Doing More with Less… The UCT Experience following #RhodesMustFall, #FeesMustFall & #EndOutsourcing The Numbers Challenge….. Hardy Maritz, Director Group Finance
Contents the story outlined… Co Context xt Key E y Even ents 01 01 02 02 UCT Financial Policy, history of # RhodesMustFall, #FeesMustFall and increasing fees, less state funding, #EndOutsourcing – the perfect storm massive disparities, broken promises Wh What N Now ow Looking A Ahea head 03 03 04 04 Key decisions, choices, actions and Where we are now, new challenges, is it outcomes sustainable? page 01
Context: UCT Integrated Financial Policy the drivers and reasons… surplus investm tment r returns Target of 3% of revenue as a surplus Pay for capital expenditure Grow cash reserves Pay for strategic spend Pay for discretionary spend cash sh r reser eserves es fina nancial s sus ustainability 20% - 30% of operational costs Understanding key cost drivers – 3 – 4 months’ cover Internal Inflation Unexpected incurrence of expenditure Control recurrent costs Coverage for unexpected costs Consistent surplus Rolling 5 year, cash flow by month forecast page 02
Context: State subsidies, Tuition Fees, Institutional Disparities key stats and history… state s st subsidy student f fees ees other In 2018 is 42.4% of total revenue In 2018 is 42.5% of total revenue Symbolic artworks/sculptures seen related to teaching operations related to teaching operations as insensitive and celebratory Increases below inflation for over 5 Had become tool to charge UCT campus and culture still years wealthier students full fees and largely Eurocentric and not discount them for poor student sensitive to differing student Outlook for economy and state contexts funding/support very poor Had become a tool to balance the = #RMF at UCT budget Department of Higher Education & Broken political promises Training has conflicting mandate 10.3% approved, supported by UCT and priorities – tainted by political students for 2016 “Born fees” no longer tolerant of appearances repeated promises – lack of Multi-year history of increases struggle? Increasing pressure on the state to around or exceeding double digits improve outcomes for citizens 20 to fund poor students and cover Institutional disparities – UCT vs years post democracy “loss” of state funding Others page . = #FMF at WITS which spreads 03
#RhodesMustFall #FeesMustFall #EndOutsourcing
Key Events: #RMF, #FMF and #EndOutsourcing perfect storm stuff… # R RMF MF #FMF MF #EndOutsourcing In 2015, a group of student Started in 2015 two weeks into Students rallied staff providing activists smeared the Rhodes #RMF at WITS core services such as cleaning and statue overlooking UCTs Golden security to join the fees protest in Mile with faeces and paint Gathered rapid momentum and 2015 wide spread support at many In short, the call was for removal of campuses In return, students vowed to an installation that was seen as support staff to become university celebratory of Rhodes and his March on Parliament by western employed staff achievements as a colonial Cape students “overseer” Big driver was for improved wages March on Union Buildings by and benefits Protester tactics were to occupy students and public Bremner, intimidate staff, try and UCT Management and Council force discourse Demands were for the “promised” agreed to insource from July 2016 free, decolonialised higher at R80m extra cost Student comments, Council vote – education statue removed and stored Not all universities did this – very State caved to pressure in late divisive in sector and has seriously page October 2015 and announced it skewed labour market 05 would partially fund increases for 2016
#RhodesMustFall #FeesMustFall #EndOutsourcing
What Now? the fundamentals have not changed… page 07
What Now? Key Events and Further Influences state s st subsidy student f fees ees poisoned c chalice State interferes in institutional In 2016, state funded 83% of lost In early December 2017, ex autonomy on fees – announces it fee increase due to 0% decision President Zuma announces fee will fund increases up to 8% in free higher education for students both 2017 and 2018 via fee In 2017, this 83% was rolled into from families with gross annual settlement our Block Grant – resulting in a incomes of ZAR350k and below further loss of 4% of total revenue Fee losses from 2016 on residence by 2018 Throws existing under pressure fees are not covered by the state – National Financial Aid Scheme so keeping housing sustainable President appointed Heher under the bus – battling to cope becomes a further crisis Commission of enquiry into “Fee with one system, now have two Free Higher Education” Heher Commission reports in In February 2018 new Finance October 2017 – “Fee Free Higher Ongoing student unrest at various Minster announces budget – VAT Education not feasible or campuses increase, more to HE and NSFAS, affordable at this time…………” less to all other key state operations Reignites protests, UCT establishes “November Hall” and for the first page time since 2014 substantially completes academic year in the 08 year
UCT operational costs the tough line staffing c costs fina nancial a aid ( d (UG) G) 01 01 02 02 Largest expense item at 67% of total costs Fee increases beyond Internal Inflation from 2009 to make up declining state funding and increase financial aid to students at UCT who cannot afford fees (EFC) other c costs exclusions 03 03 04 04 Maintained Library Acquisitions spend, as well as ensuring A 5 to 6 year history of operating efficiencies and existing IT and Related infrastructure replacement increases at below inflation provisions maintained page 09
UCT operational costs actions… doing more with less sta taffing Due e to to 5 5 yea ear r rolling c g cash f forec ecasts, h had started ed proces ess to to c cut to total costs b by R R120m/6% i in 2013/4 Ready to implement in 2016 to 2018 as we foresaw a sustainability challenge Cut support staff numbers by 60, academics by 8 – all through incentivized voluntary severance, early retirements and retirements fina nancial a aid ( d (under undergraduate) e) UCT had for over 10 years charged advertised fees to well off students, while a family means test allowed students to apply for fee discounts via financial aid if family income below R350k GAP funding between R350k and R600k for missing middle The s state f e funding o g of f free h ee higher er e educati tion f for F FTEN ENS p provided ed f funding r g relief to f to U UCT – in es essence a an under erwriting s g saving o g of s some R e R75m process a automation a and e efficiency Focus on automation to improve efficiency of administration Rev page eviewi wing s services es p previously o outsourced ed – initial f findings gs that e exter ternal p provider ers s simply a added ed people to e to s solve p e problem ems r rather er than f focus on p proces ess improvem emen ent and e efficien encies es 10
UCT operational costs details… doing more with less (or generating more revenue) size, s shape a and t through ghput Campus location limits size to 30,000 – decision to remain medium sized, contact, research led Review academic offerings in depth – implement course appropriate headcount enrolment minimums and timeframes to right-size, while focusing on strategic objectives Revie iew c credit it l load ads, a acad ademic ic w wor orkloa kloads, a acad ademic ic y year ar – ensure e appropriate to e to d deliver er b bet etter er teaching a te g and r resea earch, w while a e also i improving s g succes ess r rates es d due to to less s studen ent “ “overstr tres ess” commercial e enter erprises ses Establish commercial enterprises division within Finance Department to maximise existing and establish new opportunities for third stream revenues Alrea eady o oper erating: g: Confer eren ence M e Managem emen ent C Centre, e, V Vacati tion A Accommodati tion, C Commercial Let etti ting, F Film S Shoots ts, B Brea eakwater er L Lodge, e, P Protea b by M Marriott M t Mowb wbray, Food & & Connect, t, A Academ emic Devel elopmen ent P Progr gramme ( e (early career eer, m mid-career eer) To c come: e: C Confer erence C e Centre f e for 6 600pax, i improve V e Vacati tion A Accommodati tion o occupancy, Bet etter er manage l e leases es a and occupancies es f for C Commercial L Letting, A Adver erti tising g on C Campus w wher ere e appropriate, e, S Short C t Courses es ( (primarily o online o e or b blended ed) Plan to become stand-alone unit in the next 24 months following incubation within Finance page Department 11
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