UCT needs to save R120m, cost cuts immediately

(Picture: Supplied)
(Picture: Supplied)

Cape Town – The University of Cape Town needs to save R120m by 2018 - and will be taking strict budgetary measures to do so immediately.

Vice Chancellor Max Price made the announcement in a statement on Monday, saying "austerity measures will be implemented between now and 2018".

He said that the funding of higher education nationally had become a challenge.

"The University of Cape Town is equally affected by this and must take action now in the interests of our longer-term sustainability."

According to Price, specifics of these cost saving measures and how these will be achieved, are being deliberated and agreed by a special budget task team and the executive of the university.

"At an institutional level we estimate that a minimum of R120m needs to be saved by 2018 to avoid entering a serious deficit budget scenario."

Price identified low government subsidies as a key problem saying government subsidy increased at 3.5% per annum.

He said this was 2.5 percentage points behind inflation and 4 percentage points behind UCT's cost increases which "was largely due to our growing salary budget that amounted to a 20% smaller budget over five years".

"In the past, we compensated for some of this decline through fee increases that were well above inflation. But there remained an annual shortfall, and with fees in the future unlikely to increase at the rates they did in the past, this deficit will grow if we do not tackle it now.

"The minister of finance's recent budget speech commitments compensate for national student financial aid scheme shortfalls and for the zero fee increase of 2016, but do not indicate a growth in subsidy that will keep up with growing student numbers and with inflation."

Price said that because most of the R2.6bn budget went towards staffing, 80% of savings "need to be made on the staffing bill".

"We will, wherever possible, rely on natural attrition – retirements, resignations or incentivised retirements, and stopping of non-essential activities.

"This might not always be possible and where it becomes necessary to restructure to achieve efficiency and meaningful savings, we will follow due human resources process in consultation with the unions."

Price said higher education institutions around the country were seeing increased enrollments, and issues around fee complexities, transformation, growing student expectations of support services, insourcing and a compromised national economy.

"This is the challenge ahead of us. This is about the future of our university and we need to tackle this challenge as a collective and not allow the austerity interventions to create internal divisions." 

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