Formal Change Proposal
On 3 February 2012, the University issued a Formal Change Proposal outlining proposed savings measures in relation to academic salaries and staffing-related administrative costs. The period for formal feedback closed on 15 February 2012. Thank you to everyone who provided feedback and suggestions.
On 21 November 2011, the University published a Draft Change Proposal setting out a proposed strategy for reducing expenditure on a University-wide basis. The Draft Change Proposal noted that non-salary expenditure would be reduced by a total of $28 million across the University, and put forward two proposals for reducing salary-related expenditure. These were to reduce both staffing-related administration costs and academic staffing costs by 7.5 percent across the University as follows:
- Faculties, portfolios and professional services units (PSUs) would be given an expenditure cap restricting the total amount they can spend on general staff salaries, casual salaries and contractors. Where savings are required, each faculty, portfolio or PSU would then be responsible for formulating and implementing a strategy to achieve them, and 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 would be required to develop and progress its own change management proposals.
- Overall academic staffing costs across the University would be reduced by approximately 7.5 percent. Under the Draft Change Proposal, it was envisaged this would be achieved primarily through offering eligible staff voluntary redundancy. The process for determining which staff would be offered voluntary redundancy was set out in Appendix 1 to the Draft Change Proposal.
The University established a dedicated website to provide additional information about the Draft Change Proposal and to facilitate staff and union feedback and provide opportunities for staff to ask questions.
A total of 348 responses were received from staff: 116 of these were from individuals, 219 were form letters using content provided by the NTEU, and 13 were responses from groups of staff, including school and departmental responses. In addition, submissions were also received from the National Tertiary Education Union (NTEU) and the Community and Public Sector Union (CPSU).
Meetings of the Management & Staff Consultative Committee were held on 21 November and 5 December 2011, and various meetings have also been held with staff at the Faculty/Professional Service Unit level to discuss the Draft Change Proposal.
Some staff expressed support for the proposal, and others suggested alternative or additional ways of making savings. In some instances, staff queried the need for savings to be made and others expressed concern about what they regarded as a failure to anticipate and plan for managing the situation the University is now in. Others suggested that money could be borrowed to meet the financial requirements identified in the Draft Change Proposal and some suggested that major projects should be deferred. However, most of the comments received were expressions of opposition to the proposal to reduce academic staffing numbers, and to the way in which it was proposed that this would occur.
Key issues that were raised by staff expressing opposition to the proposals were as follows:
- Concerns about using research-related criteria as the basis for the academic assessment process
- Reliance on ERA-rated publications for the academic assessment process
- Concerns about increased workloads for academic and general staff
- Alternatives to involuntary redundancies should be explored
- Concerns about reputational risks for the University and risks of a negative impact on its international rankings
These issues are addressed below.
After considering the feedback received from staff and unions, the University has decided to proceed with the broad expenditure reduction measures outlined in the Draft Change Proposal. It is proposed, however, that there will be some changes to the process for reducing academic staffing costs, with more emphasis being placed on measures such as flexible options including pre-retirement contracts, and natural attrition in addition to redundancy to achieve the budget savings required, as well as changes to assuage some of the concerns about the assessment process.
The proposed changes, as modified as a result of the consultation process to date, are now being put forward for staff consideration as the University’s Formal Change Proposal. Consistent with the requirements of clause 261 of the University of Sydney Enterprise Agreement, the following information is provided in relation to the proposed changes:
(a) Nature and Rationale
Reduction in non-salary expenditure
It is proposed that the $28 million reduction in non-salary expenditure would proceed as outlined in the Draft Change Proposal.
This will mean that most faculties and professional services units (PSUs) will need to reduce their non-salary 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, 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.
Reduction in salary-related administration costs
It is proposed that salary-related administration costs will be reduced by 7.5 percent across the University.
It is envisaged that this would be achieved by giving each faculty, portfolio and PSU 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. Some positions, to be advertised and filled in 2012, might now be cut. In other instances, 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.
Reduction in academic staffing costs
It is proposed that academic staffing costs would be reduced by 7.5 percent on a University-wide basis. It is envisaged that this would be achieved by a reduction in overall academic staffing numbers across the University, with actual reductions varying from faculty to faculty.
The proposed process for implementing these staffing reductions is set out in Appendix 1. As noted above, the proposed process now places more emphasis on flexible options including pre-retirement contracts and natural attrition as alternatives to redundancy to achieve the budget savings envisaged in this change proposal. Moreover, in Appendix 1 we set out in greater detail the range of considerations with respect to the circumstances of individual staff and the teaching needs of particular areas that have been taken into account in determining the selection of particular staff in this process.
The process described in Appendix 1 continues to provide for an assessment of relative research output, utilising ERA data to provide an independent measure of research output. In a research intensive University, research output is an appropriate assessment measure.
