According to University World News, while university enrolment has more than doubled since 1994, government funding per student has declined from R20 187 a year in 1994 to R16 764 in 2014. The cost of tuition has had to increase to meet that deficiency as well as the steadily rising costs they themselves face.
Higher education institutions will be facing steadily increasing costs in the coming year – from staff costs to utilities and support services and their student financial aid programmes. With the recent freeze on university fees, there is going to be a shortfall that can only be addressed in two ways: a shining knight on a white horse who rides to the rescue with additional funding, or universities are going to have to find better ways to manage their costs.
It seems fair to assume that government won’t be riding in on a white horse anytime soon, so we need to focus on the latter, managing reduced resources. Broad-based cost cutting tends to be like a blunt axe when a surgical instrument is required.
The high-level approach overlooks the requirements at a departmental level, making some departments dysfunctional while leaving other departments largely unscathed. Take, for example, a decision to freeze Capex. Great – at a macro level it will save a fortune. However, at a micro level, while finance and the arts will be largely unaffected, the sciences – say biology – may be heavily impacted.
The more surgical approach is to encourage departmental heads to take ownership of their costs and by doing so, make them more accountable. Managing costs at this level will empower individual departments to be able to make cuts that do not affect their ability to deliver. Expanding on the above example: perhaps the biology department will motivate for Capex spend because they need new microscopes, but they may choose to sacrifice attendance at overseas conferences. This will achieve the same net cost reduction but have far less impact on their ability to deliver.
Enhanced empowerment, ownership and accountability of departmental budgets, while not being the solution in or of itself, will at least be a step in the right direction.
Author: Kevin Phillips CA(SA) is Managing Director of idu Software