I indicated in my earlier email that I would provide further information about the financial state of the University and the background to the headline figures quoted by the NTEU in their Factsheet. In this email I would like to focus on the figure of $122,811,000 - 2012 Current Assets (cash and cash equivalents).
This figure is actually incorrect - the correct Cash and Cash Equivalents figure for 2012 for the University was in fact $90.244 million (see the 2012 Annual Report at page 16).
The NTEU claims their figure “indicates that the University is not broke and could absorb the projected three-year total decrease in federal funding of $26.5 million while maintaining a healthy cash balance”. This is a disappointing statement by the NTEU particularly when it is not only based on an incorrect figure but also totally fails to understand what Current Assets (cash and cash equivalents) means.
Given that the correct number is some $32m less than that quoted, we need to look at how this cash balance is generated. Included in this 2012 cash balance is $22 million of tied funding for buildings, which had not yet been fully spent at December 2012 but will be in 2013 as the capital projects to which this relates are completed. The figure also comprises the working capital the University has to have on hand to meet such responsibilities as payroll and creditor commitments. It is financially prudent to maintain a minimum level of working capital to sustain operations.
The University was already forecasting a significant deficit operating result for the 2013 Budget, with a 2.6 per cent salary increase factored in. It has now offered a 3 per cent annual increase. All four faculties are using reserves generated in prior years to sustain current year operations, meaning that cash reserves are being depleted and not being replenished as these reserves are used up. And that was before the recent cuts announced by the Federal Government.
This means that the cash position of the University is declining.
The $26 million decrease in the funding we expected from the Commonwealth Government is not something that the University can simply “absorb”. We need to work with the reality of the situation to ensure the University’s long-term sustainability rather than just picking headline numbers.
Tricia Brand | Executive Director
Division of Finance and Resource Planning