However, ERA outputs will not be the sole determining factor. Teaching contributions and disciplinary expertise will be taken into account to ensure that students are not adversely affected by the reduction in academic staff numbers and that staff who have been performing ‘above load’ teaching duties are not disadvantaged in the assessment process. The assessment process will take into consideration individual factors such as disabilities or illnesses and absences due to parental leave or other reasons. It will allow flexibility in the assessment of research output to ensure that staff who have produced one or two substantial works, who have made significant progress towards a substantial work or have appropriate works pending publication, or who have other comparable research output are not disadvantaged in the assessment process.
Rationale for the proposed changes
As outlined in the Draft Change Proposal, the University’s budget outcomes for 2011 and expectations for the immediate and medium term 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 levels 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 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 that underpinned the 2011–2015 Strategic Plan. This represents a decrease in annual growth from the average of 9.6 percent that was achieved from 2005 to 2010, to a projected growth of only 6.99 percent.
The decline in revenue growth for 2011 and the forecast decline in 2012 will have significant pipeline effects for the next few years. In addition, all of the projections of international student demand, combined with the necessity to put a brake on annual fee increases in order to remain competitive in an increasingly competitive international market, clearly indicate that the University will fall well short of our forecast for student fee revenue for at least the next few years. The University has therefore been required to revise down its revenue forecasts for 2012–2015.
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.
Some staff raised concerns about the proposals to make savings in staffing expenditure in order to fund investment in buildings and ICT infrastructure. It is not feasible to delay expenditure in these areas. 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 and other compliance obligations such as those relating to disability discrimination.
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 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 address our revised revenue forecasts and 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 to be used for designated construction projects, unspent research funds 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. This will be an ongoing challenge in the next triennium: revenue forecasts revised downwards while managing continuing demand for essential infrastructure maintenance and development.
Borrowing to address the University’s needs is not a viable option. Borrowing is only justified in order to support long-term strategic initiatives such as the construction of new facilities, and is not an appropriate strategy to fund recurring operating costs such as salaries. Nor is it feasible to stop or delay large scale projects such as the Centre for Obesity, Diabetes and Cardiovascular Disease (CODCD) or the New AIN-Physics Building both of which have received significant government funding. In addition to the fact that these projects are already well advanced, much of the funding which is being used to pay for them has been provided specifically for these capital works, and cannot be diverted to other uses. And, importantly, these are projects that are essential if we are to accommodate our existing activities and those that are planned for the future.
(b) Proposals to mitigate negative effects including training and redeployment
Involuntary redundancies will be utilised as a last resort. Measures such as voluntary redundancy, pre-retirement contracts, natural attrition and alternative working arrangements will be used where feasible. Staff who are offered voluntary redundancy will also be entitled to seek redeployment, and redeployment officers located in the University’s Recruitment unit will assist staff in this process. Where suitable roles are identified for affected staff through the redeployment process, appropriate training will be provided.
(c) Expected outcomes including expected advantages and disadvantages
The implementation of the proposed changes will generate savings and provide a reduced salary cost base for the future, and in doing so will free up funds to be used to meet the capital expenditure needs outlined in part (a) above. In addition to providing improved facilities and ICT infrastructure that will better meet the needs of staff and students, the University will be better equipped in terms of workplace health and safety needs and will be able to provide better support for staff, students and visitors with disabilities.
The proposed changes in relation to academic staff have been structured to ensure that students are not adversely affected by the reduction in overall staff numbers. It is proposed that teaching contributions will be taken into account and there will be scope for some staff to move to teaching-focused roles if they wish to do so, thereby providing additional resources for teaching.
By improving facilities and ICT infrastructure and strengthening our teaching resources the implementation of the proposed changes will enhance, rather than diminish the University’s reputation.
It is recognised that the proposed changes will inevitably affect staff morale as a result of the uncertainty that accompanies the change process. The implementation plan outlined below is intended to ensure that affected staff will be supported as well as possible throughout the process, and that it can be completed as quickly as possible, so as not to prolong this period of uncertainty for staff. The University is also committed to ensuring that involuntary redundancy will be utilised only as a last resort, that issues affecting individual staff are dealt with in a sensitive way, and that affected staff will have an opportunity to discuss their situation and options with their Dean, Head of School or portfolio/PSU Head.
(d) Ways to minimise any disadvantages to occupational health and safety in the workplace
The proposed reductions in salary-related expenditure will be achieved in a way that is consistent with workplace health and safety laws and the Enterprise Agreement, including, in the case of academic staff, the workload provisions of the Agreement and relevant faculty workload policies.
In addition to the University’s usual Employee Assistance Program (EAP), staff will have access to additional EAP resources on campus.
(e) Financial implications
The savings to be achieved as a result of the proposed changes are outlined in part (a) above.
