High returns on investments of surplus liquidity in 2019 and restraint during the autumn’s Finance Bill uncertainty helped to turn a budget deficit into a surplus. AU's board of directors will continue to focus on reducing the university’s equity in coming years.

2020.04.02 | Sys Christina Vestergaard

Photo: Colourbox

Although Aarhus University expected a budget deficit of DKK 48 million, the university came out of 2019 with a surplus of DKK 51 million. This will provide a necessary buffer to continue strategic initiatives despite any challenges that may arise as a result of the coronavirus outbreak. 

One of the factors behind last year’s budget surplus was the fact that there was a great deal of doubt about the consequences of the Finance Act for university budgets towards the end of the year. As a result, many of the university’s research and teaching programmes held off on new hires and purchases. 

In addition, the university's investments of excess liquidity in 2019 gave much higher returns than anticipated. The university had budgeted with a return of DKK 20 million, but realised 52 million kroner. These are the major factors behind year-end results that were much better than expected. 

"I'm very satisfied with this year's result. The board had decided that the university was to draw on its equity to maintain and develop the strategic academic initiatives. To a great extent, that’s what the university did, and with the challenges in the autumn related to the late passage of the Finance Act together with high returns on our investments, there’s a reasonable explanation for the positive deviation of 100 million kroner,” stresses Connie Hedegaard, chair of AU’s board. 

Strategic research and education initiatives must continue despite current challenges

The goal is still for the university to continue drawing on and reducing its equity by investing in strategic research and education initiatives and the continued digitalisation of the university. But we also need to take the extraordinary challenges 2020 might present into account, Hedegaard adds:

“The current situation with a physical shutdown of the university in a period will probably put a strain on our finances in a way no one could have anticipated when the budget for 2020 was made. In this respect, it’s quite positive that the extra income in 2019 gives us a solid buffer that will allow us to continue with the strategic initiatives.” 

At the beginning of 2020, the university’s equity amounted to 14 percent of revenue, and the goal is to reduce it to 10 per cent. 

Success in attracting external funding 

There is another positive tendency in the accounts for 2019 that is worth emphasising, Rector Brian Bech Nielsen points out:

“Spending of external funding from research councils and foundations reached two billion kroner for the first time. It’s very positive that our researchers are still having success in attracting more competitive funding, and a result of that is the increase in spending and research activities we’re seeing. Of course, we have to anticipate that the consequences of the coronavirus outbreak will put something of a damper on research activities, but all in all, I think that we have grounds for measured optimism.”

Other positive deviations from the budget include results from continuing and further education, income-generating activities and the like, which generated a total of eight per cent more income than expected. 

Good financial management

Bech Nielsen is also pleased that the board has decided to stick with the goal of reducing equity to ten per cent of revenue.

“Our mission is not to generate profit, but to invest revenue in excellent research, education, consultancy and research communication. What’s more, it’s good to have a buffer at a time when we don’t yet know the full consequences of the coronavirus outbreak.” 

Aarhus University has total revenue of DKK 6.7 billion. 

"It is a big job to oversee every detail of our finances throughout the year, but at the end of the day, the university's healthy financial situation is also a sign of a successful ongoing financial management performed in close collaboration between the research and teaching programmes and the university's talented financial management staff, "says the rector. 

The accounts and the annual report were approved without qualifications by the university’s accounting firm.