Chair of the board: We shouldn’t have financed the academic development process by allowing a deficit
The university board regrets having to adopt a budget which will mean a large number of job losses at AU. Michael Christiansen, the chair of the board, explains that one of the reasons for the problem is that the board made an unwise decision in 2011: it decided to fund the academic development process by allowing a deficit to build up.
“We could have funded the academic development process by making cuts, but three years ago we decided to fund it by allowing a deficit to build up. I sometimes ask myself whether this was a wise decision. And with the benefit of hindsight, I would have to say that it wasn’t,” said Michael Christiansen, chair of the university board, after a board meeting on 18 December. At this meeting, the board regretted having to adopt a budget that will mean job losses across the entire university.
AU is vulnerable
The brief explanation is that the board’s decision to allow an annual deficit of DKK 40-80 million per annum over the past three years to finance the academic development process has placed AU in a highly vulnerable situation. Unforeseen circumstances outside the yellow-brick walls have led to a very different financial climate than that predicted by the board in 2011. This is how Christiansen explains the current financial situation:
“We’ve been generating an annual deficit of DKK 40-80 million in recent years, and we’ve got to sort this out now. People might ask why the cuts have to be so deep – they may complain that we haven’t given anybody any warning of what lay ahead. I can only reply that I don’t think any of us thought this was going to be necessary,” says Christiansen.
“When the board agreed to let the university operate with a deficit of DKK 40-80 million a year in a transitional period, we believed that our financial situation could be straightened out by taking relatively modest steps. Which begs the question of whether we knew what we were doing back in 2011. There’s no doubt that the situation has surprised everyone on the board – it’s going to be far more difficult to straighten things out than we predicted.”
Decrease in funding and market share
What Christiansen is referring to is a range of external factors occurring over the past couple of years. He believes that the most significant of these factors are a decrease in external funding, a drop in market share, and stagnation in terms of the number of students admitted to AU.
“We didn’t see this coming, and we have also had to make a range of structural changes – administrative cuts forced on us by the ministry, for instance. Our budgets have come under increasing pressure as a result. This is why the board has announced that we will not continue to run at a loss in future, and that we must build up sufficient financial reserves to protect us from a worst-case scenario like the one we’re facing at present. Because even though half the reason for the current situation is that our predictions were inaccurate, it’s our job as a board to deal with these problems. And that’s what we’re doing.”
Who’s responsible?
When asked whether responsibility for the financial situation lies with the board, the management or both, he says:
“The board is responsible for the deficits. Responsibility lies with me – and with the rest of the board.”
And as far as the management is concerned:
“I can at least say that as soon as we realised how serious this was, the rector and I acted reasonably firmly and reasonably fast. And although it’s true that we could have done this a few months ago, that wouldn’t have changed anything.”
Translated by Nicholas Wrigley