Restoring financial health to The University of the West Indies (The UWI) is one of the objectives of "Agility". During the academic year 2019/2020, the Office of Finance and the Campus Bursaries continued to effectively manage the financial affairs of The UWI to achieve this objective.
The funding challenges faced by the University were exacerbated in the fourth quarter of the academic year by the onset of the COVID-19 pandemic. The contributing Governments which provide the largest portion of income in the form of contributions to economic cost, experienced challenges in honouring their financial obligations to the University. Responding to the demands of their own health care systems, meant that some Governments were not able to make their usual contributions on time. The value of tuition fees collected was also reduced.
To maintain financial viability, the University pivoted to remote learning at all Campuses. By continuing to exercise fiscal prudence, the University remained viable without sacrificing the quality of teaching, learning and research.
The draft audited Financial Statements for the financial year 2019/2020, show that the operations of the University resulted in a deficit of BDS$66.5 million (Restated 2019: BDS$82 million deficit).
The results of Actuarial Valuations conducted in accordance with International Accounting Standard No.19 (IAS19) are recorded in the Financial Statements. A significant contributory factor to the deficit in 2020 was the cost of post-employment benefits (pension supplementation and medical benefits) for all Campuses and the University Centre and the costs associated with the defined benefit scheme for administrative and technical staff at the St Augustine Campus. The total expenditure recorded for these arrangements was BDS$43.2 million in 2020 (2019: BDS$57.8 million). The pension supplementation element of the Federated Superannuation Scheme for Universities (FSSU) is unfunded.
Impairments recorded in accordance with the International Financial Reporting Standard No.9 (IFRS9) accounted for BDS$22.6 million of the deficit in 2020 (2019: BDS$17.2 million). Impairments were recorded primarily on student and government receivables outstanding for several years as well as on investments.
These two items of expenditure which continue to influence the results adversely each year are being reviewed by a Special Committee comprising of Government representatives, members of the private sector and the University leadership. This Committee will make recommendations to reduce the associated cost to the University.
The sources of income for the year:
Government Contributions 47% (2019: 48%)
Tuition and Other Student Fees 15% (2019: 14%)
Special Projects and Other projects 26% (2019: 27%)
Commercial Operations 8% (2019: 7%)
Other Income 4% (2019: 4%).
The categories of expenditure:
Departmental 45% (2019: 45%)
Administrative 12% (2019: 11%)
Central 16% (2019: 18%)
Special and other projects 19% (2019: 20%)
Commercial Operations 8% (2019: 6%).
The University's engagement in income-generating activities, including the offering of full fee- paying programmes has contributed to 32% of its total income. This supports the operations of the University, which continues to experience shortfalls in government funding.
Due to the onset of the COVID-19 pandemic, the University experienced loss of revenues from its commercial operations. Halls of Residence and conference facilities were closed in the last quarter of the academic year. A deficit of BDS$6.3 million arose from these operations compared with a surplus of BDS$9.5 million in 2019. Other income-generating sources are being explored.
In March 2020, the Government of Barbados paid to the University the final tranche of BDS$51.1 million, as settlement for a Bond issued under the debt restructuring programme, in exchange for government contributions and tuition fees due to the University. For early settlement of the Bond, payment of tuition fees from the Government of Barbados to the Cave Hill Campus was restricted to amounts in excess of BDS$20 million for fiscal years 2019 and 2020.
Annually, the Office of Finance issues Budget Guidelines to the Campuses and University Centre Departments for the preparation of the Biennial Estimates, and co-ordinates and directs the preparation of these estimates for submission to the Meetings of the Technical Advisory Committees (TACs) and the Grants Committees.
The Budgets for the Biennium 2020/2021 and 2021/2022 of the University's five Campuses, the University Centre and the University Hospital of the West Indies (UHWI) were reviewed by the TACs at the meetings hosted by the Government of Trinidad and Tobago on March 3 and 4, 2020.
The meetings of the Campus Grants Committees (CGCs) and the University Grants Committee (UGC) were subsequently held on May 4, 2020 and July 10, 2020 virtually to review and approve the recommendations of the TACs.
Both the TACs and Grants Committees had representatives from the Ministries in the contributing countries responsible for tertiary education and finance. The Ministry of Health, Jamaica was also represented. Representatives of The UWI and UHWI also attended the meetings.
