A large budget deficit in 2022 puts pressure on AU’s budget for 2023

High energy prices, a fall in student admissions, and losses on financial items all mean that AU will end 2022 with a significant budget deficit. The next few years will call for careful resource and financial management. As the new chair of the board emphasises, this financial pressure is coming from the combined effect of external and unforeseeable factors.

[Translate to English:] AU bliver presset på budgetterne i 2023. Arkivfoto: Lars Kruse, AU Foto

Like many other organisations, Aarhus University has been hit hard by the economic conditions in 2022. Rising electricity and heating prices mean higher operating expenses, and despite employees’ considerable efforts to save energy, the university anticipates a significantly larger deficit in 2022 than predicted in its original budget – especially since negative trends on the financial markets have led to major losses on the university’s investments. Combined with this, the university is facing a decline in student admissions and graduation completion rates at several faculties.

“Although we will only know the full extent of AU’s 2022 budget deficit after the new year, there is no doubt that it will make a significant dent in the university’s financial reserves. The situation looks difficult now, but I’m convinced that, with the university’s sense of responsibility and expert leadership, we will be able to mitigate these negative impacts in the years to come while also continuing on the university’s growth journey,” explains the new chair of the board, Birgitte Nauntofte.

“Our financial reserves and the returns we make on them have enabled us to make a range of investments in research and education in recent years, but they can also act as a buffer in difficult times. Unfortunately, the latter will be the case in 2022. This isn’t a problem in itself, because Aarhus University is well managed. But we have no guarantees that 2023 or the following years will be any better. That is why we must concentrate on restoring our financial reserves, which will result in tight budgets over the next few years”.

The AU Board has previously decided that the university’s financial reserves must equate to between 7.5 and 12.5 per cent of its revenue; the target is 10 per cent. In recent years, reserves have been just above this range, but, after this year’s financial result, they are expected to be closer to the bottom of this range – which is why the university needs to work on increasing its financial reserves for the long term.


It is difficult to make budget forecasts at the moment, and the 2023 budget is characterised by a number of uncertainties. It is unclear how long inflation and higher energy prices will last.

“I am impressed by the agility the university has shown in responding to these external pressures and implementing measures to mitigate them. For example, in recent months, university staff and students have made significant savings on electricity and energy. But we are still under pressure from volatile prices in these areas and from the effects of inflation,” emphasises Birgitte Nauntofte.

In addition to this, it is unclear whether there is still majority support in the Danish Parliament for continuing the taximeter increase on rate-1 degree programmes, which has made it possible for Arts and Aarhus BSS to improve the quality of their education programmes over the past decade:

“It is a huge challenge that the university sector once again lacks certainty on the taximeter increase, and if this increase doesn’t continue, it will have serious implications for Aarhus University”, says Birgitte Nauntofte, who is pleased that other important social players such as the Confederation of Danish Industry, the Danish Chamber of Commerce, the Danish Confederation of Professional Associations (AC), and Universities Denmark have sent a strong request to the Danish Parliament to secure this financing as soon as possible.

AU’s budget for 2023 assumes that the taximeter increase will continue. If this proves not to be the case, the budget will need to be looked at again, explains the chair of the AU Board.

Tight budgets in the coming years

Even if the taximeter increase continues as expected, the need to balance AU’s finances means that many places at the university will have to cut costs between now and 2026.

Earlier this year, AU launched an energy-saving campaign and a partial hiring freeze. Both of these initiatives are having a positive effect on the university’s and the faculties’ finances. But it’s impossible to rule out the need for further measures, due to the magnitude of the economic challenges and the combined effects of several negative factors.

“We expect a certain level of growth in overall revenue over the next few years. We will continue to invest in our research and education initiatives and our campus development, and we also expect to be able to attract and spend more external funding. But this can also put a strain on our base funding, and we need to make sure we can balance our finances. So we find ourselves in a situation which will require us to prioritise carefully and make difficult decisions in number of areas over the coming years,” says Rector Brian Bech Nielsen, who points out that the Main Liaison Committee discussed the budget in advance of the AU board meeting.

Budgets will be tight at all the faculties and in the administration over the next few years, but the situation at Arts, Aarhus BSS and NAT will be particularly challenging – partly due to lower educational revenues than expected. This is a challenge that everyone at the university is facing together, and the other faculties and the administration have also had to contribute budget cuts in order to stabilise AU’s financial situation.