Rhodes University in financial difficulty

Rhodes University in Grahamstown, Eastern Cape. Photo:  Ru.ac.za/S Smith

Rhodes University in Grahamstown, Eastern Cape. Photo: Ru.ac.za/S Smith

The financial challenge of the university was compounded by a high ratio of staff costs, heavy reliance on student fees and significant maintenance backlogs.

Grahamstown’s Rhodes University on Friday laid bare its financial crisis as a result of declining government subsidies and a combination of pressures.

The office of the vice-chancellor, Sizwe Mabizela, sent a toplist communique to staff earlier this week explaining that the university was under financial strain and was facing critical financial choices.

Mabizela said the situation was due to the fact that over the past two years, the higher education sector in the country had been grappling with the serious impact of declining subsidies and a combination of other financial pressures.

Mabizela said the financial challenge of the university was compounded by a high ratio of staff costs, heavy reliance on student fees and significant maintenance backlogs that can no longer be deferred.

Also exacerbating the financial situation at the university was the wage negotiations with organised labour that have deadlocked following a rejection by the unions of a five percent revised salary offer.

Mabizela said, in the communique, that the university accepted that five percent was a minimal increase, but the offer reflected the current financial situation, adding that the institution continued to engage in good faith and with complete transparency.

“An increase of five percent is a bitter pill to swallow in the face of biting inflation. This we accept. We, however, engage in good faith and with complete transparency. We opened the books for scrutiny. The offer reflects our current financial situation,” Mabizela said.

“A single percentage increase in the remuneration bill is equivalent to R4 million. The current offer thus translates into an additional R20 million in salaries. We cannot increase this budget further without placing the future of this university and the academic project in serious jeopardy.”

Unlike many other universities, Rhodes University has not outsourced its support services apart from additional security services and some external contracting.

Mabizela said the university had to realise savings of just under R10 million in the 2017 financial year and an additional R28 million in 2018 in order to remain viable.

He said the management of the university has been working on a turnaround plan and Council further engaged with the proposals at its recent meeting.

As a result, Mabizela said the university would be implementing some measures as part of financial risk mitigation in the short term.

These measures include reviewing the academic size, harnessing alternative sources of income, banning year-end functions paid from university funds, and ensuring that all travel, accommodation and catering costs are motivated and approved by line managers.

A partial moratorium on the filling of support staff vacancies and the re-grading of support staff posts has also been put in place, and another moratorium placed on non-essential consultancy contracts.

“The challenges which face us at the moment present us with an opportunity to reimagine our place and purpose as an institution of higher learning in the context of our developing nation,” Mabizela said.

“We need to appreciate the interrelated factors which must inform our choices and prioritise the academic project which is the reason for our existence in the first place.”




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