The UGC meeting was chaired by the Honourable Colm Imbert, Minister of Finance, Trinidad and Tobago. An expenditure budget of BDS$701.4 million was approved for The UWI, to be funded by Government contributions totalling BDS$531.5 million and the balance from tuition fees and other sources of income.
An expenditure budget of XCD 74.4 million was approved for the Five Islands Campus. The budget included XCD 55.6 million for the infrastructural and information and communication technology development of the Campus. The budget of the Five Islands Campus was expected to be funded in the amount of XCD 71.7 million, by Government contributions from the Government of Antigua and Barbuda, the only contributing Government to this Campus. Tuition fees and other income were expected to provide the balance.
At the UGC meeting of May 4, 2020 the formation of a Sub-Committee of UGC was agreed, which would meet periodically over the next two years (2020/2021 and 2021/2022), to critically review the budgets of The UWI and the UHWI and to make recommendations regarding the best strategies to: improve teaching and learning; restructure The UWI, its expenditure and cash flow, and develop a plan for income-generation.
It was noted that this approach would provide for a greater level of involvement of the UGC in the overall operations of The UWI.
Higher Education delivers real and substantial benefits to economies globally. This investment in human capital provides individuals with the ability to gain mobility up the economic ladder. Over the years, Caribbean Governments have relied on The UWI as the institution of choice to educate their people. This ultimately helps to address the needs of the Caribbean economies and bolsters economic growth. The development of the region has benefited significantly from Governments' investment in education.
Focus has been placed on maintaining dialogue with Governments to encourage payments of their assessed contributions to The UWI on a consistent basis. During the year 2019/2020, The UWI continued to maintain invaluable relationships with contributing Governments and increased their awareness regarding their outstanding obligations to the institution. In an effort to recover outstanding debt, the University continued to submit payment plans accompanied by monthly or quarterly invoices to the contributing Governments. This has assisted somewhat in reducing the receivables from Governments.
The creation of a Trust Fund to provide additional income from performing assets is still being pursued. The contributing Governments will pledge physical assets and other revenue performing assets to the Trust and in some cases these assets will be exchanged for contributions owed to the University.
The shortfall in funding of the University's budget from its current sources of income, has increased the need for the University to seek other sources of income for the long-term. The income-earning capacity of assets in the Trust Fund is being considered as a long-term solution to provide an additional source of revenue to reduce the gap in the budget. Other funding mechanisms are also being explored.
Increasing research output remained a priority for the University during the year. The University continued to make significant strides towards its goal of growing and sustaining a culture of research and innovation aligned to the specific developmental needs of the region.
The value of research grants received by the University during the year 2019/2020 was US$13.1 million (2018/2019: US$6.3 million). Efforts are being made to obtain new grants of high value to conduct research, particularly related to health care and regional development. Execution of research grants provides income to the University in the form of administrative fees.
Over the years the University's grants management staff have been making presentations at conferences for Research Administrators on related topics to enhance the grants management function.
A team from the Budgets and Grants Management section of the Office of Finance along with the Legal Unit of the University Centre, attended the Society for Research Administrators' Annual Meeting held between October 19 and 23, 2019 in San Francisco. The team gave a presentation on the topic "Legal Issues for Private Universities outside of the USA". The focus of the presentation was on: how mandatory US-based legal requirements in Sponsored Research Agreements may conflict with legal provisions in non-US institutions; and the procedural and/or policy changes that non-US institutions can make to ensure compliance with Local and International Laws and Federal requirements. Attendance at the meeting facilitated collaboration with a full slate of industry, Government and subject matter experts and the knowledge gained has improved the research management capabilities of the Budgets & Grants Management team.
The University of the West Indies, like similar institutions of Higher Learning, is exposed to a wide cross section of risks related to reputation, student experience, staffing issues, information technology (cyber risks) and financial issues.
The University must address its existing and potential risks, the likelihood of their occurrence and their economic impact and a process must be implemented to mitigate the causes and effects of those risks. This is particularly important when there is increased uncertainty.
Efforts continue to be made to ensure that all major risks are properly identified and to foster more complete risk management arrangements. To this end, initiatives regarding the establishment of adequate University-wide Enterprise Risk Management (ERM) processes are being considered for implementation.
