Message from Vice-Chancellor sent to all staff and students on Friday 23 April 2021
As the University's 2020 financial results have been finalised through the auditing process and approved by Council at its meeting on 9 April, I am able to share them with you today.
I will first highlight some key figures and then provide some more context about what those figures mean in reality. Most of us are not accountants or experts in financial data and so I encourage you to read the full update to understand what the numbers actually mean, and seek clarification if you are unsure.
Last year, I told you we expected an operating deficit of $219m. Our final 2020 operating deficit was $162.4m. The difference between the forecast and the actual 2020 deficits is mostly due to better-than-expected tuition income ($22.7m) and income from research grants ($27m). The remainder ($7.1m) is due to accounting adjustments and variances.
This does not mean we have $57m more than we thought we had. It simply means we have a smaller deficit. The sacrifices you have all made in the past year have gone a long way towards reducing our deficit and future-proofing the University from further financial shocks.
The $22.7m in additional tuition income than we'd forecast is due to higher rates of student retention than we had planned. This is testament to the amazing work across the campus - from both our staff and students - to ensure the student experience remained one of the best in the world, despite the challenges of 2020.
We have also secured $27m more in research income than we had planned and costs for this research income will continue into 2021. This has come from Government grants and consultancy fees.
I thank each and every one of you for your unrelenting focus on our core work, in what have been unthinkably challenging circumstances.
We have updated our website with more detail about our financial statements that will soon be tabled in Parliament with our 2020 annual report. I will announce the release of the annual report in my blog when you are able to review it.
On that webpage you will see our reported deficit is $17.7m. I want to explain this in careful detail for the vast majority of us who are not accountants. To be clear, though, our operational deficit is $162.4m.
Under our legislative obligations, the University is required to report all its income sources so that there is one bottom line. This technical reporting process does not reflect the reality of the University's fiscal operations.
Within the University's income sources for 2020 are "investment revenue" ($61.4m) and "insurance proceeds" ($91m).
The "insurance proceeds" are payouts from our insurance claims for repairs to the Chifley Library following the 2018 floods and for some of the damage caused by the 2020 hail storm. Our insurance claims for these two weather events will continue to be paid out for several years, so we will continue to report those payments in our income statements. However, of course those proceeds have to be spent directly on repairing the damage caused by the weather events and cannot be spent on any other operational costs (like salaries, for example).
The University has a large Long-term Investment Portfolio (LTIP) of approximately $1.2bn. Last year, our investment portfolio experienced interest, dividends and capital appreciation amounting to $61.4m. Our LTIP includes endowments, which we can only spend on the cause of the endowment and Commonwealth Superannuation defined benefits obligations. Therefore, the money we make in returns on our LTIP is already "spent" through our endowment and superannuation obligations - and it would be unethical to use these funds for other purposes which would disadvantage our staff or impact their entitlements. It is not money we can use for general operational costs.
As always, my aim is to be transparent and honest. I will be hosting a staff (today, 11am-12pm) and a student forum (Wednesday 28 April, 2-3pm) with the Chief Operating Officer and Chief Financial Officer to answer any questions any of you have after reviewing our financial updates. You can register to attend those forums here. You can also find more information about our 2020 financial results on our website.
This has been the hardest 12-month period in our 75-year history and I know you are all working extremely hard to steer the University towards a brighter future.