University College Cork has privately projected that its financial deficit would climb to €23 million this year unless it embarks on series of cost-cutting measures.
Last January the university revealed that it has been forced to review capital projects after recording a €11.2 million deficit last year, which was attributed to “rising costs”. During internal staff briefings this week staff were provided with details of “project alpha”, a cost-containment plan aimed at reducing the deficit.
Staff were told that on its current trajectory the university’s deficit would climb to €23 million in this year and €35 million next year.
Under “project alpha” the deficit would reduce to €16 million this year followed by a return to a surplus of €2 million. However, as much of the spending has already been committed to and is “locked in”, the university says it will have to rely on a series of additional and unspecified “one-off” measures to reduce the deficit to €500,000 this year. It projects the college will return to a surplus of €2 million by next year.
Briefing material for staff, seen by The Irish Times, shows that all discretionary expenditure is being scrutinised and only expenditure that is essential will be progressed. A revised policy on travel and expenses has been developed, while expenditure on new mobile phone handsets or contracts, IT, stationery or furniture should “not be progressed at this time”.
Essential expenditure in the area of IT, such as hardware devices, must be discussed with budget holders.
Staff were told that since Covid the university’s income has grown by 14 per cent while its costs have grown by 17 per cent.
Among the contributory factors to excess spending, according to briefings, include a surge in inflation, interest rate rises and losses on investment funds. In addition, the university notes that there are structural funding deficits in pay awards, research overheads and capital funding.
A significant increase in recruitment since Covid, at a time when some income sources have not recovered, is cited as another factor.
It said the trend of costs exceeding expenditure began in 2017 but that Covid and investment gains masked these underlying issues for a time. The gap between income and expenditure continued to widen between 2021 and 2023, even as income slowed down. As a result the university says it is working to ensure “greater visibility and control” of staffing numbers and boosting commercial income sources.
Among the areas where it says there is more ability to control costs are in sectors such as advertising and promotion, professional fees, equipment, motor/travel/subsistence and consumables.
In a statement UCC confirmed that it has initiated a plan to address its deficit by “generating greater commercial and philanthropic income, and achieving cost savings across a number of areas are a focus of this plan”.
“Through this plan it is expected that the deficit will be reduced by year-end 2023/24, with UCC returning to surplus in 2024/25. The Higher Education Authority (HEA) has been notified and UCC and the HEA have agreed to review capital projects in the context of the current work plan. The fundamentals of UCC remain strong and the university is committed to returning to a surplus position,” it said.
It said project deficits outlined in internal meetings were presented as “illustrative examples” if certain once-off measures were not realised. When these measures are included a spokesman said the deficit would be reduced by year-end 2023/24, with UCC returning to surplus in 2024/25.
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