Draft Change Proposal
On 21 November 2011, the University released for comment the following Draft Change Proposal in relation to the University's 2012 budget. The period for formal feedback on the Draft Change Proposal closed on 16 January 2012. Thank you to everyone who provided feedback and suggestions on the Draft Change Proposal document.
The University has been well served by a long tradition of prudent, astute and proactive financial stewardship. Even during the global financial crisis of 2008–2009, when our investment income fell by over $100 million annually, we were able to manage without significant restructures or disruptive expenditure reduction programs.
In recent years the University’s financial position has been bolstered by strong growth in income from student fees, and it was our expectation that continuing revenue growth would support much needed investment in our buildings and ICT infrastructure. On that basis, the University set a financially ambitious, though in many ways modest, infrastructure program. The key to implementing this program was always going to be growth in student fee revenue.
Unfortunately, our projected results for 2011 and expectations for the immediate future indicate a marked decline in growth of student fee income. International student enrolments are down throughout the sector. While demand from domestic students remains high, we are seeing higher level of deferrals and students electing to take fewer units of study, with fee income dropping accordingly. While we are looking at all possible strategies to increase student fee revenue, it is clear that growth in the immediate future will be much lower than the 9.6 percent average annual growth that was achieved over the period from 2005 to 2010. Our forecast result for 2011 is that student fee income will be down by $27 million, and our revised forecast for 2012 is $24 million below the original target set in the 2011–2015 Strategic Plan.
In addition to the pressure created by the shortfall in student fee income, it is now clear that our infrastructure investment needs are more urgent and more costly than previously expected.
It is not feasible to defer investment in our buildings and ICT infrastructure. We have a critical need to deal with a backlog of repairs and maintenance, which the NSW Auditor General has assessed at a cost of $385 million. While this work will need to be undertaken progressively, there is much that is needed urgently to ensure that we meet our workplace health and safety obligations.
Other essential capital expenditure includes basic ‘stay in business’ ICT infrastructure, normal library replacement and research and teaching equipment. These are basic investments which will cost approximately $53 million in 2012.
We also need to address critical issues such as our outdated IT network backbone and the amount and quality of space for teaching and research. We must ensure that we are in a position to replace facilities once they reach the end of their useful life, and avoid disruptions and costs of the kind we are currently incurring to accommodate the Faculty of Agriculture, Food and Natural Resources following the demolition of its 1940s ‘temporary’ facilities.
The only feasible option open to the University to meet our infrastructure investment needs is to reduce our expenditure in other areas. Our reserves are insufficient to meet these costs. While the University achieved a net operating margin of $113.7 million in 2010, this does not provide a solution to our revenue shortfalls and will not meet our infrastructure investment needs. Importantly, this net operating margin includes $79 million in funds that can only be used for the designated purposes for which they were given – included in this amount are federal government grants and income from bequests where the initial income must be preserved and invested. The remaining $35 million falls well short of the amount required to meet even the most urgent of our infrastructure investment needs.
Concerns about the state of our buildings and ICT infrastructure were raised by staff in the University’s Green Paper consultations, and continue to be raised as a priority issue. The University’s objective is to reduce expenditure in other areas to enable the implementation of a prudent and focussed infrastructure investment program that will provide new and upgraded facilities to better support the work of our staff and students.
The University’s proposed strategy for reducing expenditure is outlined below.
As a starting point, non-salary expenditure will be reduced by a total of $28 million across the University in 2012. This will mean that most faculties and professional services units (PSUs) will need to reduce their administrative expenditure relative to their 2011 budget. Where savings are required to be made, it is envisaged that they would focus on discretionary areas such as travel, consultants and contractors, minor equipment, entertainment and printing. The corporate card program will also be restructured to significantly reduce the number of cards issued and limit the ability to use the card where there are preferred supplier strategies in place, for example in areas such as travel, copying and printing, stationery supplies and desktop computer purchases.
Proposal for consultation in accordance with Part I of the University of Sydney Enterprise Agreement 2009–2012
Unfortunately, reductions in administrative non-salary expenditure alone will not be sufficient to address our funding needs. In addition to the measures outlined above to reduce non-salary expenditure, the following proposals have been developed:
- Reduce salary-related administration costs by 7.5 percent across the University. It is proposed that each faculty, portfolio and PSU would be given an expenditure cap restricting the total amount they can spend on general staff salaries, casual salaries and contractors. The faculty, portfolio or PSU would then be responsible for formulating and implementing a strategy to work within that expenditure cap. In most cases, this will involve a budget reduction. The measures that will be proposed by each faculty and PSU will vary according to individual circumstances, such as the size of its budget reduction, existing structures, scope for greater use of shared services and other efficiencies and ongoing operational needs. For example, in some cases, the required savings might be best achieved by reducing casual employment and/or the use of contractors. In others, it may be necessary to reduce the number of continuing or fixed term positions. Where the implementation of strategies at the individual faculty/portfolio/PSU level would involve changes to which the Managing Change provisions of the Enterprise Agreement apply, the relevant area will develop and progress its own change management proposals.
- Reduce academic staffing costs by 7.5 percent. It is proposed that this would be achieved by a reduction in overall academic staffing numbers across the University (on a full-time equivalent basis) by approximately 7.5 percent. The process by which it is envisaged this would be achieved is set out in Appendix 1.
