Posted tagged ‘financial health’

The financial health of higher education

March 29, 2016

England’s funding Council, HEFCE, recently release its annual report on the financial health of universities. It found that most were in a sound position. However, it also found that financial stability and robustness were not enjoyed by all institutions; some are in a difficult financial position. The report also highlights some of the problems faced in universities that have over recent years under-invested in capital infrastructure. And it sounds a pessimistic note on the future: the English higher education sector may have to anticipate ‘lower surpluses, a fall in cash levels and a rise in borrowing’.

England is not alone in this situation – similar warnings have been sounded in the United States.

One of the problems is that, after all the changes in the institutional landscape and its regulation, the business model of universities has not changed – but whether this traditional model is still sustainable is less clear. If your income is largely based on public money you may experience difficult times when government itself must tighten its belt, but you may tell yourself that your consolation is that your paymaster is predictable and reliable and that, generally, income fluctuations are not extreme. But the experience all over the developed world has been that the state is finding it increasingly hard to meet its obligations to higher education, so that a financially healthy sector may need to target other revenues much more ambitiously.

In the meantime we will need to see how (or whether) universities with an increasingly tricky balance sheet can remain sustainable. There are many who now predict that the next few years will see universities having to close; that would create a very different higher education narrative.

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