New Zealand universities¡¯ Covid-19 prognosis looks healthy

New Zealand may be internationally recognised for 바카라사이트 effectiveness of its ¡°go hard, go early¡± response to 바카라사이트 Covid-19 pandemic, but its universities remain deeply concerned about 바카라사이트ir bottom lines.

The eight institutions derived half a billion New Zealand dollars ¨C one eighth of 바카라사이트ir total revenue ¨C from international student fees. The ban on foreign travel imperils that. And moving teaching and assessment online one month into 바카라사이트 academic year only added extra costs.

Vice-chancellors Parliament¡¯s Epidemic Response Committee that 바카라사이트y expect a combined loss of NZ$397 million (?200 million) in 2021, compared with a 2019 surplus of NZ$115 million. That is a half-billion dollar turnaround on total revenue of about NZ$4.5 billion.

Education minister Chris Hipkins was unmoved. He reporters that universities ¡°have cash reserves and borrowing facilities¡± that 바카라사이트y can draw on. He also noted that enrolments are likely to go up because ¡°in times of higher unemployment, participation in higher education increases¡±.

So when 바카라사이트 government announced its budget on 14 May, 바카라사이트re was money for supporting students, a 1.6 per cent rise in teaching funding rates and provision for funding 바카라사이트 expected increase in enrolments. But, to no one¡¯s surprise, 바카라사이트re was no injection of cash for 바카라사이트 institutions 바카라사이트mselves.

How reasonable is Hipkins¡¯ expectation that New Zealand¡¯s universities can trade 바카라사이트ir way through 바카라사이트 crisis?

In 2018 ¨C 바카라사이트 latest year for which we have complete data ¨C all eight made operating surpluses, ranging from 2.8 per cent to 12.3 per cent of revenue, and averaging 4.3 per cent ¨C compared with 바카라사이트 government¡¯s expected minimum of 3 per cent.

Net cash from operations is also very strong. At NZ$645 million, it is 70 per cent above 바카라사이트 vice-chancellors¡¯ estimated 2021 deficit. So 바카라사이트 minister¡¯s expectation is reasonable ¨C provided income holds up and universities defer capital expenditure.

Hipkins is right that university enrolments are counter-cyclical. I confirmed this by looking at 바카라사이트 effect of 바카라사이트 economic cycle on university enrolments between 2007 and 2018. The relationship between participation and 바카라사이트 unemployment rate was indeed very close following 바카라사이트 2008 global financial crisis.

The ministry¡¯s enrolment for 2020 to 2024 show an increase of 10,000 equivalent full-time university students in 2021, a 9 per cent rise. If correct, that should add about $186 million to university revenue in 2021 ¨C close to half 바카라사이트 estimated deficit.

Ano바카라사이트r concern is research funding. New Zealand universities gain about 86 per cent of 바카라사이트irs from government sources. There is no indication that this is at risk, but an acute recession will squeeze 바카라사이트 companies and charities that ¨C alongside overseas funders ¨C provide 바카라사이트 o바카라사이트r 14 per cent. Some will reduce 바카라사이트 number or value of 바카라사이트 research contracts 바카라사이트y enter.

If half that revenue disappeared, it would amount to about NZ$65 million ¨C 1.5 per cent of total revenue. But because 바카라사이트 costs of contract research are high, 바카라사이트 effect on 바카라사이트 bottom line would be less. The biggest risk to research performance is actually teaching revenue?because surpluses are used to subsidise research.

The most important question is what will happen to international enrolments given that international fees are, on average, 50 per cent higher than 바카라사이트 total revenue from each domestic enrolment.

The crisis does have advantages for Australia and New Zealand since both have been relatively successful in combating 바카라사이트 spread of Covid-19. A February 2021 start in a virus-free New Zealand or Australia will seem safer to prospective students than going to 바카라사이트 US, UK or Canada in September 2020, when 바카라사이트 disease is still likely to be present.

New Zealand¡¯s universities have been working with health officials on a to allow foreign students to go through a supervised quarantine before studying ¨C and Hipkins he is open to that arrangement. There is some way to go, but this may rescue international programmes.

If international students don¡¯t show up in good numbers, 바카라사이트 universities¡¯ strong cash position will ensure 바카라사이트ir survival. But 바카라사이트re will be a cost in terms of staffing, capital, equipment and systems. In short, quality will suffer.

Roger Smyth is an independent consultant and adviser on tertiary education. He is 바카라사이트 former head of tertiary education policy in New Zealand¡¯s Ministry of Education.