million.

In both 2020 and 2021, ST and now NAT/TECH have received DKK 19 million from the other faculties. However, this will not continue, and the financial challenges at TECH in 2022 and onwards are therefore clear.

Specifically, the environmental science and food science departments at TECH will have to cut costs by approx. DKK 34 million with effect from 2022. 

The faculty management team expect these savings to ensure financial balance at the environmental and food science departments from 2022. 

New conditions mean a new situation

The engineering area is TECH’s other challenge. Conditions have changed since the engineering initiative was adopted in 2016, and this is putting a strain on finances, explains Arnold Boon, university director.

"Establishment of the new study programmes was delayed by two years due to institutional accreditation, but the ministry's 2018 funding reform also brought huge challenges for new programmes. The reform meant that new student FTE funding was reduced by one-third. In addition, the basic subsidy is determined on the basis of the original number of students and is only adjusted every four years and only under certain conditions. Furthermore, the ratio between basic research funding and education revenues on the one hand and external funding on the other is significantly lower in the engineering area than in other areas at AU,” says Arnold Boon.

The board agrees with the senior management team's decision to provide financial aid for the engineering initiative.

Currently, TECH will have a deficit of DKK 45 million in the engineering area from 2025, despite budget adjustments in the period 2019-2020. This will be remedied by allocating TECH additional USM funding of DKK 12 million in 2023, DKK 25 million in 2024 and DKK 45 million annually from 2025. The USM funds will be reduced as the engineering area earns new basic research funding. 

The USM funds had not been previously allocated, and this will not change the budgets of other faculties, including their share of basic funds. This solution will balance the budget for the engineering area from 2024. In the period 2021-2023, the area will be in deficit. The deficit will be covered by drawing on Aarhus University's reserves. 

The aim is to forge sustainable solutions

The engineering initiative is strategically important, not only for AU, but also nationally, stresses rector Brian Bech Nielsen.

"We educate engineers who are highly sought-after by the private sector, and who produce the research knowledge demanded by society. Establishing new study programmes is expensive, and should be viewed as a long-term investment. The engineering initiative will help to change AU's profile and meet society's need for highly trained engineers. We must continue to grow in the engineering area up to 2025, and we believe that these initiatives will ensure financial balance in the area," says Brian Bech Nielsen.

He is aware that TECH employees are now entering a period of uncertainty.

"Implementing cost savings of this magnitude creates a difficult situation. Management at TECH will present the plans and proposals at staff meetings. I know that faculty management is determined to find the best possible solutions, but I’m aware that, despite this, some announcements will cause anxiety and trepidation. That’s why the situation is being dealt with immediately, so that no one is kept in suspense any longer than necessary," says Brian Bech Nielsen.

Eskild Holm Nielsen, dean of the Faculty of Technical Sciences adds:

"We need to establish long-lasting financial solutions, so we have a solid foundation to generate strong research results and be competitive at national and international levels. Our extensive academic expertise within so many areas means that we have a unique opportunity to create synergy across departments. This puts us in a good position to contribute to society's needs by educating talented graduates, coming up with technological solutions and finding solutions for the green transition. Furthermore, we have an unexploited potential in gaining external funding, which is fundamental for our future financial balance and stronghold,” says Eskild Holm Nielsen.

There will be no changes to the budgets of other faculties.