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A budgeted DKK 132 million loss has turned out to be a profit of DKK 80 million. Yet UCPH is still cutting DKK 200 million. Employees asking why
Several staff are now questioning why it was necessary to lay off so many of their colleagues in early 2016 to cut costs by DKK 300 million. A total of 437 jobs were shed by both voluntary departures and layoffs, partly because management predicted a large decline in revenues up to 2020.
Further cuts have therefore been announced totaling DKK 200 million.
But the latest financial forecast has 2016 ending with a DKK 80 million profit. Management had expected a DKK 132m loss.
This has staff representatives in UCPH’s liaison committee HSU, where management and employees discuss common university issues, asking questions.
In the coming three years, UCPH is budgeting profits of DKK 101m in 2017, DKK 25.9m in 2018 and DKK 23m in 2019 respectively, with a loss of DKK 4.2 m in 2020.
The university’s financial reserves will reach DKK 821m in 2019. The goal is that it should be at 7.5 percent of revenues, corresponding to DKK 638 million.
Joan Lykkeaa, staff representative for laboratory assistants at the University, finds it “troubling” that management’s forecasts have been so inaccurate, as has been the case in recent years.
“It’s a really bad signal to send to the people who have lost their jobs, that there is now a profit. To be quite frank, I do not understand why we need to save up more for capital reserves. They are currently higher than the target set by the Ministry, and I do not think it is necessary to uphold them at such a high level,” she says.
There were also critical voices at the HSU budget seminar on 23rd November, according to the minutes of the meeting. Signe Møller Johansen, staff representative and Ole Bested, of the Dansk Metal union, both questioned why the University should save an additional DKK 200 million when the budget is balanced with the already implemented savings. Jette Fugl of the BibliotekarforbundetHas hit the brakes too hard
Thomas Vils Pedersen, senior staff representative for academic staff (VIP) at UCPH, still reckons that it looks like the University’s management has hit the financial brakes too hard.
“Some things you could not have predicted. But this has happened now a few times that management enforces cuts and dismissals, so research environments get shut down because of financial uncertainty. So you should be very careful not to keep slamming the brakes,” he says.
Allan Randrup Thomsen, another HSU member and representing doctors in DADL says you can be critical and ask about the necessity of all the layoffs.
“I will not defend management, but we have an explanation that appears to be legitimate. It has a negative effect on the working environment to have rounds of layoffs every year, so maybe it was better to get it all over with at once. We should certainly avoid further layoffs this year to to avoid completely destroying this university’s morale,” he says.
According to Thomas Buchvald Vind, Vice President for UCPH finance, there are many figures in UCPH financing forecasts, but you have to distinguish between yearly fluctuations and long-term financial adaptations.
“It is like making a long-term course heading so we safely reach port. But while we sail towards port the wave motion will mean that some years we will be on a wave crest, while other years we will be in a trough,” he says.
Thomas Buchvald Vind adds that there are a number of unforeseen factors that have 2016 ending up with a surplus.
The Study Progress Reform which was introduced in 2012, led to a strong growth in income from government on the full time equivalent students ‘STÅ’ scale – in 2016 it was DKK 90 million more than budgeted.
Universities get funding every time a student passes exams equivalent to one year of study.
However due to the ‘ketchup effect’ a large number of students in a short time have been ‘pushed’ to complete their studies faster than they might otherwise have done. Other universities are also getting a similar surge in revenues as a result of the Study Progress Reform.
UCPH expects in the longer term a decline in these revenues due to falling rates and fewer study places as a consequence of another government cutback, the so-called ‘Dimensioning’ plan.
The other reason for the 2016 profit, according to Thomas Buchvald Vind, is that the move into several of the University’s new buildings, including the Maersk Building has been delayed, so removal costs are to be paid in 2017. So costs have been shifted from 2016 to 201. Besides this, departments have cut back on spending after the round of dismissals earlier this year.
The Vice Director explains that the Spring 2016 round of dismisals was not about 2016 finances, but about a long-term adjustment to lower revenues.
Three to four years into the future, management expects to lose revenue partly because of the Danish government reprioritizing a DKK 230 million contribution in 2020 and taking away a DKK 70m rent subsidy. In addition there is the risk of falling revenues as a result of the dimensioning policy, fines for non-complaince to the Study Progress Reform, a possible removal of taxameter funding to humanities and social sciences, a new funding reform and less overhead income from public councils and foundations.
“It has always been planned that we would turn a surplus on UCPH finances in both 2017 and 2018. The alternative was a very slow adaptation over the years, which would create additional insecurity for University employees. A temporary profit now cannot hide the fact that it is necessary to reduce the University’s costs or increase revenues by at least half a billion kroner by 2020. We are handling a structural challenge to our finances, which one year’s profits will not solve,” says Thomas Buchvald Vind.
He adds that the University needs to have sufficient equity to be able to handle economic fluctuations and strategic investments, such as moving into new buildings.
UCPH will also use DKK 300m of its own funding to build a new natural history museum. Four private foundations have donated DKK 550m to the project.
UCPH will, following the payment of the DKK 300 million in 2021, have a net equity of DKK 517 million, below the target of 7.5 per cent of University revenue.