The University is expecting to face an annual funding gap of £4-£6million soon after 2012/13 as departments are told to save space and contain costs.
The operating cash flow of the University is expected to fall by £7m to around £15.5m, leaving it £10m short of the required level.
To combat the gap, the University will use the “increase in the net contribution from additional fee income” as well as a programme of capital utilisation across the estate. Students, excluding overseas, will be charged £9,000 from October 2012, a threefold increase on the current level.
The strategy paper labels the last stage of University growth and borrowing as the “free cash generation” with debt soon to be “at around £150m”.
Tim Ellis, YUSU President, has warned the University against using the additional income from students’ fees to combat the funding gap.
“[We] will be urging the University to find other means to fill the funding gap. It is important that students don’t subsidise other areas of the university.”
The Finance Strategy, published at the start of November, also outlined the level of dependence the University has on fees from overseas students; up to 50 per cent of cash flow can be traced back to “the University’s continued ability to attract good quality students from abroad.”
The Strategy also states that the importance of fees from overseas students “will, however, continue to grow and will remain an important contributor to the University’s bottom line.”
However, UCAS figures this week showed that the number of overseas applicants to York has fallen by 6.2 per cent from the same time last year.
Graham Gilbert, the University’s Director of Finance, spoke to Nouse about the Finance Strategy report and the funding gap that was addressed within it.
He stated that the University is in a “generally strong position” to close the gap, however emphasised that “there are always concerns about the market, particularly during periods of significant and rapid transition.”
Gilbert stressed the need to contain excessive costs in the report, stating: “There can be no justification for creating plans that contain no means of containing costs that have the potential to rise faster than the ability to recover them.”
The report outlines challenges the University is experiencing in the short term, but states that: “In the longer term the University expects its financial resources to strengthen as the new student funding regime embeds.”
Ellis added: “Last year the University committed to spending any additional income from fees on things that directly effect students and their time here at university.
Ellis cited “lower student staff ratios, textbooks and course materials, improvements of campus and things that affect the student experience” as areas where the additional income should be directed.
Gilbert continued: “The University needs to improve its capital utilisation, and this is one of the ways to ensure that the University can continue to afford to sustain growth and replace legacy assets after the current MTP [Mid-Term Plan] period. A 10 per cent improvement in space utilisation would improve the funding pressure by over £2m per annum and 30 per cent would eliminate it.”
Gilbert expanded: “The University is in a generally strong position to close the gap between current levels of resource generation and future need.”
But he sought to reassure students, by stating: “I am confident that we can cope with any likely problems and still hit the enhanced targets we shall be setting ourselves.”