The question university councils must answer as staff cuts continue

Charles Sturt University, one of Australia’s largest regional universities, has joined the growing number of universities known to be making significant staff reductions. 

It follows reports that the University of Southern Queensland (USQ), another major regional university, is shedding 259 full-time equivalent positions – almost 20% of its workforce. The job cuts are part of a major restructure, which the vice-chancellor has said is being driven by rising costs and a shifting funding landscape. 

The vice-chancellor of CSU cited huge reductions in international enrolments as a catalyst for their staff cuts, noting that last year’s international enrolments were a mere 10% of their figures in 2019. 

This lack of international enrolments appears to be stemming from recent government restrictions on overseas student numbers, in addition to increased visa fees. Combined with funding cuts to the sector, which have been ongoing for over a decade, the pressure on university budgets has reached breaking point.

Government mandates reshaping the sector

Sources point to the new 2024 Australian Universities Accord as an underlying motive for the pressure, which details sweeping plans to reform the entire tertiary education sector. 

The aim of the accord is to ensure universities are helping to meet Australia’s future skills needs – with a focus on local enrolments, course relevance, collaboration across tertiary institutions, and greater participation from underrepresented or underprivileged groups. 

As a decade-long plan, it’s clear these changes aren’t going away. In fact, they bring to mind similar reforms in other sectors – such as the introduction of the National Disability Insurance Scheme in healthcare, which forced organisations to rethink their operating models after the funding model was fundamentally overhauled. 

It’s apt to view these shifts as a form of restructure, because to remain financially viable through the change will force many universities to reassess what they do, how they do it, and who they serve.

Even once the books are balanced, universities need to be looking ahead to position themselves for long-term stability. Government funding is likely to come with greater scrutiny than it did in the past – so each university must have the vision, strategy, and systems in place to either meet those demands or secure sufficient funding elsewhere.

 The question all university councils or senates need to be asking

In the face of sustained financial pressure, university councils or senates (governing bodies) must take an active role in understanding their organisation’s position. Too often, we see the governing bodies staying at arm’s length, assuming the current business model will eventually stabilise. Recent policies make it clear that this is highly unlikely. 

With this in mind, it’s time to face facts and ask: 

Is our university financially and strategically viable in its current form?

This includes everything from course offerings to operational structures and even executive pay packets. Unless university leaders are capable of and accountable for delivering the same level of enterprise performance as corporate executives, can these be absolutely justified in periods of downsizing?

It’s time to stress-test everything. You might even consider engaging a restructuring expert, who can work with you to properly review:

• strategic and business plans
• cashflow, budgets, and forecasts
• core revenue assumptions 

Returning to the university’s original purpose and values is also important as a way of determining the right path forward. For example, alignment between purpose and values and the government’s new accord could mean fully embracing it and adjusting policies and processes to suit. Or, it could point to reducing dependence on government funding, which would make fee structures and fundraising strategies more critical.

For governing bodies still hoping to “see how things go”, it’s important to remember that this is just stage 1. This is the phase of reviewing, reassessing, and making necessary changes. Stage 2 comes when options narrow, and formal restructuring or administration discussions begin. 

The time for passive optimism has passed. Now is the time for grounded realism and well-considered action. Only through this can your university maintain its place as a leader for the next generation of graduates.

RSM’s restructuring and recovery division has worked with countless organisations in the education and NGO sectors to help navigate changing funding landscapes and financial challenges. Our goal is to support you through difficult periods of change, and guide you towards sustainable strategies that will preserve your reputation and safeguard your longevity. 

For a free and confidential initial discussion with an experienced advisor in our restructuring and recovery team, please contact your local RSM office.