With proper planning, forward thinking and the implementation of proper measures, these risks can be minimised or mitigated. The University is now in the process of hiring a new Risk Manager to identify risk, communicate risk policies and processes for the University.
Adequate insurance coverage remains one of the primary vehicles in mitigating the University's risk exposure to natural disasters. Annual reviews are conducted to ensure there is balance between cost and risk profile.
The UWI has managed to keep tuition fees affordable and hence widen access to students regionally and internationally. For the year 2019/2020, tuition fees for University Grants Committee (UGC)-funded programmes at the Mona Campus were increased by 1.5%. Tuition fees at the other Campuses remained at the 2018/2019 levels.
During the 2019/2020 academic year, scholarships to deserving students were provided from funds raised through entities such as The UWI Regional Endowment Fund, The American Foundation of The UWI, The British Foundation of The UWI, The UWI Toronto Benefit Gala and gifts from individuals and the private sector.
From its UGC budget, the University also offered a significant number of Open Scholarships to undergraduate students and postgraduate students were also provided with scholarships and grants for research and publications.
Staff members University-wide are tasked with ensuring that the Banner Finance system is optimally used.
The use of the Banner Finance System and its interfacing with other Banner Modules particularly the Student Administration System and the Research Accounting and Grants Management module allowed the University to continue to improve efficiency in the accounting operations, and generated timely and accurate financial information to support major initiatives across the University.
This University-wide implemented project is expected to yield efficiencies in several areas of the operations of the institution. Based on recommendations from the Consultant who was engaged to provide guidance on the implementation, several project teams have been set up to do the groundwork for implementation. The Digital Transformation Initiative will include an ICT Target Operating Model for shared services. The Office of Finance and Campus Bursaries will be engaged in the implementation of various initiatives for shared services, which will provide significant reduction in the cost of operations. Arrangements are being made for the financing of this project.
In light of the budget cuts experienced, a number of cost saving measures have been undertaken across the Campuses and the University Centre to reduce expenditure. Among them include the rationalisation of programme offerings and the reduction of staff costs, capital expenditure, travel, office expenditure and utilities.
Costs related to post-employment benefits are being reviewed for more cost-effective arrangements to be implemented.
The budgets approved during 2019/2020 for the 2020/2022 Biennium took into consideration the uncertainties created by the COVID-19 pandemic. The reduction in staff costs was achieved by a reduction in numbers aided by natural attrition, freezing vacant posts and reassigning tasks, and a reduction in overtime payments. Travel expenditure was cut by using various meeting platforms to host meetings virtually.
Progressively, The UWI has been reducing its cost to operate in line with available income. The University continues to seek opportunities for operational efficiency in order to reduce cost.
The University operates defined-contribution pension schemes for its academic and senior administrative staff and non-academic staff. The St. Augustine Campus administers a defined-benefit plan for its administrative and technical staff.
The Federated Superannuation Scheme for Universities (FSSU) for academic and senior administrative staff has a defined benefit element which provides qualifying retirees with a supplement to pension on retirement. A review has been undertaken by a firm of Actuaries and an initial draft of the report with recommendations to reduce the cost of post-employment pension and medical benefits has been received.
During the financial year, the Office of Finance continued to have consultations with an investment advisor on the maximisation of returns (at minimal risk) on investment of pension contributions of members of the FSSU. This is one of the tools that can be used to reduce the size of the unfunded supplementation liability.
The University appreciates the financial support received from contributing Governments, funding agencies - particularly donors to research projects, the private sector, alumni, staff, students and other stakeholders without whom it could not achieve its current commendable ranking as being among the best in the world.
The efforts of all members of staff in the Office of Finance and the Campus Bursaries, are appreciated for maintaining sound financial practices and contributing to the achievement of the financial goals of the University.
Stewardship of the University's resources and restoring the financial health of The UWI remains a priority. The University will continue to focus on revenue generation and cost containment in order to achieve the targets of its Strategic Plan.
Given the levels of uncertainty created by the COVID-19 pandemic, we will need to be as flexible and adroit as possible to stay ‘liquid' (to have sufficient operating cash available).
We will endeavour to reduce expenditure and to continuously seek income-generating opportunities.The finance team remains committed to the success of the "Triple A Strategy" which is the current roadmap for The UWI as it seeks to deliver quality service and drive Caribbean development.
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The University of the West Indies
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