UTAS' deception.

 

The ructions at UTAS continue unabated.

The release of UTAS’s 2023 Annual Report was accompanied by an email to colleagues, presumably staff, from the Deputy Vice Chancellor (Student Services and Operations) explaining what the report meant, together with assurances that management are attending to addressing problems confronting UTAS.

A copy of the email is reproduced below.

Staff members are part of the university as defined by Section 5(1) of UTAS’ governing Act. For an outsider it was jaw dropping to see the tenor of the email to members of the university, replete with misleading statements, half truths and unsubstantiated assertions when commenting on the 2023 financials. It is little wonder relations with staff are strained particularly COBE staff who must have a better grasp of financial matters than the Deputy Vice Chancellor obviously assumes others must have.

Quite incredibly there was no mention of how the Hobart rebuild was impacting UTAS’s finances.

There are four paragraphs where the financial performance of UTAS was discussed where the writer obviously didn’t understand UTAS’ financial statements and/or was quite happy to provide a misleading interpretation.

Comments plus suggested amendments for the four paragraphs plus the introductory paragraph are set out below should the Deputy Vice Chancellor wish to issue an amended circular in the interest of truth and full transparency amongst colleagues and members of the university.

The opening paragraph is a little misleading and lacks specifics. A few additions are needed:

 

The first of four paras on the financial statement shows a woeful misunderstanding of cash vs accrual accounting. EBITDA is an accruals measure. Cash flows from operations is a cash outcome. The latter is not a reliable measure of financial performance for one year. Timing differences are one aspect. What’s earned and incurred are the crucial metrics. When it’s received or paid is secondary when measuring performance from a sustainability viewpoint. More significantly the cash flow calculation includes an inflow of $7 million being net interest received (interest plus dividends less interest paid). EBITDA by definition doesn’t. Admitting EBITDA was negative would be confessing to UTAS' inability to service debt from operations. A pea and thimble trick was used to pretend that a positive figure from the cash flow statement was the same thing. It's a shameful, probably deliberate attempt to misrepresent reality to colleagues. Pathetic. A suggested amendment follows.

 

The next paragraph on the financials is a little misleading and a few changes are needed:

 

The next paragraph has an incorrect date, and needs a more honest appraisal of UTAS’ investment portfolio than the spin presented.

 

The final of the four paragraphs on financial aspects contains an amazing admission. A continued ability to deliver a budgeted result implies the 2023 budget was achieved. With a negative $64.4 million outcome no less. Furthermore, assertions that the balance sheet is strong and student numbers are holding need further explanation given plenty of evidence to the contrary. Otherwise, an amendment as follows is suggested:

 

The email from the Deputy Vice Chancellor is reproduced below, The paragraphs requiring editing are highlighted:

Dear colleagues, The University’s 2023 Annual Report was tabled in Tasmania’s Parliament today. You can read it on our website. We delivered on our mission in 2023. We made a difference for and from Tasmania through our teaching, research and engagement and we did so in a challenging financial environment amid policy uncertainty. Careful management of our finances is an ongoing task as the volatility in the national higher education sector, particularly in relation to international students, continues in 2024. For the first time, the report includes a section on sustainability, in addition to the regular institutional overview and segments on the University’s governance and finances. We’ve done this because it is important to us and our students that we have a positive impact for our community and the planet. We are a recognised global leader in sustainability – the number one university in the world for climate action three years in a row according to the Times Higher Education Impact Rankings. As a world leader, we wanted to set out how we approach sustainability and report on our performance in areas such as waste, energy usage and greenhouse gas emissions. We will continue to evolve our sustainability reporting in the years ahead. Other sections of the report capture our financial performance. Pleasingly, our domestic student revenue and research income was stable, and our asset base strong, in 2023. However, the post-pandemic volatility in the international student market impacted revenue while high inflation impacted costs, and this put pressure on our financial result. In these difficult times, we focused on managing our financial performance with an emphasis on our cash operating result, known as EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation). Through the efforts of many we met our goal for 2023 of generating positive cash flows from our operations. In the Annual Report this is best represented by the $1.5 million inflow reported in the ‘Cash flows from operating activities’ table on page 79. Once we take into account the $54.7 million of depreciation we incur from our $1.2 billion in property, plant and equipment assets, and the inflows we received from our investment portfolio returns and government capital grants, our consolidated net result from continuing operations was a deficit of $10.4 million. This result reflects the careful financial management we have undertaken across the entire university in these challenging circumstances for the sector. The result also reflects the excellent returns we were able to make from our investment portfolio in 2022, generating a gain of $40.5 million, contributing to the consolidated net result and growing our portfolio, which is a critical asset to support our investments in teaching and research facilities and our scholarship program. As at the end of 2023, our consolidated net asset position was more than $1.3 billion. Our continued ability to deliver our budgeted result in a difficult revenue and cost environment, as well as the underpinning strength of our balance sheet and growing domestic student numbers, give us a solid foundation as we manage the complex economic and policy environment in which we operate.

The challenges experienced in 2023 have continued into 2024. The Australian Government’s proposed reforms, which would see higher education shift from a market-driven model to a managed model, will help address these challenges in the medium term and create a more stable, equitable funding system. That will be good for Tasmania, but the transition will take time. In the short term, unannounced changes to international visa processing have reduced the number of international students at regional universities like ours. We have a plan that we have consulted with you on to continue to deliver on our mission and remain financially sustainable. Thank you again to the more than 900 people who contributed during the consultation process and to the 350 people who came to the drop-in session on Monday where we discussed the outcomes and outlined how the strategies are being implemented. One of the initiatives we received feedback on was senior manager wage restraint. All staff covered by the staff agreement will receive the specified 2.5 percent pay increase from the first full pay period in July, but we have agreed that there will be no pay increase in 2024 for members of the University’s executive or Council members. Pay increases for senior managers on individual contracts will be limited to 1.5 percent with some exceptions to ensure we continue to reduce our gender pay gap. Vacancies and recruitment will be carefully managed, making sure we prioritise critical roles, support the student experience and ensure local decision-making for Colleges and Divisions. We are responding and making the adjustments needed to ensure our financial sustainability in these challenging times for the sector. You can find more information about our savings strategies, including a recording of Monday’s drop-in session, on the staff intranet.

I would encourage you to look at our 2023 Annual Report and all of the financial and sustainability information it contains. If there is anything you would like to discuss about our financial position, please don’t hesitate to contact me at craig.barling@utas.edu.au