Principal’s Open Fora 3 rd November 2010 - PowerPoint PPT Presentation

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Principal’s Open Fora 3 rd November 2010
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Principal’s Open Fora 3 rd November 2010

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  1. 1 The situation is serious but not desperate….. Principal’s Open Fora 3rd November 2010

  2. 2 A New Economic Landscape 100% Asia 80% Africa & Latin America 60% US, Canada & Oceania 40% 20% Europe 0% 2000 2050 (projected) Economic Activity by Region Source: Sachs, J. (2008), Common Wealth, Penguin Books.

  3. 3 US & UK versus Top Performers 60% 50% 25 to 34 35 to 44 40% 30% 45 to 54 20% 55 to 64 10% 0% US UK Canada Korea Japan Percentage of Adults with a Tertiary Degree by Age Source: OECD, Education at a Glance 2009.

  4. 4 Trends in tertiary type A graduation rates – place of the United Kingdom Rank 2000 2003 2004 2005 2006 2007 2008 100% Asia 80% Africa & Latin America 60% US, Canada & Oceania 40% 20% Europe 0% 2000 2050 (projected) Economic Activity by Region Key: CZ, Czech Republic; NL, Netherlands; NZ, New Zealand; SK, Slovak Republic; UK, United Kingdom; USA, United States. Source: OECD (2010) Education at a glance

  5. 5 UK Expenditure on tertiary education relative to competitor countries 2007 100% Asia 80% Africa & Latin America 60% US, Canada & Oceania 40% 20% Europe 0% 2000 2050 (projected) Economic Activity by Region Source: OECD (2010) Education at a glance

  6. 6 Net public benefit for a male obtaining tertiary education 100% Asia 80% Africa & Latin America 60% US, Canada & Oceania 40% 20% Europe 0% 2000 2050 (projected) Economic Activity by Region Source: OECD (2010) Education at a glance

  7. 7

  8. 8

  9. 9 Expansion demand for employment between 2007 and 2017 by occupational group Source: UK Commission for Employment and Skills (2009) Working futures 2007-2017

  10. 10

  11. The situation is serious but not desperate…..

  12. Planning for the Storm Open Fora 3 November 2010

  13. Puzzle –5 TextAgendaHere Scottish Govnt Context UK Govnt Destination Transition

  14. The world has changed

  15. UK Context • Govnt borrowed hugely to avoid meltdown • Recessionary pressures • Reduced tax take • Increased welfare costs • Increased debt burden • Government’s Financial Imbalance • Balance needs addressed

  16. Bank of England Projection

  17. Clearing the Fog • Hutton (interim) (7 Oct 2010) • Browne (12 Oct 2010) • UK CSR (20 Oct 2010) • Scottish CSR Outline (18 Nov 2010) • Scottish Budget Agreed (March 2011?) • Scottish Elections (May 2011) • Scottish Emergency Budget (June 2011?) • New Scottish CSR (November 2011?)

  18. Puzzle –5 TextUK GovernmentHere Timescale Scale Other issues Context UK Govnt

  19. Scale & Timescale • Timeframe • Current UK Parliament • Assume full term – through ‘till 2014/ 2015 • How much • Scottish Government - c10.8% • Distribution • Protection of priority areas?

  20. Other issues • Browne • Actual implementation • Implications for competitors • Hutton • Climate / necessity for reform

  21. PuzzleScottish GovernmentHere Protection Scale Local Context SFC Options Scottish Govnt Context UK Govnt

  22. Scottish Budget Allocation

  23. Government approach? • Balance in reductions required between • Reasonable annual efficiency gains • Recognition of necessary output reduction • Government will want efficiencies • Without reduction in output • When does efficiency become unreasonable? • After how many years becomes unsustainable?

  24. Local Context…….

  25. What Universities get paid for Scotland St Andrews

  26. Who funds Universities Scotland St Andrews

  27. Operations Surplus as % of Turnover

  28. According to TrACUniversity Surplus Generation

  29. Scottish Funding Council Implementing Scottish Government Higher Education Policy

  30. SFC Options (1) • Salami Slice everything • Shares pain • Requires little thought / justification • 20% off of volumes across the board? • 800 FTE (non controlled student FTEs) • Doesn’t demonstrate strategic leadership • Doesn’t advance Scotland HE • Doesn’t justify existence of SFC

