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Deloitte Ireland Higher Education Survey 2015
Deloitte’s first Higher Education Survey indicates need for new funding sources as capital expenditure is expected to rise and recurring funding is restricted.
Cautious optimism among respondents in relation to the financial prospects for Higher Education Institutions for the next three years. Increasing student numbers identified as top priority in the coming year. Bulk of capital expenditure to be devoted to teaching facilities.
21 April 2015 – Today in Dublin, Deloitte published the results of its first Higher Education Survey, which revealed a cautious level of optimism amongst finance directors of Higher Education Institutions (HEI) in relation to their financial prospects for the next three years. Survey respondents were drawn from a variety of institutions including universities, institutes of technology and private colleges.
When surveyed on their priorities for the coming year, the key objectives amongst respondents were to increase student numbers; to introduce new programmes / methods of delivery; and to expand into new markets. Against the backdrop of cautious optimism, a number of key concerns were also identified, namely restricted recurrent funding; the impact of changes within the sectoral landscape, such as Technological University (TU) status and mergers; and IT risks. Interestingly, 41% of respondents are currently looking at some form of strategic alliance themselves.
One of the key trends to emerge from the survey was the intention of 47% of respondents to increase the amount allocated to capital expenditure over the next ten years. This increased expenditure would be sourced from funding, borrowings and existing reserves, and priorities by institutes would be allocated as follows: teaching facilities 58%; research facilities 12%; student accommodation 6%; and student facilities (sports facilities, student unions, and student services) 24%. With predictions that the HEA allocation for capital expenditure in the next 12 months will be relatively modest, the report’s authors raise the issue of whether in the absence of funding, there will be challenges to significant HEI investment in capital programmes.
Focusing on operating costs, the survey indicates that both pay and non-pay operating costs are projected to increase. 71% of respondents anticipate operating pay costs to “increase somewhat” – under the Haddington Road Agreement, pay is frozen until the end of 2016. In turn, 65% expect operating costs (non-pay) to “increase somewhat.” When surveyed on cash flow and funding, 71% of Higher Education Institutions expect cash flow to “decrease somewhat” in the next 12 months.
This highlights a disconnect between increasing capital expenditure and operating costs on the one hand and decreasing cash flow and cash and cash equivalents on the balance sheet, on the other.
In the absence of funding for capital expenditure, HEIs anticipate issues arising in a number of areas including the inability to attract students (including international students), and to develop new programmes due to facilities not being fit for purpose.
Commenting on this issue, Eileen Healy, Director, Higher Education Team, Deloitte said: “In order to achieve the stated objective of increasing student numbers, the survey indicates that Higher Education Institutions need to enhance their offering, be that by improving teaching facilities or moving into new programmes and methods of delivery. The challenge faced by HEIs however is to increase student numbers without increasing expenditure. Given this challenge, Irish HEIs have an opportunity to consider smarter investments, utilising emerging technologies and existing infrastructure, in order to offer an alternative and a more cost effective higher educational experience. The high level of focus given to increasing research funding in the survey could be reflective of HEIs exploring alternative revenue sources, and expanding potential opportunities to use research activity as a method of attracting and retaining students.”
About the survey
The Higher Education Finance Survey 2015 is the first of what will be periodic surveys to provide insight into Finance personnel perspectives of the issues impacting the higher education (HE) sector in Ireland. For this survey, Deloitte obtained feedback from 68% of the higher education sector, with respondents from a range of higher education institutions including universities, institutes of technology and private colleges. Where relevant, the results of the Irish survey have been compared with an equivalent survey conducted by Deloitte UK in 2014.
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