The University will manage the Change Proposals outlined above in accordance with the Managing Change provisions contained in Part I of the Enterprise Agreement.
Consistent with the Enterprise Agreement, a process of consultation will be conducted, during which we will attempt to achieve consensus in relation to the adoption of the change proposal and the way it is to be implemented.
Change communication and consultation plan
The following timetable is proposed for communication and consultation:
|21 November 2011||Release Draft Change Proposal (DCP); ‘All staff’ video message from Vice-Chancellor via email link and dedicated website||Management and staff||
Issue DCP to staff and seek comments and suggestions.
|21 November 2011||Meeting with NTEU and CPSU||Management and union representatives||Outline DCP and proposed consultation arrangements.|
|28 November to 2 December 2011||Faculty/PSU level meetings||Management and staff||Provide opportunities for discussion of DCP|
|16 January 2012||Feedback on DCP due||Staff and unions||The deadline for feedback was extended from 9 December to provide greater opportunity to capture suggestions and alternative viewpoints.|
|17 January 2 February 2012||Consider staff comments/suggestions and develop Formal Change Proposal (FCP)||Management||
Review and consider feedback and suggestions regarding DCP.
Prepare Draft Implementation Plan for consultation with staff and unions.
|3 February 2012||Release FCP via email and dedicated website||Management||
FCP released via email and website.
|4 February 2012||Faculty/PSU level meetings||Management and staff||
Provide opportunities for the discussion of FCP and draft implementation plan.
|15 February 2012||Feedback due on FCP||Staff/unions|
|16/17 February 2012||Consider staff and union comments and suggestions||Management||Review and consider feedback and suggestions on FCP and draft implementation plan; prepare Final Change Plan.|
|17 February 2012||Release Final Change Plan incorporating implementation plan||Management and staff||Commence implementation of Final Change Plan in accordance with implementation plan.|
The proposed process for managing the reduction in academic staff will be based on relative research performance, assessed on a University-wide basis.
The assessment of relative academic research performance will be based on research outputs as defined in the Excellence in Research for Australia (ERA) guidelines, or equivalent research output as assessed by Faculty and Central Assessment Panels.
Eligible research outputs
- Must meet the definition of “research” in the ERA 2010 Submission Guidelines
- Must have been published or made publicly available over the period from 1 January 2009 to 4 November 2011 (the Assessment Period)
- Must be an eligible research output type as defined in the ERA 2010 Submission Guidelines, for example:
Books – authored research
Book chapters in research books
Journal articles – refereed, scholarly journal
Conference publications – full paper, refereed
Original creative works
Live performance of creative works
Recorded/rendered creative works; and
Curated or produced substantial public exhibitions and events.
For further information see http://www.arc.gov.au/pdf/ERA2010_sub_guide.pdf
Who is to be included in the assessment process?
The assessment process will apply to all academic staff with continuing appointments, except those in the categories listed below. Fixed-term appointees will be considered on a case-by-case basis to determine whether they are to be included in the assessment process.
The following categories of staff will not be included in the process:
- casual staff
- staff on long-term sick leave
- staff who have formal resignation/retirement arrangements in place (such as staff employed on pre-retirement contracts or who have given notice of their retirement/resignation)
- staff on existing teaching-focused contracts
- fixed term appointees where appropriate (ie having regard to circumstances of their contract)
- staff whose salaries are wholly funded from external sources
- postgraduate fellows and other early-career researchers
- staff who joined the University after 4 November 2010.
Staff (other than those in the excluded groups listed above) with three or fewer eligible research outputs (prorated for part-time staff and staff commencing after 1 January 2009) over the assessment period will be considered for possible redundancy or alternative arrangements such as teaching-focused roles, pre-retirement contracts and other measures to avert the need for involuntary redundancy.
It is proposed that an initial assessment process would be undertaken at the faculty level by a Faculty Assessment Panel comprising:
- the dean
- two senior members of the academic staff from within the faculty (such as deputy deans, pro-deans or heads of schools/disciplines)
- two members from another Faculty Assessment Panel
The Faculty Assessment Panel would assess the research performance of staff with three or fewer eligible research outputs over the assessment period, taking into account output relative to opportunity. This would ensure that consideration is given to factors such as where a staff member has produced one or two substantial works, has made significant progress towards a substantial work or has appropriate works pending publication; career breaks such as parental leave or sick leave; performance of ‘above load’ teaching or administrative duties allocated by the faculty; and the staff member’s length of service in the position. Consideration would also be given to situations in which staff are undertaking teaching and postgraduate supervision work that their school must provide in 2013 and which could not be provided through other means.
Assessments made by the Faculty Assessment Panels would then be reviewed by a Central Assessment Panel, comprising the Provost (Chair) and three senior professors. Oversight by a Central Assessment Panel will ensure a fair and consistent process across the University. It is proposed that the Central Assessment Panel would make recommendations to the Vice-Chancellor in relation to the selection of staff in each faculty to be offered voluntary redundancy.
Offers of voluntary redundancy would then be made to the selected staff. Depending on the faculty’s operational needs and budget constraints, staff who are offered voluntary redundancy may also have opportunities to consider alternative arrangements such as pre-retirement contracts, teaching-focused roles or part-time work. Involuntary redundancies will be utilised only as a last resort.