Commercial Ventures and the Public purse – #5 – Canterbury University Seeks Bailout As Intake Falls

Canterbury University is pleading for at least another $150 million from the Government as it faces losing almost 20,000 students and $346m in revenue in the next eight years. Based on a report they’ve prepared along with Deloitte which  forecasts a cumulative drop in fulltime equivalent students of 19,400 from this year to 2019 and a reduction in revenue over that time of $346m

A 65-page document detailing the business case for support asks the Government for $130m in operating support, $25m for capital costs and a  yet-to-be-determined sum for building remediation not covered by insurance, but the amount could be between $20m and $70m.

The February earthquake caused it to lose hundreds of domestic and international students –  About 15,500 fulltime equivalent students are enrolled at the university.

It already has 1200 fewer domestic students and 420 international students  than 2010. Of those about 800 were first-year students and 80 per cent of them would have continued to a second year of study. More than 25 per cent of the first-year student intake either discontinued or  did not complete their enrolment this year.

Here’s the thing – the university is therefore  asking for $1,000 per student to prevent it’s decline in standards, 1,600 less students is extrapolated over 8 years to be 20,000 students. Somehow. As a concession the university will shed around 300 jobs over 3 years from the 3,000 staff it currently has, that’s 3-4% a year over 3 years.

Each Student, using the figures provided, generate income to the University of $18,200 each, per student, and they have staff to student ratio of 1-5

“In exchange for the government money, the university was proposing to make  savings of $134m, double its borrowings to $100m, and reduce its capital  expenditure by $20m to $45m annually from next year to 2019. The savings would include a 3 to 4 per cent reduction in staff numbers for each of the next three years. The university has about 3000 staff.”

The university has a good reputation and it has a strong balance sheet with about $90m in the bank. It’s not up against any wall and it’s not sinking into oblivion.

So – change the name from ABC university to ABC corporation – and you’ll see why this isn’t really something that I would be in favour of. The user pays education system that we’re all familiar with appears to not want to cut it’s cloth to suit, but wants to have a Rolls Royce facility. I can’t imagine a scenario where a corporation with the same staffing ratio’s would be able to go cap in had to the Govt and ask for a bail-out. (Of course I ignore finance and insurance companies, of course!)

Am I in favour of reducing the scope of the offering to suit the amount of revenue, you bet I am. Should the taxpayer fund what is essentially a corporation into maintaining what is an impossible scenario – even they recognise some truths “ The university had started many initiatives to attract students, including  increasing recreational areas on site. It was also spending millions of dollars
on additional scholarships. Vice-Chancellor Rod Carr was visiting several countries to get the message  across to potential international students that the university was fully open
and safe after the earthquakes ”

So spend a few more millions, after all in for 346million in for the lot! I’m confident the world will not end for the University, I’m sure that student X overseas does not want to come to a city of rubble to live, in over-priced short availability accommodation, unless of course they’re on a scholarship, but that’s not generating income is it, that’s filling seats to tick a box to maintain existing funding for the public purse.

Do I think that there are too many staff? what do you think, in a normal corporation I would imagine that a ratio of 1-10 managers to staff is more normal, it’s possibly even more.

I’m therefore a little perplexed by the timing, the amount they are asking for, the reasons given, and the blind way in which it ignores some truths about their plight and situation.

via Canterbury University Seeks Bailout As Intake Falls… | Stuff.co.nz.