So what are we going to do about it?
'It's not the years...it's the mileage.' We could probably all make use of Indiana Jones' off-the-cuff quote these days. Institutionally, collectively and individually, we've taken a buffeting over the last few weeks and with continued uncertainty on the horizon, we are still trying to adjust to business as unusual. On the positive side of the ledger, it does look like the steps implemented nationally and locally are having an impact on the spread of COVID-19, and consequently we are in a far better position than many other places facing this dreadful challenge. But the challenge hasn’t gone away and the measures in place are not without their own societal and economic cost.
On economic cost, I’ve noted increased anxiety around the traps, manifest even in virtual meetings, regarding the impact of the COVID-19 pandemic and the associated control measures on our operational budget and our plans for the future. This anxiety is doubtless heightened as other Vice-Chancellors write formally to their staff and foreshadow significant interventions and downturn. I could easily pen such a letter to our community and I may yet have to, but I am loathe to do so in the absence of absolute clarity and possession of all the facts. Clarity and fact are clouded in forecasting and forecasting is highly dependent on matters outside of our control. So I’m not going to speculate or catastrophise – but I’m also not going to sugar coat where we are and what we are working from.
I can start with a 20-month worst case scenario, looking out to the end of 2021. That scenario has us experience a forecast revenue drop in excess of one hundred and twenty million dollars. Before you run around screaming, remember that a lot of things have to go wrong for that to eventuate. Even still, to quote my late friend Sir Terry Pratchett, ‘Scientists have calculated that the chances of something so patently absurd actually existing are millions to one. But magicians have calculated that million-to-one chances crop up nine times out of ten.’
To be responsible, we must plan for the worst case – because it might happen.
What’s worse about this worst case is that it won’t be fixed in 18 months, we could be working through tough times for several years to come. But let’s put that to one side for a moment. And remember that above the darkest clouds, the sun is still shining.
The sun is shining for UniSA insofar as we have good domestic enrolments (the best we’ve ever had), we had a diversified international student cohort (the best we’ve ever had), we have amazing online capabilities, we haven’t initiated expenditure on any new major capital projects, we have no debt and we have just successfully restructured our academic organisation affording us the opportunity to do things differently and more efficiently - thanks to the flexibility and ingenuity of our staff. This doesn’t confer immunity on us from revenue losses, it just positions us to weather them differently from some other institutions who haven’t got as much sunshine in their lives. (I’m tempted to pop in a quote from another hon doc of ours, Eric Idle, relating to the bright side of life, but I shall resist).
‘What about the best-case scenario?’, I hear you say. The best-case scenario is over thirty million dollars of lost revenue this year, and like its less popular worst-case cousin, that would come with a similarly extended duration of impost, growing year on year. This is a scenario which is again hugely reliant on a large number of things all going right (and which are outside of our control). Which I guess is just as likely as a large number of things going wrong. But again, certainly not bankable.
So, we find ourselves hoping for the best and planning for the worst. And with some tailwind from our current position and aspect, we might land somewhere in between, but with no room whatsoever for complacency.
I had a very long Zoom meeting this morning with the Enterprise Leadership Team, our CFO and the Executive Deans. We walked through best-, probable-, and worst-case scenarios across an eighteen-month time horizon. We agreed that, right now, we can’t look any further forward than the end of next year. We also agreed that if we were to intervene on the worst-case scenario, we would have to take extraordinary measures – which we believe ought not to be rushed into.
So what are we going to do? To set us on the road to managing this situation, I have asked my senior staff to forgo a component of their salary packages, in the order of 10%. I will forgo 20% of mine. We also agreed it would be inappropriate to consider any salary increases for senior staff. We additionally identified a suite of non-salary budgetary interventions which will bring us a significant way towards meeting our targeted savings across the next 20 months to offset our revenue losses. These include elements such as capital works, travel and hospitality, training and other discretionary budgetary elements. These interventions will have some impact on operations, but not on staffing. We are committed to preserving employment levels in the university as our highest priority.
At this time, we are not seeking to reduce anyone else’s salary.
As we closely track our progress on closing the unfolding revenue gap and as the various projections and scenarios become more fine-grained and clearer, we do have other options available to us which could further assist in balancing our books, while still preserving our employment levels. In the main these relate to pausing future salary increments, to minimising leave balances, to substituting leave for leave loadings, and in the worst of worst cases, to reduced FTE fractions.
Should we ever need to implement those measures, it will only be following frank and open conversation and consultation among us all, and a collective decision to progress those changes which are necessary to preserve employment in the organisation.
Our strategy for now is to intervene as detailed above and to monitor the unfolding situation, to measure the impact of intervention and to continue to plan accordingly. We will simultaneously be looking for growth opportunities and to maximise efficiencies and the opportunities our new structures afford us. To lead in this State and Nationally. It’s imperative that the momentum we have built as Australia’s University of Enterprise is maintained – we will have a significant role to play in local and national recovery.
Whether the Australian Higher Education sector will ever return to its pre-COVID standing is questionable. Its probably unlikely. But an agile, responsive, growth-geared university like ours will be ideally positioned to excel.
Our near-term focus will be on People and Programs. Precincts can wait a while, but we still have some projects to progress which will gear us for growth. We will sow seeds for the future as, in parallel, we protect our most valuable assets – our workforce and curriculum – and deliver for our most valuable stakeholders - our students, community and end-users - through continued excellence in education and research.
In my Zoom meetings I have a backdrop snapshot of the giant boulder rolling down the ramp towards Indiana Jones, a still image grabbed from Raiders. It sits over my shoulder rolling towards the camera’s perspective. I call it the COVID-19 boulder.
Spoiler alert. It’s outrun.
We’ve got this.
Through The Big Picture, I hope that our whole community gains a greater and current appreciation of what is going on, how it fits together and how our activities connect and reinforce each other at a whole of enterprise level.