Over-ambitious budgets? A lack of due diligence? Or both?

Rector Brian Bech Nielsen is enjoying a coffee in his office late on Friday afternoon, at the end of a week in which he has had to tell the university staff that an unknown number of them will be fired as a result of cuts to be made early next year.

“We started to be concerned in the senior management team when we got the first budget forecasts in September,” says Bech Nielsen.

Budget forecasts

Shortly after taking up the reins as the new rector, he decided to get a clear view of the university’s financial situation, so he asked for budget forecasts from the four main academic areas back in late August.

These forecasts provided a picture of the financial situation for the whole of AU. And this is when the first deep furrows began to appear on Bech Nielsen’s brow.

The senior management team asked AU Finance and Planning to validate the budget figures, and by mid-October they had a good idea of what amounts to a rather bleak financial situation:

“The management concluded that cuts were inevitable,” reports the rector.

Problems last year, too

The management also discussed the financial situation with the board last year, when there were already problems – partly owing to the financing of the academic development process.

The board gave the management permission to run the university with a deficit in 2013 and 2014, but insisted that the books should balance in 2015. The management now realise that this financial goal cannot be achieved without taking drastic action.

“One of our main academic areas experienced particular problems in getting individual departments to submit financial reports. But the entire main academic area did not do too badly, so financial management has not been a problem in itself.”

Brian Bech Nielsen is referring to the Faculty of Arts, who had so many problems with their financial reporting that their finance function was merged under BSS in the autumn.

However, the deans of the Faculty of Arts and BSS still have overall responsibility for this area.

No valid figures

Although the rector says that “the financial management has not been a problem in itself”, it is hard to escape the conclusion that this is the kind of understatement for which the people of Jutland have become so justly famous.

Because in late summer it was still impossible to extract any valid figures from the IT systems that are supposed to support the financial management process at a number of departments. For instance, heads of department and a great number of researchers have had very little idea of what their budgets looked like.

Lack of due diligence

But more than anything else, the current financial situation is due to the stagnation of the university’s income and a lack of due diligence on the part of the senior management team.

“As the management we are forced to acknowledge that if we had applied the brakes last year, the challenge facing us today would have been less dramatic. So the fact that we now need to make cuts can be taken as evidence of a lack of due diligence,” says Brian Bech Nielsen.

He continues:

“But it’s worth adding that in the senior management team we were extremely concerned about the consequences of making major cuts at a time when the organisation was still affected by the development process.”

“And can I just add that it also depends on the way the whole university has behaved in terms of making new appointments throughout the entire period – and in terms of generating the level of income which the management could reasonably expect. So if we analyse the problems in a little more depth, you could say that we have all contributed to the problems we are facing at present. Even so, there is no doubt that it’s the management’s responsibility.”

Job losses

The rector has been a worried man since September, and the staff have been worried since he told them at the end of November that there would be job losses next year.

Before the rector’s speech to the staff in the Anatomical Lecture Theatre, the union representatives had been informed of the situation at an extraordinary meeting of the Main Liaison Committee.

Union representatives in shock

“We were shocked to learn of the extent of the cuts. We knew we would have to make adjustments at some point, but we had no idea the cuts would amount to DKK 200 million. I think we all thought the same thing: ‘Oh my God!’,” says Aase Pedersen, who is the joint union representative for the technical and administrative staff.

Per Dahl, the joint union representative for the academic staff, says:

“My first thought was that this was the diametric opposite of what we’d been told at the last meeting of the main liaison committee before the summer holiday.”

Appealing to the board

As soon as they had recovered from the shock, the joint union representatives started analysing the new situation. And they are now busy drawing up proposals for cuts to keep the number of job losses to a minimum.

In this connection, they are asking the AU board to stretch the cuts over an additional year until 2016. At least until the analysis group and panel of experts recently set up by the management have had the time to make their recommendations about the best way to change the structure of the university.

A complete basis for decisions

Associate professor Peter Bugge, who represents the academic staff on the board, has the following comment about the appeal made to the board by the joint union representatives:

“I assume that the management will listen to them and work out whether the proposal is realistic, giving us the best possible basis for making a decision on 18 December”. This is the day on which the board will be asked to approve the budget for 2014.

Translated by Nicholas Wrigley