University announces preliminary financial results for 2020
The University of Melbourne today provided an update on its financial position for the year ending 31 December 2020 and its financial outlook for 2021.
The University’s preliminary and unaudited accounts show an operating surplus of about $8 million for the 2020 year.
This result was largely achieved through a very significant reduction in spending of approximately $360 million. It was delivered in the face of a fall in revenue of $275 million and additional costs including $60 million in student support grants.
Other measures that were put in place to manage the financial impact of the COVID-19 pandemic included reducing capital expenditure by more than $300 million, drawing down on the University’s financial reserves by $120 million and increasing debt by $300 million. The University’s capacity to take these measures is a testament to solid financial management over a number of years.
The University experienced a boost in enrolments in Semester 2, plus an increase in the number of subjects that students took in the last half of the year which also contributed to the result in 2020.
Financial reporting requirements for the University dictate that the recurrent operating result is conflated with fluctuations in the value of long-term assets like endowments and investments. This means the University’s overall reported bottom line is expected to show a surplus of about $180 million - some $142 million less than 2019. This amount is not available to fund the University’s teaching and operations since much of it is tied to specific endowments.
Vice-Chancellor Duncan Maskell said the small operating surplus in 2020 is attributable to the University’s prudent financial management and the resilience of the University community.
“Last year our thoughts, conversations and actions were dominated by COVID-19 as the pandemic created a very unstable and uncertain operating environment. The pandemic has resulted in us needing to make difficult decisions, including some that have led to a number of valued colleagues leaving the University.
“Throughout this time, the resilience shown by our students and staff has been incredible. The University would not be where it is today without the hard work and professionalism of our staff. They have adjusted to a set of circumstances on a scale that we never could have imagined. Repeatedly, they have overcome the challenges created by the pandemic to continue to deliver the world-class teaching and research that the University of Melbourne is renowned for.
“At the same time our students, who have been unable to study on campus and immerse themselves in university life, have embraced online learning. They too have adjusted and overcome the difficult circumstances that confronted them over the past 12 months. To all of the university’s community, staff and students, I say a sincere thank you for all that you have done throughout 2020 and as we face the ongoing pandemic and continuing uncertainty in 2021 and beyond.”
Looking ahead, the University expects the challenging outlook to continue into 2021 and 2022.
In addition to the 2020 revenue shortfall, the University is anticipating a continued fall in revenue over the next two years, resulting in the loss of almost $900 million in revenue over three years.
Domestic student enrolments are on track, but international student enrolments have fallen. Currently, more than 23,000 international students are enrolled (new and returning students) which is 10% down on last year (based on Equivalent Full Time Student Load) and is down 22% compared to pre-COVID estimates for commencing students.
“Despite the result in 2020, achieved only after unprecedented efforts in terms of cost savings, the future remains extremely uncertain as the effects of the pandemic will continue to be felt for several years to come,” Professor Maskell said. “I was inspired by what the University was able to achieve last year, but I am under no illusion that 2021 and 2022 won’t be just as challenging.”