A message from the Chief Financial Officer
For those of you who don’t yet know me, I joined the University of Sheffield as Chief Financial Officer at the beginning of February. It is safe to say I never anticipated to be writing to you all for the first time in these circumstances and I want to thank you in advance for taking the time to read and digest this important information.
This update will provide an overview of our current financial position, let you know the financial scenarios we are modelling as we look to next term and give information on the steps we all must take to protect and improve the University’s financial position.
Our current financial position
As is the case for all universities, the Covid-19 pandemic has had a significant impact on both our current income and our financial forecasts for the next academic year.
Since we closed University buildings in March, we have lost over £10 million in income from student residences, conferences, catering and sports activities. We have also seen some pauses in research income from funders.
While these losses are significant, from the measures we have already taken, the University has been able to manage them well and it is our projections for next year that need greater attention.
Our projections for next year
Looking to the next academic year, our latest financial forecasts show that, prior to Covid-19, we expected to receive £780 million of income during the next academic year. This would be made up of £346 million of course fees, £87 million of funding council grants, £238 million of research grant income and £110 million of other income. Of the £346 million of course fees, £177 million relates to international student fees.
Although we are receiving an encouraging level of international student applications, we are aware that the Covid-19 pandemic may impact on a student’s ability to travel to the UK for study, which may in turn affect their decisions. There is also a risk that some home students may choose to defer study as a result of the pandemic.
We have looked at two potential recruitment scenarios:
- Firstly – no international students study at the University, broadly the same as only 50 per cent of total tuition fees received. This results in a £162 million reduction in cash received.
- Secondly – 50 per cent of the international intake and 25 per cent of the Home/EU new intake are not recruited. This results in £70 million reduction to our cash received.
If these students are not on campus we will also see reductions to residential, catering and sports income. Although actual recruitment in September may differ from these figures, they do show the large amount of income at risk.
Actions we have taken so far
It is due to this high level of uncertainty and the potential high value of this loss of income that we have introduced a number of immediate measures to build our cash balances as much as possible. These include:
- All new staff posts or extensions to existing staff contracts will be reviewed and approved by a new Recruitment Advisory Panel chaired by the Deputy Vice-Chancellor.
- Non-pay expenditure is restricted to essential spend only. We have a task and finish group working on guidance for colleagues which will be available at the end of this month. Until this guidance is released please only commit expenditure if it is absolutely essential and essential that it is required now.
- Capital projects have been paused and are restricted to projects with contractual obligations only.
- We have reviewed and made changes to our reward and recognition process for 2020. More information will be shared with you this week.
- We are accessing available government support through the Job Retention Scheme, advance payments from the Student Loans Company, and the Quality Research payments. We are keeping under review the need to apply for the Covid-19 Corporate Financing Facility, a scheme to help large businesses affected by coronavirus (Covid-19) through the purchase of their short-term debt. This is not an immediate requirement for us as we have a revolving credit facility already in place.
- We are looking at the areas where we can increase student numbers by up to five per cent as part of the conditions announced around the new cap on student recruitment for 2020-21.
- We are also engaging with the government around the opportunities for further support for crucial research.
Alongside this, we will start to prepare further actions that could be taken to mitigate a £100 million shortfall in income. This work is being progressed and we will keep you informed as plans develop.
How we can all support a sustainable financial position
All of us need to do everything we can to support a sustainable financial position for our University. It is really important that in all you do, you consider what is and isn’t essential spend. Your efforts to do this so far are really appreciated; please continue as this will make a significant difference.
We also all need to play a part in developing the best online education possible, the safest campus and to let students know how committed we are to their education, development and graduate opportunities. Acting as advocates and promoting the University in the best possible way will help to maintain our position as a globally-leading university.
There has already been a fantastic effort from colleagues across the University to develop and deliver student recruitment activity online. We really must continue to prioritise this work given the potential high loss of income in this area.
Thank you for everything you are already doing to protect and improve the University’s financial position. I will continue to keep you updated so that you have the information you need to help the University in these challenging financial times.
Chief Financial Officer