The weighty assessment found in the Spring Memorandum indicates that the crisis year of 2022 has considerably shaken up the (financial) situation at the UT: due to declining intake, higher energy costs and high inflation, among other things, ‘it is time to reassess and tighten a number of financial guidelines,’ the plans state.
The UT expects the main setbacks to revolve around the lower student intake with respect to the expectations posed in the multi-year budget set at the end of last year, when the Executive Board chose to budget ambitiously – despite the known uncertainty. Whereas the earlier multi-year budget expected the UT to grow towards a population of 15 thousand students towards 2027, this will become considerably lower according to the Spring Memorandum. The estimates arrive at a population of some 13.5 thousand students in 2027.
Student intake has major consequences for a university's financial management. After all, for the so-called first-stream funding, the UT is heavily dependent on the tuition fees paid by students on the one hand and the state contribution on the other; the ministry distributes this among the universities on the basis of their market share. The more students are enrolling proportional to enrolment at other universities, the higher the state contribution.
As a consequence, the UT has to tread water in terms of budgeting according to the Spring Memorandum. Annual budgets continue to grow, but at a much slower pace than estimated last year. For instance, the previous expectation was to grow from an annual budget of 433 million euros to almost 485 million euros in 2027. Those expectations have been drastically adjusted to a budget of 466 million euros in 2027. Thus, the annual budget has decreased by an average of 18.5 million euros lower with respect to recent expectations.
According to (the draft version of) the multi-year plan, the financial impact will mainly be felt on the educational side. Expectations for research funding from first-stream funding are only slightly adjusted downwards; annually a few million euros less than expected in the earlier budget plans. On the other hand, all faculties expect a growth in income from second and third money streams – research grants and contract research.
All in all, the UT still anticipates to grow in terms of financial well-being in the coming years, but much less rapidly than previously estimated. In order to remain financially healthy, the university needs to be more cautious. After all, the UT has to meet certain financial requirements towards the Inspectorate of Education; liquidity, solvency and profitability have to remain within certain standards.
The so-called 'current ratio' - the extent to which short-term debts can be paid off – is already at risk of falling below a critical limit in the short term. The UT ideally has the current ratio at 1, which threatens to plummet to around 0.50 in the coming years.
Although expectations are already being sharply adjusted due to numerous uncertainties, the UT will not be able to avoid further uncertainties in the near future. While the Spring Memorandum mentions various topics like the political debate surrounding the decrease of international intake, ongoing collective labour agreement negotiations, possible wage increases and changing legislation, the developments have not yet been incorporated into the financial projections.