The core of the issue is low student numbers.
The University of Canterbury is bleeding money. What are those on top trying to do to stop it – and what happens next if they can’t?
The University is in a precarious financial state.
To put it in the words of Chancellor Dr John Wood, "If we do not put the financial position of the University in order, we will not have a University."
This is no exaggeration. After a drop of nearly 2,000 full-time students and 400 international students in 2010, UC lost more than $17 million in tuition fees. Add in additional costs and the University is expected to be $20 million under this year.
There's extra refurbishing costs for older damaged buildings, too, knocking the coffers back an expected $150 million. There are no funds to cover this. The University's pre-quake cash reserves are all but empty from delaying tough decisions regarding cutting courses and programmes, as well as funding initiatives such as advertising and scholarships in an attempt to attract students back. As a consequence what was $60 million in working capital one year ago is projected to be as low as $10 million by December, followed by a $68 million increase in debt over the next ten years.
According to Professor Ian Town, the core of the issue is low student numbers. With seven years experience as the University's Deputy Vice-Chancellor behind him, the Professor of Medicine is no stranger to managing financial situations. "Domestic and international student numbers is how we generate the vast majority of our revenue. Because we lost students after the earthquake, the key imperative for us is to rebuild those student numbers and exceed them, particularly in relation to international students."
The massive drops in student numbers, 12% of all full-time domestic students and 32% of all full-time international students, can be attributed to the earthquakes. While student numbers have since stabilised, they're not yet growing back to pre-quake levels.
In response, the University management has tried to cut costs wherever it can. Much to the dismay of academic staff and students, courses and programmes were put on the chopping block. TAFS and Cultural Studies survived, but American Studies and Operations Research have since been canned. Staffing cutbacks are set to reach 15% of full time staff, with 160 positions disestablished prior to the quakes, and a further 150 jobs expected to go through attrition and voluntary redundancies over the next three years.
But there is some hope. The University has been appealing since October of last year for financial assistance from central Government. The argument, according to University documentation, is that the University of Canterbury contributes more than one billion dollars to the Canterbury economy every year. But the Government hasn't signed any checks yet, despite the potential risk to the city's recovery.
The man in between UC and this desperately needed capital funding is Hon Stephen Joyce, the Government Minister of Tertiary Education; depending on who you ask, he's either a jerk or a godsend.
To Gabrielle Moore, a representative for the Teacher's Education Union, the first is accurate. "The Government is not doing enough. We believe that the Vice-Chancellor has cut just about as much as he can and now the Government needs to listen."
Despite the University losing $100,000 every working day, deliberations with the Government regarding financial assistance have been continuing for almost a year. If the need for funding is so dire, why the Government delay? According to Ian Town, the Government is still trying to determine the nature and extent of support the University might receive.
"Minister Joyce was really looking for a set of structured initiatives," he mentioned, referencing the Government's deferral of the University's initial appeal for assistance in October 2011. "Initiatives that would assure him that UC is taking charge of its future and identity."
This "set of structured initiatives" has been Professor Town's latest portfolio over the last few months. The proposal for funding, 'UC Futures' by name, is a reflection of the wishes of Government, who have indicated they would rather fund innovative new capital projects than compensate the University's operational losses.
Build a new Science Centre, revamp the Engineering building, turn the UCSA building into a sports centre and they will come – this is the theory pitched by Town and the rest of his 'UC Futures' team. The hope is that the ideas for capital projects – a proposed $240 million dollars' worth – would spark an influx of student growth, drawing back the 2000 missing students. But first the proposal has to impress Minister Joyce, which has involved a strong redefinition of the University's goals and priorities.
"UC has to demonstrate to the Government that in exchange for additional capital support, we have to do some things differently," Vice Chancellor Rod Carr acknowledged. "But actually doing some of those things is things that we would want to do anyway." As VC, Carr is the man in charge of all this, the big cheese blazing the University's trail in uncertain times. While that direction is often contested by peers and academics, it's clear he has a vision. Always ready with an answer to a question, he often begins his reply before you've even finished asking.
"About 35% of our students already have a requirement for relevant work experience as a part of their programme of study," he mentioned when outlining how "Employability and Innovation", one of the new priorities, was already in line with the University's vision. "The question is, why isn't that [other] 65%?"
Overall, 'UC Futures' presents four main priorities for the University. After the aforementioned, "Cultural Awareness and Confidence" is a second; the University would hope to nurture Maori participation and success. Internationalism, too, is a priority; both attracting new international students and encouraging students to study abroad as a part of their degree. The final dimension is "Community Wellbeing". Students and staff would be encouraged to undertake certain academic programmes, which would benefit the community, for credit. Each of the four are designed to pull UC's agenda in line with the Government's.
"I don't find any difficulty in wanting to promote these," Carr continued, "but it's likely that more explicitly the Government may require them of us if it is to provide the capital support we're asking for."
The payoff for convergence is to the tune of $240 million dollars, which would provide a capital injection for several new building projects. The proposed major project is a new Science Precinct to improve and replace the functionality of a number of science buildings, at a cost of an estimated $127 million. A further $86 million is estimated to modernise the laboratory, teaching and research facilities in College of Engineering buildings, while another $30-35 million would develop a new world class Earthquake Research Centre.
