University to run on empty by next year
The University of Canterbury will run out of money next year, forcing it to borrow cash to fund its day-to-day operations.
The university has already asked for government help, but Vice-Chancellor Rod Carr insists it is not facing an "imminent crisis".
"We're not going to run out of time. We're forecasting and the Government is aware of our circumstances."
It was understood the university had asked the Government for between $200 million and $250m in support - about 5 per cent of its 10-year operating and capital works budget - but would have to wait until October to find out what level of funding it could receive.
Tertiary Education Minister Steven Joyce has already said the science and engineering facilities at the university will receive support. However, the university's need was much wider than those two areas.
Last night, a spokesman for Joyce said: "The actual amounts to be provided towards those two projects will only be able to be determined once a detailed business case has been prepared and accepted... The Government is yet to receive the detailed business case from the university.
"As the minister has previously said, the Government is committed to providing financial assistance to the university by October. Obviously, that deadline is dependent on the business case being provided sufficiently in advance to the Government."
Government funding continued at pre-quake levels, meaning the university "can maintain capacity while it works through its business case and long-term recovery strategy," the spokesman said.
Last month the university announced a $67m deficit for the 2012 financial year.
Carr declined to comment on how much money was needed from the Government while negotiations were ongoing, but said the university had budgeted for a deficit of $10m this year.
That was now likely to be closer to $17m after a higher than expected number of students did not return to study, Carr said.
The $17m deficit would be paid for from the university's dwindling cash reserves, along with another $20m to fund improvements to earthquake-damaged buildings over and above insurance proceeds, Carr said.
The university has already spent about $60m of its reserves since the earthquakes.
"We went into this with $100m in cash and reserves. We've consumed in the order of $60m and are going to consume in the order of $40m. We're going to be in the order of runout," Carr said.
He said the university would need to borrow money to fund its operations because it will run out of cash towards the end of next year. However, it required government consent to borrow money.
When asked if it would still need to borrow regardless of the government support, Carr said: "If they give us heaps of money we wouldn't need to borrow."
If the university needed to borrow, the money would most likely come from banks it already has relationships with.
"The university is quite bankable. We have strong cashflows as the Government pays a third of our revenue."
Carr has identified six ways the university can save $600m during the next 10 years, including recruiting and retaining more domestic and international students, increasing philanthropic support and simplifying some university activities.
He also believed the university could save money by carefully managing its insurance entitlements.
Staff at the College of Arts, which has lost about 30 per cent of its students since the quakes, were asked at a meeting last week to consider taking early retirement or reducing their hours.
The university had 70 fewer fulltime equivalent staff on March 31 than it did at the same time last year.
Carr said last year he aimed to reduce staff numbers by 50 a year until the end of next year.
CARR MUM ON FUTURE
Rod Carr is refusing to reveal if he will seek another term as University of Canterbury vice-chancellor when his five-year term expires next February.
The university council, which has the sole responsibility of appointing the vice-chancellor, has yet to indicate if it is prepared to offer Carr another contract.
It has until August to indicate its intentions to him.
Carr said he did not want to pre-empt the council's decision-making by announcing his intentions through the media.
University chancellor John Wood said the vice-chancellor's employment committee was working on a proposal, which would detail the process it would follow when deciding. He said it was far too soon for the council to indicate if it planned to reappoint Carr and he would not say when a decision would be made.
"I'd like to get certainty into the process as quickly as reasonably possible."
Carr took a 50 per cent pay cut when he became vice-chancellor in 2009 after leaving Jade Software. At Jade, he was one of the region's highest-paid chief executives, commanding nearly $1 million.