  31. SFC Options (2) 20% cash cut, all from T 20% cash cut, all from R 79% of Total R Public impact on volume? Impact on UStA Lose £14.2m, 37% of SFC Grants • 27% of Total T • c30,000 Student FTEs • Impact on UStA • Lose £5.2m, • 14% of SFC Grants • 1,200 student FTEs • c300 per annum less

  32. SFC Options (3) • Restrict Horizon Fund size • Capital £65m (StA £4.25m – 7% of total) • Revenue £50m (StA £1.1m – 2% of total) • Balance c£15m • Less impact on recurring services • Less opportunity for Govnt initiatives • 3% to 5% annual efficiencies • Minimises scope for volume cuts, esp on T • Cuts in volume could be countered by ‘fines’

  33. SFC Options (4) • Salami Slice on T • Increased excellence focus on R • Minimum proportion of 3* or 4* • Significant impact on less R intensive • Less impact on UStA • Reduced incentive to ‘bulk up’ for REF • Challenge to minimise proportion of 1* & 2*

  34. Assumed scale of problem

  35. UStA Total Impact • If Scottish HE cut is 20% • SFC – Cash in 2010/ 11 • £8.5m shortfall • £4m from Aug ‘11, balance over next 2 yrs • Fee consequentials (if numbers cut) • Assume 800 Student FTEs - £1.5m • From Aug ’12 over 4 years • Research Grants – protected? • VAT £0.6m from January 2011 • CRC £0.4m from June 2012

  36. Puzzle –5 TextTransitionHere Rate of cuts Initial plan Scottish Govnt Context UK Govnt Transition

  37. Continuing uncertainty • Need to preserve current ranking • Decisions must deliver strategic goals • Proposed initial measures • With consideration of more radical solutions • But avoid prejudicing strategic decisions

  38. Cost base (2010/ 2011) • Pay – c£95m (58% of total spend) • Non Pay – c£68m (42% of total spend) • Fixed elements £53m and counting……… • Research Grant £12m, • Depreciation £11m, • Scholarships £6m, • Loan Interest £5m, • Energy £5m • Maintenance £4m, • Residences £4m, • Books / Journals £3m • Income related £2m, • Insurance £1m…….

  39. Summary Plan • Phase 1 • Non Recurring Savings • Phase 2 • Improved efficiency • Other targeted measures • Phase 3 – if required • More radical cost reductions

  40. Phase 1 • Initial non recurring measures • Until recurring path agreed • Vacancy Management £3m • Minor Capital £2m • Non Pay £1m • Additional Revenues £1m • Overseas students/ Commercial/ Development

  41. Phase 2

  42. Back office activity • Support staff - 500 FTE across campus • Sharing support between schools (clusters) • Facilities & Systems • Single sources for information • Devolution of expertise / support • Building upon recent projects • Lean, MMS, ASP, Timetabling • Leverage from vacancy management • Potential savings £2m to £3.5m pa

  43. Research Focus • Recognition of change in funding focus • Emphasis on 4* and 3* • Not all academics Grant Active or 4* • Teaching needs and research excellence? • Key research themes within each school • Alignment staff to themes • Identify points of weakness • Focus on sources of grant funding • Cost / benefit analysis of individual pools • Potential savings £1.5m to £3m

  44. Other activities • Overseas Demand • Offset by reducing home numbers? • Renewables • Guardbridge CCHP & Kenly Wind • Commercialisation • StEP, own spin outs • Shared Services • With other public bodies • Development Activity

  45. Underlying issues • Academic prioritisation • Market forces on student numbers • vs artificial protection from current regime • vs ‘academic freedom’ and breadth of offer • Need for rebalancing of T portfolio?

  46. Puzzle –5 TextDestinationHere Vision Status Quo Graduate Contribution Scottish Govnt Context UK Govnt Destination Transition

  47. Strategic Goals • Broadly similar student size • 7,000 to 7,500 FTE, at least 1/3rd Scots • Diverse student background • Broad subject base • Top Research Rated in Scotland • Top Student Rated in Scotland • Consistent league table performance • Top 10 in UK • Top 100 in World

  48. Status Quo for funding model

  49. Approach • If funding is cut • Cut service volumes to permit cost cutting • Minimise impact on other income streams • Need to focus resources to retain quality • Academic standards key to decisions • Negative impact on reputation inevitable • Have to sustain programmes through 4 years

  50. Other Issues • Ability to trade up on other subjects • Replace HUG with OS UG • Impact on mix within Schools • Actual Funding Cell • Retention of research area • Ability to trade on non HUG activity • Sustainability of teaching through run down • Emerging market trends