Aarhus University to introduce cost-reduction measures

An across-the-board cost reduction plan is under development at Aarhus University, and it will involve layoffs. According to current budget prognoses, the university will need to cut approximately DKK 200 million in costs by 2016. The precise amount will be announced after the final 2014 budget has been reviewed and approved by the Main Liaison Committee and the University Board on 18 December, after which the university’s departments and administrative divisions will be in a position to draw up their own budgets.

As Rector Brian Bech Nielsen explained in an interview,
“Even though we are still at an early stage in the process, the senior management team decided to announce this now because we think it’s important for everyone to have a clear understanding of the challenges the university faces. At the same time, we want to involve the union representative and liaison committee systems in the process in due time and make sure that the process is transparent, decent and fair, even though we are conscious of the fact that this means a longer period of uncertainty for our staff.”

The spending cuts will affect the entire university, and all four main academic areas will be affected. However, the administration, which is already being streamlined, will experience the greatest cost reductions in relative terms. Hopefully, part of the necessary cost reductions can be achieved through natural wastage and by reducing the number of new hires over a shorter period. But it will not be possible to make the necessary reductions without layoffs. The spending cuts were discussed with the Board and will be carried out with the Board’s full support.

Stagnating revenues

Funding for Aarhus University - and for the Danish university sector as a whole - is stagnating after a longer period of growth.  This means that expenditure must be reduced to reflect the new financial situation.

The background for university’s current financial situation is:

• The slowdown in the funding Aarhus University receives over the Danish Finance Act - particularly basic funding. At the same time, there is no reason to believe that basic funding will increase significantly in coming years.
• The total expenditure has increased in step with revenues in recent years. But since the funding slowdown means that revenues will not continue to increase in step with these increases in expenditure, the university will experience a significant, unsustainable budget deficit each year unless measures are taken.
• The need to balance the university’s finances. Primarily because of the academic development process, the Board has approved deficit budgets in recent years. But in order to avoid making more demands on the university’s equity, which will amount to less than 10 per cent of annual turnover, Aarhus University must present a balanced budget as of 2015. This means it is necessary to adjust the level of expenditure.

Theme Site: Read more about the reduction plan

Facts about the process:

When the precise scope of the necessary spending cuts is known, proposals for the criteria for layoff decisions will be developed and submitted to the senior management team and departmental and administrative management teams, after which they will be reviewed by the main liaison committee and the local liaison committees. The liaison committees’ input will be taken into account when the management establishes which criteria will be applied. This means that will be possible to adapt the general criteria to local requirements if necessary. It is important that the criteria for layoff decisions enable the university to perform its functions in the best possible way with the available personnel resources.