There are also plans to move the College of Education from its Dovedale campus to the main Ilam campus, at the cost of $55-60 million. According to Professor Town, the shift is a result of the University having more space than it needs: "Making better use of our capital assets is a really strong crown priority." The Dovedale campus would be then be used for another purpose yet to be decided. There are several ideas, including a lease to commercial operations, or an extension of educational facilities for students.
Overall, costs were expected to go beyond the initial $240 million dollar request, with UC offering to pay the remainder. All of this is an attempt to attract students back to the University by promoting it as a world-class institution and ensuring it remains a key contributor to the Canterbury rebuild. But the grant would present other advantages to Canterbury too, Ian Town argues. "It would enable us to use our own capital for other purposes, such as speeding up remediation. It all goes in the mix and it gives us a lot more flexibility than we would have if we were just relying on our own funding."
But like any plan or draft, there are a few problems. Erin Jackson, the President of the UCSA, was concerned with the lack of student interest. The UCSA ran a survey on UC Futures, asking students to give their opinion. They only received 151 responses. "I am a little bit disappointed that we didn't get more of a buy-in," Jackson said. "The buy-in we did get was good, though." She was also reassured by the fact that the UC Futures team had involved her and the UCSA Executive from the start of the project. "I have been talking to students all the time anyway," she added, "as their representative."
According to Lynn McClelland, a senior member of the UC Futures team, students have been involved in several stages of the process – such as the focus groups about work-integrated learning – and will continue to be involved. The UCSA Executive had also been consulted in the planning of a 'UC Sports' initiative, intended to equip a renovated UCSA building with spaces like a gym and club offices. Wider student involvement on this project, along with consultation on the proposed Science Precinct, is promised to occur when plans became more detailed.
A primary worry, however, is the pressure UC is under to comply to central Government's agenda. One senior professor, who asked to remain anonymous, was worried that the pressure to comply would hurt the University's integrity. "It [the UC Futures plan] has been dictated by the way executive Government works and to what they want to hear as well," the professor told Canta, "which is, of course, specialisation through engineering and ICT and what-have-you."
"And look, I'm not sure if there's any comforting answer for that to be honest," the professor continued. "At the end of the day if they do give the 240-odd million like we've asked, it's going to come with strings. We know that central Government wants specialisation and they've been provided with a very convenient guinea pig, which is Canterbury University, because of the troubles that we've been through."
But Lynn McClelland doesn't feel so threatened. "If you look at the needs of the Canterbury community over the next five to 10 years, we are in a different situation to what we were prior to the earthquakes," she said. "So you can expect any Government to look at 'what are the skill needs of this region' and the country as a whole. When you look at some of the requirements that are becoming clear in terms of construction and rebuild, given the fact that it takes a long time to train engineers, I think it's isn't surprising that the Government has identified that as a priority. Not just for Canterbury, but for also for New Zealand."
Vice-Chancellor Carr had a broader perspective. "I think over time the proportionalities in the University shift. We haven't always been the thirteen and a half thousand students we are today. We've tripled in size over fifty years and the mix has changed.
"Do I think the mix will change over time? I think that will. I think it will be partly informed by student choice, it will be partly informed by Government policy, I think it will be partly informed by fashion. What we need to do is make sure we keep options open so that when things become smaller for a time they have the opportunity to become larger again in the future. But equally, we have to be realistic and realise that some things become completely sub-scale and therefore unviable."
Of course, all of these scenarios and capital projects are just proposals at this stage. A final draft of UC Futures will go before University Council at their meeting on September 26, and then flicked to Government within days – but the campus has to wait until mid-November for a verdict from Cabinet.
What if UC Futures fails? What if the Government rejects the request for assistance yet again? To Ian Town, this option is off of the table. "In shaping up this project, we have been very focused on that pessimistic worst case scenario being an unacceptable outcome."
But he also mentioned that UC was part of a "very expensive challenge for the New Zealand Government," admitting that while "our needs are significant... they'll have to be considered within a priority framework."
"I think the starting point on this," Rod Carr argues, "is that if the University cannot find a sustainable, stable, equilibrium the Government is faced with the problem. If we can't find out how to manage the business without constantly needing extra help from the crown, why wouldn't the Government turn round and say, 'Well, who's running this show?'"
Under the Education Act, Minister Joyce has the power to replace the University Council responsible for UC's finances with a commissioner. "The biggest asset as risk here isn't the single program or the single course," Carr argues, "it's an answer to the question, 'Who's in charge?' If we're not careful, we won't be."
One thing is clear: if student numbers remain at such a low rate, UC will be in a bad state. Even the Teacher's Education Union agrees on this. "Our members are very aware of the need to make cuts and save money and are prepared to do so," TEU rep Moore said. "They care about the integrity and standing of the University, but they're also aware of the numbers."
But to the Vice Chancellor, this still means problems. "The danger is everybody says, 'Yeah we're up for change, we're ready to be different,'" he said, with the pushback from the first round of Change Proposals certainly still fresh in his head. "But what they're really saying is 'You're up for change, you need to be different.'"
"The best way out of this? Get the students to come back," he continued. "But the reality is that we have 2,000 less students, and potentially $20 million less tuition revenue. Therefore whatever we had in 2010 we actually can't afford all of in 2013. So the question for the University is, 'How do you move from that spoiled state to the other world state without tearing yourself apart as you get there?"
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