Transcript Slide 1

Delivering HEI Finances in the new
HE Economy
17 November 2011
Andrew McConnell
Director of Finance
University of Huddersfield &
Chair of British Universities Finance Directors’ Group
Contents
• Institutional and Financial Strategies
• Financial Sustainability
• Future Challenges
• Managing New Behaviours
• Implications for the Finance Director and for Governors
Our Mission: To deliver an accessible and inspirational learning experience, to undertake pioneering research
and professional practice, and to engage fully with employers and the community
Stakeholders
Mission &
Values
Vision
Our Vision: To be an inspiring, innovative University of international renown
Our Values: Ambition, Student focussed, Pioneering, Integrity, Respect, Excellence (ASPIRE)
Our students can expect:
An education that
challenges and
S1 creates excellent
career
opportunities
To learn from
staff at the
S2 leading edge
of knowledge and
application
Inspiring our students
Aims
Our partners can expect:
High quality
physical and
S3 supportive
learning
environments
Research and Innovation
A1
To deliver inspirational
learning & teaching
A4
To strengthen and enhance
our research capability
A2
To provide opportunities to
all who can benefit
A5
To contribute to economic, social
and cultural development
A3
To enrich teaching through
research and innovation excellence
A responsive and
High quality work
S5 leading experts
S6 delivered efficiently
that delivers
in their field
and effectively
Enhancing our standing
Growth
A6 To enhance our standing
A7
To produce employable
and enterprising graduates
A9
To become one of the UK’s
30 largest providers of HE
A8
To develop our identity
and raise our profile
A10
To grow international and
postgraduate recruitment
Valuing and developing our staff
Enablers
To deal with
S4 flexible University
Financial sustainability
V1
To attract and retain high
quality staff
V3
To promote equality of
opportunity and diversity
F1
To ensure all Schools generate
surpluses for re-investment
V2
To support staff to
achieve their best
V4
To develop leadership/management
skills in a wider range of staff
F2
To align investment to
strategic priorities
F3 To ensure value for money
Improving our effectiveness
E1 To provide top-class facilities
E2 To create time for development
E3
To improve core processes
and systems
Key Financial Strategies
• Strategy for Surplus and Reinvestment
• Resource Allocation Model:
-
eat what you kill
minimum surplus and contingency set aside
quarterly performance monitoring meetings
staff % to income
• Controls over:
- staffing appointments
- material non-pay expenditure from reserves
• Liquidity/Borrowings + treasury management
• VFM, including procurement
• KFIs
Financial KPIs
• Strength – basket, benchmarked
• Sustainability – single, internal
• Sustainability Report in Accountability Returns
2009-10: UUK Pattern Chart 25 - The Security Index
700.00
Lower Quartile 241.00
Median
330.00
Upper Quartile 400.00
Huddersfield 09-10, 500.00
600.00
Huddersfield 08-09, 439.00
500.00
Huddersfield 07-08, 399.00
Huddersfield 06-07, 370.00
400.00
300.00
200.00
100.00
0.00
Lower Quartile
Mid Range
Upper Quartile
Percentage of Estate classed as condition A or B 2009-10
100.0
90.0
Huddersfield 10-11, 85.0
Lower Quartile: 66.20%
75.32%
Average:
Upper Quartile: 90.00%
Huddersfield 09-10, 82.0
Huddersfield 07-08 & 08-09, 77.0
Huddersfield 06-07, 75.5
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Lower Quartile
Mid Range
Upper Quartile
HEFCE Annual Accountability Returns for July 2010
“Overall show a healthy position”
• “Wide range of results between HEIs”
• Income increased by 5.7% (tuition fees)
• Overseas income has doubled in 10 years to 9.6% (but 50% of total
