Briefing note on budget reductions as at March 2007
- At its meeting on 21 March 2007 the University’s Board of Governors agreed that in-year reductions totalling £5million be made to departmental budgets. This results from shortfalls in student recruitment against targets for 2006/07.
- The Board reviewed a mid-year re-forecast of income and expenditure account that predicts shortfalls against budget of approximately £1m in grants and between £8m and £10m in fees. The Board agreed that the expected shortfall be covered by departmental budget reductions, by reductions in the £3m budget set aside to implement JNCHES (this was previously approved by the Board subject to affordability, which is not now tenable) and a reduction in the budget for severance payments, as it is unlikely that all of these will fall into 2006/07. The remaining budget for severance costs required to generate staff cost savings in our business plan is delayed to 2007/08.
- Provided that these in-year savings are made, the risk of further shortfalls should be covered by contingency.
- Shortfalls in recruitment have been predicted since Autumn semester enrolment and The Board were advised of this at their December Board meeting, although the financial impact of the shortfall was not clear at that time. The shortfall was also discussed at SMG meetings and at the JCNC meeting with Unison in January.
- The size of the shortfall reflects known Spring semester enrolment and uses February data on submitted and marked assessments to reduce the Autumn semester enrolled figures for those students who have left the University prior to assessment, in accordance with the HEFCE grant protocol for determining fundable student numbers.
- Overall, student numbers as at mid March were approximately 2,680 under target, the main shortfalls being in new home full-time undergraduate recruitment (c. 1,100 students) and in overseas full-time postgraduate taught students (c. 900 students). Home part-time undergraduate numbers were also down, but it should be noted that recruitment of these students continues throughout the year.
- The Executive Group has allocated required savings to department using a weighted average based upon:
- allocation evenly across the departments by size, taking the core budget allocation as proxy for size.
- Requiring half of the saving from academic departments and half from PSDs, then allocating academic department required savings in proportion to the shortfall against full-time student number targets, allocating PSD savings pro-rata to the size of the PSD budgets
- taking a pragmatic approach, allocating savings pro-rata to under-spends on core budgets as at the end of February.
- The Director of Finance will meet every department head to agree how the required saving will be achieved.
It is expected that this will be a combination of:
- Crystallising budget under-spends as at the end of February by keeping to the profiled budget spend for the rest of the year
- Stopping all non-essential non-staff expenditure, including casual and agency staff
- Carrying vacancies where possible
- Where it is realistic, to increase income generation to fund existing core budget costs from other sources.
- Sufficient under-spends existed as at the end of February to cover the majority of the required saving.
- The Executive Group is confident that, with the commitment of management and staff to reduce costs commensurately with the reduction in the volume of our activity, we can achieve our budgeted result for 2006/07 in line with the agreed business plan.
- Work on the 2007/08 budget has begun. The Planning Office is working with SRMC and each academic department to agree student number targets for 2007/08 and the next five years. These will be used to determine the income budget for 2007/08 and to inform departmental budgets.
Actions to allocate savings
2007/08 budget
B A Roper
Vice-Chancellor and Chief Executive
29 March 2007