Given the range of measures that are potentially available to meet the proposed reductions in expenditure, it is not possible at this stage to quantify the cost of implementing the proposed changes because the final cost will necessarily depend on the measures that are adopted at the faculty, portfolio and PSU level.
(f) Timing of the consultation and implementation of change
Consistent with the Enterprise Agreement, a process of consultation will be conducted in relation to the Formal Change Proposal, 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.
The following timetable is proposed for communication and consultation:
|3 February 2012||
Release Formal Change Proposal (FCP) via email and dedicated website
|Management||FCP released via email and website.
FCP indicates where staff/union suggestions have been incorporated and provides explanation for any suggestions that are not taken up.
FCP includes draft implementation plan.
Staff invited to review FCP and draft implementation plan and provide comments and suggestions.
Faculty/PSU level meetings to discuss FCP and draft implementation plan.
Follow up with email to staff confirming timelines for feedback and next steps.
|6 February 2012||Faculty/PSU level meetings||Management and staff||Provide opportunities for 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.|
If the changes put forward in this Formal Change Proposal are proceeded with, it is proposed that they would be implemented as follows:
- Academic staff who are identified as meeting the criteria for an offer of voluntary redundancy or other alternative arrangements will be contacted in the week commencing 20 February 2012 and invited to meet with their Dean, Head of School or designated supervisor. They will receive written details of the proposed process and the options that will be available to them. Affected staff will be invited to provide any comments or submissions they wish to make about the assessment of their research output and any other relevant information they wish to have taken into account in the decision-making process. Staff will have time to provide written comments and submissions, and may also have further discussions with their Deans/Heads during this period.
- Final decisions about arrangements for affected academic staff, including offers of voluntary redundancy, will be made in March 2012 after considering any comments or submissions made by affected staff. Any staff member who is offered voluntary redundancy will have four weeks to decide whether to accept the offer or seek redeployment (as provided for in the Enterprise Agreement). There will also be opportunities for staff who are offered voluntary redundancy to discuss other suitable arrangements and/or timing issues if they wish to do so, and there are also review options available to staff covered by the Enterprise Agreement. Any alternative arrangements that are entered into by staff must be on an entirely voluntary basis.
- It is envisaged academic staff redundancies will take effect from 1 July 2012, although different dates may be agreed on an individual basis.
- As noted in part (d) above, all academic workload allocations (including any changes to allocations made as a result of implementing this change proposal) will be in accordance with the workload provisions of the Enterprise Agreement and relevant faculty workload policies.
- For general staff, changes will be implemented at the faculty, portfolio and PSU level progressively after a final decision on the change proposal is made (i.e. after 17 February 2012). Where local measures involve changes to which the Managing Change provisions of the Enterprise Agreement apply, the relevant area will be required to develop and progress its own change management proposals, including plans and timetables for their implementation.
(g) Implications for staff including changes in duties, number of staff, workload, work environment
Given the nature of the changes that are being proposed and the range of measures that are potentially available to implement them, it is not possible at this stage to provide specific details of changes in duties, numbers of staff affected and changes in workload allocation. However, as noted in part (d) above, the proposed reductions in salary-related expenditure will be achieved in a way that is consistent with workplace health and safety laws and the Enterprise Agreement, including, in the case of academic staff, the workload provisions and relevant faculty workload policies.
The proposed increases in capital expenditure will provide improvements to the working environment for staff through the upgrading of accommodation, facilities and ICT infrastructure.
(h) Mechanism for assessing and reporting on the progress of the change, and evaluating the change with staff
Information on the progress of the change process will be provided through reports to be published on the University website and through the Management and Staff Consultative Committee, and provision will be made for staff to provide feedback on these reports. The Academic Staff Workload Monitoring Committee will monitor the operation of faculty workload allocation policies (including any effects of the proposed changes) as part of its remit under the Enterprise Agreement.
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. Involuntary redundancy will be utilised only as a last resort. Staffing reductions which occur due to natural attrition will also be taken into account to minimise the need for redundancies.
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 or has a publication record that is properly regarded as being the equivalent to more than three ERA-rated publications; career breaks such as parental leave or sick leave; disability or illness; 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.
Affected staff will be invited to provide any comments or submissions they wish to make about the assessment of their research output and any other relevant information they wish to have taken into account in the decision-making process. Staff will have time to provide written comments and submissions, and may also have further discussions with their Deans/Heads during this period.
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.
Final decisions about arrangements for affected academic staff, including offers of voluntary redundancy, will be made after considering any comments or submissions made by affected staff. There will also be opportunities for staff who are offered voluntary redundancy to seek redeployment and discuss other suitable arrangements (such as pre-retirement contracts, teaching-focused roles or part-time work) and/or timing issues if they wish to do so. Final arrangements will depend on the relevant faculty’s operational needs and budget constraints, and any alternative working arrangements must be entered into by staff on an entirely voluntary basis.