is in 20 HEIs)
• Staff costs up by 3.5% but down to 54.3% of income
• Pension costs increased by 13.3%
• Operating surplus averaged 3.2% (FRS 17 charge is variable)
• Operating surplus forecast to fall to 2.6% in 10/11 and further in
11/12 – 13/14
• Improved liquidity, forecast to fall
• Higher borrowings, forecast to increase
• Cap ex £2.5bn, up by 0.7%, forecast £3.1bn in 10/11
Actual
Forecast
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
£21,015M
£22,223M
£22,721M
£22,639M
£23,362M
£24,100M
£275M
£706M
£600M
£215M
£443M
£551M
1.3%
3.2%
2.6%
1.0%
1.9%
2.3%
£522M
£805M
£789M
£344M
£569M
£773M
2.5%
3.6%
3.5%
1.5%
2.4%
3.2%
(£1,267M)
(£926M)
n/a
n/a
n/a
n/a
-6.1%
-4.2%
6.8%
8.3%
5.4%
4.7%
6.0%
6.5%
Net liquidity as number
of days’ expenditure
83
98
84
75
71
71
External borrowings as
% of total income
20.9%
21.1%
22.3%
24.1%
24.3%
23.4%
Discretionary reserves
exc. FRS17†, as % of
total income
43.7%
46.1%
49%
51.2%
52.5%
54.6%
Total income
Operating surplus
as % of total income
Historical cost surplus
as % of total income
TRAC operating deficit*
as % of total income
Cash flow from
operating activities as
% of total income
Percentage of Historical Cost Surplus to Total Income (excluding FRS17) 2009-10
25
Lower Quartile: 1.73
Average:
4.15
Upper Quartile: 7.08
Huddersfield 09-10, 14.17
20
Huddersfield 10-11, 13.37
15
Huddersfield 08-09, 8.02
10
Huddersfield 06-07, 3.79
Huddersfield 07-08, 4.61
5
0
-5
-10
Lower Quartile
Mid Range
Upper Quartile
Days of Liquidity to Total Expenditure 2009-10
400
350
Lower Quartile: 49.56
100.99
Average:
Upper Quartile: 128.38
300
Huddersfield 10-11, 157.23
250
200
Huddersfield 09-10, 112.04
Huddersfield 06-07, 129.53
150
Huddersfield 08-09, 92.26
Huddersfield 07-08, 76.23
100
50
0
-50
Lower Quartile
Mid Range
Upper Quartile
Percentage of Long Term Borrowings to Total Income 2009-10
90
80
Lower Quartile: 4.95
Average:
21.20
Upper Quartile: 30.96
70
60
50
Huddersfield 06-07, 26.41
40
Huddersfield 10-11, 0.00 (Debt Free)
30
Huddersfield 08-09, 10.57
20
Huddersfield 09-10, 9.01
Huddersfield 07-08, 12.24
10
0
Lower Quartile
Mid Range
Upper Quartile
Financial Sustainability
Cash Flow Required for Strategic Investment and Contingency
£k
Actual
Cash Generated
32,000
Target
30,000
28,000
Historical Average
26,000
Forecast Average
EBITDA
24,000
Surplus
22,000
Surplus exc FRS17
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2001
2002
2003
2004
2005
2006
2007
-2,000
Year
2008
2009
2010
2011
2012
2013
2014
2015
Future Challenges?
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How does any of this change?
Cuts in Resource/HEFCE T Funding
Cuts in Student numbers - AABs + core/margin on price
Competition for Student numbers (incl Overseas & Postgraduate)
Tuition Fee levels, fee waivers, bursaries
Impact on Staffing/Non-Pay/Capital spend
REF (distinctiveness) - research funding concentration
Maintaining:
- Quality
- Support for Learning and Teaching
- Student experience
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Improving:
- Retention
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Resource prioritisation
Managing New Behaviours
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Entrepreneurial leadership
Communication
Financial awareness
Culture change
Customer service excellence
Competition and Marketing : Key messages?
Growth strategies
Efficiency and effectiveness
Permanent change - scenario planning
Implications for Finance & Governors
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Financial awareness and businesslike approach
Engagement with academic agenda
Costing and pricing
Planning
Knowledge transfer
Risk management and new regulatory framework
Challenge?
Questions?
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