Update on University budget position
Dear colleagues,
I am writing to follow up on this morning’s Open Session where we outlined the strategic priorities and the key budgetary challenges facing our University, as well as the steps now underway to deliver financial sustainability this year and in the years ahead.
In the past five years we have seen international student fee income grow from £25m in 2017 to £63m in 2023 - a rise of 150% - reflecting better performance in a growing market. In setting the 2023/24 budget we planned for continued growth in fee income to address £12m of additional inflationary pressures.
In recognition of the impact of the £5m cut in our SFC funding following our REF results, our governing body Court approved a £3.9m deficit for 2023/24 with a plan for return to break-even in 2024/25 and surplus in 2025/26.
Disappointingly, although we will still see some income growth in the current academic year, it is now clear that International PGT student recruitment to the UK has been adversely impacted by a range of factors including changes in immigration rules set by the UK government. Shortfalls in international PGT numbers are being reported across the UK by universities in all parts of the Higher Education sector. For our University, this means we will need to operate in the current academic year with revenue that is 5% lower than expected and budgeted.
In the short term, significant effort is being invested in maximising our January 2024 student intake, but we also need to reset our approach to student recruitment including expanding our portfolio of transnational and online courses and expanding the international markets we recruit from. It is also clear that it would not be prudent to expect future revenue growth from international student recruitment at the levels previously achieved. We must therefore maximise all sources of revenue and identify and develop new income streams. I’m sure that many of you will have good ideas to help with this: please pass these to your Head of School or Director of Professional Services.
With an established track record in commercialising and spinning out our groundbreaking research, we will look to further develop our culture of enterprise and innovation and academic commercialisation and the generation of revenue from campus services and other activities.
However, the challenges we currently face mean that bar exceptional circumstances or where posts are externally fully funded, vacant posts will not be filled and there will be a pause on staff recruitment until our financial position improves. All non-essential operational spending will also be paused.
Some of our Schools and Directorates will be reconfigured to ensure that the University is able to align its resources with the opportunities for growth now available to us. Our Senior Vice-Principal, Karl Leydecker, has already had discussions with several Schools about plans for aligning resources with student numbers and the revenue being generated.
Similarly, our University Secretary and Chief Operating Officer, Tracey Slaven, will have meetings with all Directorates in the next few weeks to address how we best redeploy resources to align with our Aberdeen 2040 objectives. In these areas where structural change is needed there will be support for any colleagues who wish to explore options regarding early or phased retirement, reduction in FTE or voluntary exits. These options may be available on a more limited basis to colleagues in other parts of the University.
Beyond immediate efforts to control expenditure and maximise student recruitment, it is clear we will need to develop a comprehensive plan for the future operation of the University that ensures that we can deliver high quality education and research in a financially sustainable way despite the challenging environment for the funding of higher education.
I’m grateful to all of you for the five years income growth that we’ve achieved, and for the many improvements in our work, including our highly impressive NSS results, the 10% growth in our research income in the last year, and our now consistently top twenty UK rankings in both the Guardian and the Times/Sunday Times league tables. With so many productive efforts to build on, I’m confident that we’ll find a way through these financial challenges and continue to fulfil the University’s foundational purpose.
Best wishes
George
George Boyne
Principal and Vice-Chancellor