Healthy finances despite challenges

According to the 2017-2020 budget, which was was approved by the board at the board meeting of 7 December, Aarhus University faces slight reductions in revenues in the coming period. This is primarily due to the cutbacks on educational funding in the latest Finance Act and to government research funding. The loss of revenues, which was anticipated in last year’s budget, intensifies the budgetary challenges caused by government policy initiatives such as degree programme resizing, reductions in government consultancy contracts and the risk of annual fines if degree completion targets are not met.

The university expects a budget surplus of approximately DKK 100-150 million in 2016, or approximately two per cent of annual revenues out of total budget of DKK 6.431 billion. The budget surplus is primarily due to the university’s success in improving degree completion rates in 2015 in addition to budgetary restraint in 2016. It is expected that the budget for the period 2017-2020 will balance, despite decreases in funding.

“The board is quite pleased with the preliminary result for 2016 and the budget for the next period. The university is in a strong position to offset stagnations in appropriations and government research funding. This provides the stability and balance which are absolutely decisive for our continued development,” states Michael Christiansen, chair of the university board.

Room for strategic initiatives

The budget was prepared on the background of the long-term financial plan developed by the university in the first half of 2016. The financial plan identified necessary budgetary adjustments, in addition to measures needed in order to create necessary financial leeway for the academic development the university has initiated.

In June, the board approved four strategic initiatives: the Faculty of Arts will develop a more clearly defined academic profile, develop Scandinavia’s largest centre for teaching and research on the major European languages and with the establishment of a new national centre, strengthen its activities in the field of research on basic schooling and daycare. Aarhus BSS will intensify and extend the grounding of its business degree programmes in research. The Faculty of Health will orient its medical degree programmes towards careers in industry to a higher degree.  And finally, the Faculty of Science and Technology will launch a major initiative to expand its engineering degree programmes. The senior management team will contribute a total of DKK 260 million in strategic funding to support the four strategic initiatives in the period 2017-2023. The majority of these investments will be made in the period 2017-2020.

Finally, the university has also ensured that the faculties will have more funds available by reducing expenses for administration, operations and other costs in the central administration by DKK 49 million to DKK 780 million in the period 2017-2020.This reduction is in addition to the DKK 104 million cost reduction which has already been made. At the meeting of 7 December, the board stated that the budget surplus from 2016 must be used in order to support the university’s continued strategic development. “In recent years, the university has demonstrated the necessary restraint in relation to our revenues.

This means that we now have a more solid financial foundation from which to pursue our goal and strategic initiatives. We must develop the flagship research and teaching programmes and strategically selected degree programmes that can advance the university in a period of stagnating funding,” states Christiansen.