Oxford’s most recently published accounts have shown a loss for the University for the first time in over twenty years.
The appointment of tutors, college funds and provision of lectures are now under close scrutiny, as the University decides how best to adapt for the financial loss coupled with a cut in government funding.
Before the donation of heritage assets, minority interest and transfer from accumulated endowment return are considered, the University recorded a deficit of £4.3 million for the financial year 2008/09.
No deficit has been seen at this stage in the University accounts since the financial year 1987/8.
Giles Kerr, University Finance Director, revealed how the University has suffered as a result of the global economic situation. “2008/9 was a year of unprecedented turmoil in financial markets, a very difficult period for investments and endowments generally. In that period, the endowment fund declined by 5.8 per cent and the capital fund by 3.9 per cent.”
He continued, “While those absolute returns are disappointing, when you put them in the context of global equity markets over the same period, they were much smaller declines than experienced by the markets generally.”
The University lost £14.7 million deposited in Icelandic banks last year. Last week Iceland’s parliament voted to hold a referendum on whether to repay depositors from Britain and the Netherlands who lost out when the Icesave bank collapsed in 2008. This came after the country’s president, Olaf Ragnar Grimsson, vetoed a bill authorising the repayment.
There is concern that the recession, coupled with impending cuts to university funding, is going to result in reduced funding in certain areas.
In December, Lord Mandelson announced that higher education funding was to be cut by £398m for 2010-11 compared with this year. As Cherwell reported last month, £10 million is due to be withdrawn from government funding to Oxford and Cambridge Universities.
Although the Higher Education Funding Council for England (HEFCE) has not yet finalised its 2011-12 funding for Oxford, the University is braced for a tightening of its budget.
Lynn Hutton, Divisional Financial Controller of the Humanities division, told Cherwell that “any funding cuts are of great concern to the University.” She continued, “There is an £80m shortfall in public and fee funding for teaching each year, and a similar shortfall in the funding received for research compared to the full economic costs. Oxford makes up for this by transferring funding from other sources, and any further cuts to public funding are a cause of serious concern.
“Oxford will continue to exercise financial prudence maintain the strong financial position of the University during the global economic downturn, and will look to maximise efficiency and savings wherever possible. Any proposed new posts will be subject to careful scrutiny, and the University’s capital spending will tighten its focus.”
It is not yet clear how colleges themselves have performed financially over the past year, with their accounts not due to be published until later this term. It is expected, however, that they will have suffered along with the University.
David Palfreyman, the bursar of New College, and the director of the Oxford Centre for Higher Education Policy Studies, said that in the long run the tutorial system could be affected by funding cuts. Based on an estimate of a 10 per cent drop in funding in the short-term, students “won’t suddenly find [themselves] in tutorials of four.”
However, there would be need a need to balance the books, even if increased costs would be absorbed by colleges in the short-tem.
Currently nobody within the University is certain where the cuts are going to be felt the most. One History tutor believes that humanities subjects will be hit hardest, with the science departments much better insulated from the cutbacks, but not everyone is so sure.
Palfreyman said that although the situation was currently “delightfully vague”, with no confirmation of whether a reduction in funding would affect teaching, research or capital projects, there would probably be a seven-to-eight per cent cut in the funds a college has to teach its students.
He also expressed concern at the prospect of staff not being replaced. If a tutor were to leave a college, for whatever reason, then the financial situation could prevent a replacement being hired. In this regard, some colleges could simply be “unlucky”.
There is also some anxiety within the student body that funding cuts and reduced endowment income could impact on both the education Oxford can offer as well as other areas like grants and bursaries. There have been reports of some colleges already cutting back on expenditure, and there is a worry that students could be adversely affected.
St John’s have already started making cutbacks. The college may have the largest endowment of them all, as well as the second-highest income during 2007-08, but they are reducing the amount they spend in certain areas. Vacation grants, for example, are now limited to 21 days per year, where previously no limit existed.
At other colleges there have been reports of vacation residence being harder to acquire, as conference guests (who will pay higher accommodation fees) are given priority.
Olly Richards, a second-year History student, described his concern. “The fact that the jigsaw puzzle of university finance is coming apart piece by piece is the issue which concerns me the most today. Increasingly, the steady flow of money which used to ooze from central government is drying up and I am immensely concerned about how this could affect my education.
“Currently I have no lectures this term and I am puzzled as to where further cuts could come from. Moreover, cuts to the university funding as a whole could detract from the quality of tutor employed and result in students being taught by less experienced individuals.”
Alistair Strathern, a second-year PPE student, is concerned that decreasing revenue might affect the poorest the most. “Naturally I’m very concerned about cutbacks, particularly if they fall on the outreach and bursary schemes that are so vital in widening access to studying at Oxford.”