College of Arts Response to the AUS Submission

Below the fold is the response from Ken Strongman, Pro-Vice-Chancellor of the College of Arts, to the submission on the College's Restructuring by AUS.13 October 2005

Association of University Staff
C/o Marty Braithwaite

Thank you for your feedback on the University’s consultation process with the AUS in relation to the College of Arts’ financial position and its impact on staffing. We appreciate the time and effort that you have invested and acknowledge that this is a stressful time for College staff.

This letter is our written response to your written feedback and other feedback provided at the meeting on Monday.

Over the past 4 months information has been provided, and discussion and consultation has taken place within the College of Arts with staff, Heads of School, Academic Deans, the Academic Manager, Management Accountant, College Manager and Human Resources staff. Much of this information, as you are aware, has been minuted and has been available to staff.

To confirm issues raised during the discussion at Monday’s meeting:

• The 2005 EFTS forecast is 3,749 plus 165 BTchLn (total 3,914). 4,011 EFTS in total have been budgeted for 2006. As was discussed at the meeting, the variance identified in your feedback was not such as to hamper accurate analysis.


• The University is working towards allocating resources in consideration of student demand to ensure there is adequate staffing where student demand so requires.


• Financial viability is a key challenge as we “need to ensure that the University achieves and maintains financial viability and, in the process, generates a sufficient level of surplus to support key initiatives”. The University is committed to implementing the University’s Financial Recovery Plan (the ‘FRP’) to enable it to be in a financially sustainable position by 31st December 2007. This requires compliance with the Tertiary Advisory Monitoring Unit (‘TAMU’) guidelines and the FRP. A Strategic Goal in the University Profile 2005 – 2007 states that by the end of 2007 the University will “have established a continuing pattern of operating surpluses at 5% of total income, thus ensuring long-term viability and guaranteeing the availability of sufficient strategic capital to meet all other agreed medium-term strategic goals.”


• The operating surplus represents an amount required by the University to invest in its infrastructure and core business to ensure that it can at least maintain its services to meet the objectives of being a University. A surplus is used to invest in new capital projects such as those required to meet health and safety and ERMA compliance requirements in science laboratories and the student health centre. It is also used to invest in new technology and systems to ensure currency and allow the University to cope with change, and function as a research-led institution. The surplus is also used to pay off debt.


• At present the University has around $35 million of debt which has to be repaid. The Ministry of Education requires universities to make a 3-5% surplus on its income to meet such requirements. The University Financial Recovery Plan, which was agreed with the Minister, has this requirement to meet this level of surplus built in, which makes the target 4.8%. While this is at the high end of TAMU guidelines, it is prudent. The University has had a number of lean years where little new investment took place, with the result that many capital requirements were deferred and have now become critical. Therefore, the University must return an operating surplus at the higher end of the 3-5% range to enable critical deferred maintenance and essential infrastructure investment to occur.

The College of Arts has taken into account possible financial consequences of the partial PBRF round. While we hope to increase the College’s PBRF profile, the financial impact of an increased PBRF profile is unlikely to have a significant positive impact on the College’s finances given that the funding formula that applies to most Arts subjects is significantly lower than that for subject areas such as Science. Also, government funding for post-graduate students will decrease significantly again in 2007. At the meeting you agreed that the University was required to make decisions on factual information available and while consideration can be given to future possible sources of funding, presently these can be given little weight.

In general terms, while it would be helpful to factor positive political indications into future financial planning, as well as an optimistic view of the outcome of working committees such as the University Tripartite Forum, we have no concrete knowledge of any positive financial impact of these on the University’s and College’s funding. Hence, the reality is that the College of Arts is unable to meet its 2006 budget and any delay in addressing this situation may make matters much worse.

We wish to reassure you that staffing cuts are seen as a last resort and that other options have been, and will continue to be, explored. The College Manager, Management Accountant and Heads of School have worked hard to identify ways to reduce operating costs and minimise the need for staff cuts. It is important to note that the savings required for the College of Arts are of an ongoing nature and not on the basis of a one-off saving. The consequences of making cuts to operational budgets also have to be taken into account in this process. Academic standards and staff/student ratios will be among many factors taken into account when decisions are made in relation to reducing operating costs.

As was made clear on Monday, if there were to be a closure of a programme or qualification, the matter would be referred to the Academic Board.

While some cross-subsidisation across the College has occurred and will continue, we do not want negatively to impact on the growth areas of the College. We want to enable growth to occur and not place unfair burdens on teaching staff in those growth areas to further subsidise areas that are not in as much demand.

While allowance has been made for some impact on the 2006 budget from natural attrition, we do not have the time available to us to wait for the processes of natural attrition to occur over a longer timeframe. We are also mindful that it could well occur in the wrong strategic areas and not have the desired long-term impact. Likewise, we have indicated that the selection process for voluntary severance will be made on a strategic basis to ensure the academic viability of the College. Other alternative employment arrangements (such as reduced hours) are available to staff and can be pursued at any stage.

To progress, the voluntary severance process is re-opened forthwith and will close on Friday 21 October 2005. This will be communicated to all continuing academic staff in the College of Arts. There will be a termination date of 31 December 2005 for those staff whose application for voluntary severance is accepted. As well as satisfying the financial demands facing the College, this timeframe will provide some level of certainty to staff and minimise the impact on staff morale. It will also help us avoid the possibility of delays, which could make further cuts necessary.

Once decisions have been made regarding voluntary severance, we will undertake further consultation with staff and the AUS should further savings be necessary.

Again, may I thank you for your submission. May I also reiterate that this situation is unfortunate and a stressful time for everyone in the College.


Yours sincerely

Professor Ken Strongman PhD FRSNZ
Pro-Vice-Chancellor
College of Arts
University of Canterbury