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Finances in balance – but major challenges in 2017-19

After the major budget reductions of 2014, balance has been restored to Aarhus University’s finances. With an expected surplus of approx. DKK 65 million in 2015, the university is in a reasonable position to counterbalance the government’s announced cutbacks to research and education in the period 2016-2019.

2015.12.07 | Anders Correll

The board approved the financial report for Q3 and the budget for 2016 at its meeting on 3 December. Photo: Jesper Rais, AU.

As a result of the recovery plan carried out in 2014, which unfortunately resulted in redundancies and other adjustments, balance has been restored to Aarhus University’s finances. According to the university’s financial report for the third quarter approved by the Aarhus University Board on Thursday 3 December 2015, an operating surplus of DKK 65 million kroner is expected for 2015, corresponding to one per cent of turnover. This surplus must be viewed in the context of a total deficit of DKK 208 million in the three preceding years.

In terms of the accounts, the total surplus is expected to reach DKK 189 million, because a one-time profit from the sale of the engineering buildings on Dalgas Avenue totalling DKK 124 million figures as income in the 2015 accounts. However, profits from the sale have been allocated in advance to a reduction of the rent and other expenses connected with the relocation of the engineering programmes to the Navitas building.

Major challenges in 2017-2019

The positive result for 2015 will provide an important point of departure for the coming years, as the 2015 Finance Act presents significantly greater financial challenges than anticipated. In particular, this is due to the introduction of a new two per cent annual ‘reallocation contribution’ that reduces Finance Act funding for education and other purposes, in addition to a reduction of government research funding programmes by DKK 1.4 billion in 2016. Taking into account the result for 2015, Aarhus University expects equity to stand at 10 per cent of turnover in accordance with the target set by the board.

An reduction in income is anticipated for the budget period 2016-2019. However, on account of the university’s current financial position and the expected surplus in 2015, these challenges will be manageable in 2016. After this, the financial challenges will continue to increase from year to year. In 2019, a total annual reduction in income of DKK 300 million is expected. However, if the university does not succeed in reducing time to degree to the extent required by the study progress reform, income may fall even further. Likewise, the introduction of a new taximeter scheme in 2018 may have a significant effect on the university’s budget.

Against this background, up until mid-2016 the senior management team will plan how to handle the challenges which the university faces from 2017 and onwards in the best possible way to ensure balanced finances and the flexibility to make future academic prioritisations.

The board approved the financial report for Q3 and the budget for 2016 at its meeting on 3 December. The final accounts for 2015 are expected to be approved at the board meeting in February 2016.

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