AU back on track after a tough 2022

The financial forecast for 2023 looks positive, and AU can expect to meet its budget targets in the coming years. This puts the university in a solid position to manage the financial implications of the Master’s reform.

Photo: Lars Kruse / AU Foto

After a difficult year in 2022, the Aarhus University Board set two financial goals: AU should work towards balancing its operations budget, and it should rebuild its financial reserves to 10 per cent of its revenue. Both these goals are now within the university’s sights. So it was an optimistic chair of the board who presented the financial forecast for 2023 and the budget for 2024-2027 at the final board meeting of the year:

“As things look now, it’s realistic that we’ll achieve the necessary balance between our revenue and expenditure in the coming years. It’s also likely that Aarhus University will be able to increase its financial reserves to reach its target of 10 per cent of revenue – even though its revenue is increasing, which makes it harder to meet the 10 per cent objective. These are the university’s two main financial priorities, so we’re pleased with how the situation is developing. It’s important for us that AU is once again financially stable and growing,” explains Birgitte Nauntofte.

Budget surplus on the horizon

The forecast for 2023 is based on AU’s financial performance in the first eight months of the year. So the figures may change before the final accounts are available early next year.

As things stand now, Aarhus University is expected to end the year with a budget surplus of DKK 116 million, which is a better result than the university budgeted. This prediction is based on the prospect of AU earning significantly higher returns on its financial items than expected. It’s also due to AU achieving a better balance in its operations budget. The final result will be known in the spring.

Unfortunately, in 2023, the university was forced to make adjustments to staffing levels in departments with an imbalance between revenue and expenditure. These adjustment have improved the university’s overall financial situation and equipped the departments in question financially for the years ahead. In addition, the university has succeeded in securing more external funding than expected in 2023, which has been a major factor in AU being able to run a surplus in its operations budget this year.

Major one-off expenses in the coming years

According to the AU budget, the university will run a small operating deficit in 2024 and 2025 but will manage to balance its budgets again from 2026. Because of this, the university’s ongoing operations will not rely on it earning returns on its financial investments. It therefore seems that AU has achieved its goal of becoming more financially robust, and this gives the university a good starting point when we look ahead:

“There will be some significant one-off expenses in 2025 and 2026 – partly due to the expansion of AU Viborg, and partly due to the relocation of several departments to the new University City. Our finances can cope with these costs. But from 2027 we’ll have to deal with the implications of the Master’s reform, and we don’t yet know what these implications will be or how they will affect our finances. So it’s important that we go into 2027 with a solid financial foundation,” says University Director Kristian Thorn.

Taximeter increase offers stability

Rector Brian Bech Nielsen is also positive about the university’s financial outlook:

“Aarhus University was in a difficult situation due to last year’s operations budget deficit. Tackling this situation required a determined effort and difficult decisions both at the faculties and in the administration. So I’m pleased that we seem to be heading towards the stability that will make it possible to continue investing in the university’s academic and campus development.

Like the university director, the rector highlights the Master’s reform as a major unknown factor in the future of degree programme finances, both at faculty and university level. But he also points out that the permanent increase in taximeter funding for the humanities and social sciences acts as an important counterweight:

“For many years, right up until the end of the year, it’s remained uncertain whether we would be left with a huge shortfall because of a drop in the taximeter rate for the humanities and social sciences. Now, thankfully, the government and the Danish Parliament have agreed to secure the funding from 2024 onwards. It’s very important for the academic departments to have this assurance”.

The final accounts for 2023 will be presented to the AU Board in spring 2024.