SDU
The University’s finances are under pressure
The 2023 budget has now been adopted by the Board of SDU, which also supports the management’s measures to ensure that the University’s finances remain robust.
On 9 December 2022, on the recommendation of the Rectorate, the Board approved the University’s budget for 2023. The budget includes a controlled slowdown in costs to counter the consequences of declining education revenues, declining returns on securities and price increases.
As early as October, the Rectorate announced its concerns about the economic situation and indicated that a controlled slowdown was necessary: https://sdunet.dk/en/nyheder/nyheder_fra_sdu/sdu-reducerer-paa-husleje-og-driftsomkostninger. In this regard, SDU is in line with Denmark’s other universities, which expect large deficits in 2022, among other things as a result of increased energy prices, losses in the financial markets and declining education revenue.
The 2023 budget contains a number of uncertainties. In particular, a new government is expected to present a new proposal for the Finance Act 2023 in the first quarter of 2023. The proposal may differ from the bill regarding the Finance Act 2023, which was presented by the previous government presented in August 2022 and forms the basis of SDU’s budget for 2023.
Responsible actions
The Rectorate expects that the operating result for 2022 will end with a deficit of approx. DKK 138 million, which is a deterioration compared to the planned deficit of DKK 79 million. In 2023, a deficit of DKK 168 million is budgeted. The large deficit in 2023 is planned, and is primarily due to the move into New SUND. In addition, the University’s finances in 2023 will be affected by the declining intake of students in recent years, which means a declining educational revenue of just over DKK 36 million.
To ensure that SDU’s finances in the next few years remain robust and sustainable, the 2023 budget includes a controlled slowdown that can reduce the University’s costs.
- First and foremost, I would like to emphasise that SDU is a well-run university with liquid assets and savings that allow us to handle fluctuations in our revenue. Nevertheless, we are taking the situation very seriously. The responsible thing to do is to reduce the pressure on our economy and cut costs at the University. Therefore, we will initiate a controlled slowdown which includes both short-term measures to reduce costs in 2023, as well as long-term measures to cut costs over a few years. For example, in relation to renting costs. At the same time, the management will assess the University’s finances when the Finance Act 2023 is adopted in the first quarter of 2023, and when we have an updated forecast for this year’s student intake in mid-March. On that basis, if necessary, we will decide on further measures in relation to the University’s finances, says University Director Thomas Buchvald Vind.
The controlled slowdown consists of three stages:
- A reduction in renting and building operating costs (e.g. energy saving measures). A number of leases in and around Odense are planned to be terminated over the next few years. For instance, the tenancy of Pavilion 1 in Odense, which is currently used by the Faculty of Humanities, will be terminated.
- Disposition limitation. From 1 January 2023, a disposition limitation of 1.5 per cent (DKK 35.6 million) of SDU’s government allocation will be introduced to reduce the level of activity at SDU. The decrease can be achieved by reducing operating costs (e.g. travel or procurement) or postponing salary costs (e.g. longer vacancies when re-filling positions). The Dean/University Director decides on the implementation of dampening measures at each faculty. Further information will follow locally.
- Framework conditions. In mid-March, the Executive Board will decide on further measures when the application figures for quota 2 are known and when the Finance Act 2023 is expected to be adopted by the Danish Parliament in the first quarter of 2023. The Rectorate will provide further information during the first quarter of 2023.
New strategic basis
On a more general level, the Board noted that the conditions under which SDU operates have been changing rapidly in recent years. This applies not least to the uncertainty about the intake in the new few years and thus potentially declining educational revenue.
Therefore, at the recent Board meeting, the Board asked the Rectorate to initiate a process to renew the University’s current strategic basis, which dates from 2016/2019. An updated strategic basis must be able to counterbalance the scenarios that will affect the framework for the University, both currently and in the future.
The Rectorate will continuously keep the organisation informed about the further development in relation to finances and the strategy process here on SDUnet.