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From the Chair | Staff cuts sometimes an unfortunate necessity

26 September 2018 | news

From time to time, the Vice-Chancellors of our universities have had to reduce numbers of academic and general/professional staff through redundancies and other involuntary processes.

This is not something we ever wish to do and it understandably upsets the staff concerned, their colleagues and the unions. So, we might ask, “Why is it necessary?”

There are several reasons.

First, funding for domestic students is related to the number of students we attract. This is a system not of our making, but it is logical—no government would waste taxpayers' money funding a university for students it did not teach. Similarly, revenues from international students are directly related to their numbers.

However, students make their own decisions about which universities and programmes in which to enrol. The universities are, as a result, faced with continual fluctuations in demand and therefore funding—sometimes because of major events such as the Canterbury earthquakes but more commonly because of changing student preferences.

The most obvious of these has been a declining interest in the arts and languages—the proportion of secondary students studying a language is the lowest for a century. Likewise in initial teacher education, where there was a nationwide 39% drop in student enrolments between 2010 and 2016.

Although the universities try to reverse these trends—by promoting subjects with falling enrolments, improving enrolment procedures and sometimes ‘buffering’ subjects or faculties in decline, there is a limit to what can be done. If we do not reduce staff numbers in shrinking faculties, we cannot increase them in growing faculties and, as a result, students and staff in those faculties will suffer.

And, while the reduction in staff numbers in declining faculties can sometimes be achieved by natural attrition, resignations and retirements often do not occur in the right place or with sufficient frequency (our rate of academic turnover is about 6%, less than half that in the public sector as a whole). As a result, involuntary attrition sometimes becomes necessary as a last resort.

The second reason is that—due to the policies of successive governments—in the past ten years, government funding per domestic student increased by only 2% in inflation-adjusted dollars, while expenditure per student grew by 20%, mainly due to costs in areas such as salaries and technology. This means that we have no ‘fat’ in the system with which to endlessly support shrinking faculties.

It also means that we must continually seek efficiencies in our support units so that we can invest our limited resources in academic activities, maintaining our student:staff ratios (a key driver of quality and rankings)—even though our academic staff costs rise more rapidly than our student revenues.

Again, this cannot always be achieved by attrition.

Finally, we are frequently exhorted to avoid or delay these cuts. Were we to do so, we would see the financial positions of our universities weaken from their already modest situation.

Eventually that could lead to the government appointing commissioners, with the loss of institutional autonomy, as has recently happened with some of the polytechnics. Of all the unpalatable options available in these circumstances, that must surely be the worst.

Professor Stuart McCutcheon
Chair, Universities New Zealand