Saving Australia’s biggest university

Monash University looms over Australian higher education like a tertiary behemoth. With nearly 80,000 students, Monash is by far the largest and most complex university of the 43 dotted across Australia, and has assets valued at more than AU$5 billion (US$3.2 billion). Yet it is now facing serious financial problems, including a staggering revenue shortfall this year of AU$350 million (US$226 million).

“We have campuses on three continents, international partnerships and study abroad programmes around the globe, and we are Australia’s largest university,” says Monash Vice-Chancellor Professor Margaret Gardner. There are some 69,000 local and international students on campus in Australia and 10,500 on sites offshore, the majority in Malaysia.

The revenue shortfall represents a startling turnaround in only two years. In 2018, the university had a record operating surplus of nearly AU$163 million, up from AU$92.5 million the previous year.

But 2018 was also a bumper year for Monash with federal government funding up by 4.1% to a startling AU$1.1billion and international student fee revenue rising 21% to AU$170 million.

Even so, there were already pointers to looming harsher economic conditions, with investment income dropping by AU$54 million and employee-related costs rising by AU$97 million to what must have seemed a heart-stopping AU$1.3 billion.

A 2020 shock

Founded in 1958 and named after a famous World War I general Sir John Monash, the university has continued expanding almost every year since its inception.

Yet even in early 2020, Monash is experiencing a startlingly grim financial future arising from a combination of factors. These include a AU$220 million plunge in its income from student fees and a further AU$130 million in lost revenue from parking, donations, property and investment earnings, as well as other sources.

The university also faces a further AU$45 million shortfall from funding Monash College, its wholly owned preparatory offshoot that has suffered a 40% hit to its income from its own fall in student enrolments.

So what happened to generate such a significant turnaround?

In a frank interview with University World News, Gardner, the vice-chancellor, spoke freely about the serious issues confronting her institution, including its financially troubled college.

“Monash College is a wholly controlled entity of the university and we have committed AU$30 million on current forecasts to address the impact on its overall viability because of an estimated 40% decline in their income,” Gardner said.

The university had also provisionally allocated AU$15 million in hardship grants to its students from undergraduate to higher degree research, including domestic and international students.

“But applications from students for grants are well in excess of our current provision, so the final expenditure will depend in part on the level of hardship among them,” she said.

“We have also opened an appeal to staff and alumni to donate to this hardship fund and, to date, members of the university’s senior management have donated as well as a significant number of staff and alumni.”

Vice-chancellor’s salary cut

Gardner confirmed that the losses Monash was facing were being partially offset by a AU$200 million cut in operating costs, including an AU$80 million saving from an ongoing staff hiring freeze. Included in the cost-cutting is a 20% reduction in the vice-chancellor’s salary as well as those of the entire senior executive team.

Three years ago, Gardner’s annual salary of more than AU$1 million made her among Australia’s top 10 best paid vice-chancellors. Even so, that was less than the AU$1.2 million her husband Professor Glyn Davis was earning when he headed the University of Melbourne.

That meant that two of Australia’s most prominent academics were not only married but heading two of the nation’s top universities while taking home combined incomes approaching AU$2.5 million a year.

But was the salary cut at Monash forced on its executives because of the university’s deteriorating financial situation? “No!” Gardner said firmly: “I and the senior executive team volunteered to take a 20% pay cut as part of the overall reduction in expenditure.”

“The senior executives also agreed that half of the pay cut would go as donations to our hardship fund for students and half to help reduce the university’s operating expenditures.”

A dire situation

So how did the nation’s biggest university end up in such dire straits?

Among the factors causing the downturn, Gardner said, was a sudden and sharp fall in the number of international students enrolling, principally because of travel bans imposed by the federal government earlier this year.

“This meant that many of the students were unable to travel to Australia to undertake their studies,” she said.

“Those who were already in Australia enrolled and a significant number outside Australia enrolled online and continued to study offshore. But the numbers of international students in total were significantly less than in 2019.”

Gardner added that Monash had enrolled all the Australian domestic students for which it received federal government funding, and was even slightly over-enrolled. So there had been no decline in domestic student numbers.

But she agreed that Monash was facing a financial deficit this year and would start 2021 in the same situation. This meant the university was drawing on its cash reserves as well as increasing its borrowings to pay for day-to-day operations.

“Depending on whether the situation in 2020 worsens further than we anticipate or is broadly as we forecast, those extra borrowings will also be used in part to deal with 2020,” she said.

“In other words, the cash reserves and borrowing in 2020 will allow the university to prepare for the more difficult circumstances we are likely to face in 2021.”

Asked about the size of Monash’s expected deficit this year and next, and what the university was doing to tackle clearly and deeply troubling issues, Gardner said the university was projecting “a small deficit in 2020”, which it would carry forward into 2021.

“The university's deficit will be small because of the measures outlined which are mitigating the major decline in revenue. We are also examining how we might find new sources of revenue,” she said.

“As with all Australian universities, our income from the federal government for teaching domestic students is currently capped at the level it was in 2017.”

The number of fee-paying international students is lower in 2020 than it was the year before, and the number in 2021 will be lower again and so on.

That is unless international enrolments of new commencing students increase?

“All the current information about the impact of Australia’s travel bans and the downturn in the global economy suggests they are likely not to grow,” Gardner said.

Asked if it was possible to say when she hoped to return Monash to a more stable position, she said that on current projections it would take “some years”.

But this depended on changes in the global economy, the success of the university’s plans, and any changes in government support and regulation.