Towards financial resilience

Last edit: 27 Mar 2024

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"University of Twente faces financial challenges," UT reported in June when announcing the Spring Memorandum. In the Spring Memorandum, which contains the financial frameworks for the budget for the year 2024, among other things, the prognosis of student growth was adjusted downwards. The impact of various rising costs also became increasingly evident. Inflation continues, energy prices remain at higher levels due to ongoing global unrest, and increases in wage costs due to a new collective bargaining agreement were anticipated. The changing financial perspective presents UT with a challenge. It is not insurmountable, but it requires alertness and actions throughout the organisation. On this page, we tell you more about the how and what.

FINANCIAL developments

We have previously published a news item about the current situation. The increased costs due to inflation make it more difficult, even with a constant budget, to continue to achieve the same. Following the decreased intake of students in the current year, we will revise the forecast for intake in the coming years. This also has financial implications.

At the same time, there are several uncertain factors for the near future: think of the debate on the internationalisation of higher education, but also the national elections and subsequent government plans that may affect university funding. These factors make a conservative course necessary to maintain a sustainable and financially healthy organisation.

The total budget of the University of Twente in 2024 is €513 million. Most of this, over sixty per cent, comes from the central government. This is the so-called 'first flow of funds' and consists primarily of direct funding for education and research.

TOWARDS A POSITIVE RESULT

In 2022, UT spent and invested more than it received in funding. This was a conscious choice, as several investments were necessary with a view to the future. We also budgeted for a deficit in 2023, where we now see that the operational result may not be as good as budgeted and expected. This makes adjustments necessary.

We aim for a positive result in the coming years, but will not achieve this in one year. The budget for 2024 still aims for a negative result of (at most) two per cent of the first flow of funds. In 2025, that deficit may be a maximum of one per cent. And in 2026, we want income and expenditure to be fully balanced. After that, we will have to realise positive results again to replenish equity to the level required for a financially healthy and resilient organisation.

We have already set the course towards a long-term positive result in 2023. We are doing this initially with measures and choices that will have an effect in the short term. These have already been jointly drawn up earlier with and by the units. We are also working together on ideas and adjustments, which should have an effect in 2025 and beyond.

SETTING PRIORITIES

We make policy choices for the coming years around three priorities:

Maintaining student intake
A theme that will require much attention in 2024 is keeping student numbers up. The number of Dutch pupils obtaining a VWO diploma is declining slightly due to demographic developments. Moreover, fewer and fewer students are choosing a STEM profile. Several study programmes will be affected by this, as such a profile is required to start a technical university bachelor programme.
And because the elaboration of the national discussion on internationalisation may lead to new barriers for international students, we see a risk that fewer international students will choose a programme at UT in the coming years.
It is important to keep student intake at the current level. This is a realistic prospect, but will require serious effort. Within all units, there will be more attention in the coming year to increase our attractiveness and visibility as a university. A concrete example of a recently deployed action is that we are focusing more on the regions in the west of the country, as there is great potential there.
Making our education futureproof
The second priority is future-proofing our education. In particular, we are looking at opportunities to make the daily practice of our education more efficient and effective. This is already a priority given the work and performance pressures experienced by staff and students, and is also relevant to UT's financial situation. Among other things, we will evaluate the practical implementation of our Twente Education Model (TOM). Principles such as project-based and challenged-based learning are not in question, but we will look at how the implementation can be better tailored to the needs of students, lecturers and UT as a whole. This should improve the sustainability of (especially) our undergraduate education.
We also remain firmly committed to Lifelong Learning (LLL), because we see a great social demand for it. And with our expertise in both science and practice, we can play an important role. From a financial perspective, this is a significant development that contributes to the robustness of the university as a knowledge partner for society. UT-wide, proper support must be provided for this form of education, so that faculties can use its opportunities optimally. To this end, we are working closely with various partners inside and outside the university.
Increasing income from second and third flow of funds
In 2024, we will focus even more than before on increasing income from third-party activities, as this has a positive effect on the university as a whole. This includes, for example, subsidised or contract research. Comparisons with other universities show there seems to be room to increase income from these activities.
However, it will require a considerable joint effort by faculties, departments and scientific institutes to increase UT's earning capacity permanently. They will work together to increase their clout and bring more focus to their activities and support for them. This will enable them to make even better use of opportunities to conduct innovative research for third parties.

MEASURES BEING TAKEN

The financial issue calls for short-term choices and measures. In doing so, we are building on the choices we have already made for this year.

Staff costs are UT's most significant expenditure: about 70 per cent of expenditure is on staff. This also means that if savings opportunities need to be found, we need to look at staff costs. The method of stringent consideration when filling vacancies and extending contracts, which we communicated earlier, will continue to be in place in 2024.

The number of staff will decrease slightly in the coming years, with an explicit focus on a good balance between academic and support staff, appropriate to the student intake and funding we receive.

We recently drew up the Annual Long-Term Strategic Housing Plan (LTSH) and shared it with the University Council. Investments in this have been reduced substantially. The focus is on investing in existing teaching and research facilities and making them more sustainable. You can read more about the choices we are proposing in the recent news item about this.

In the coming period, we will remain critical of the expenditures we make, and we ask everyone to think along with us. For instance, whether hiring is necessary for a task or project, or when choosing the most efficient and effective solution. We do this at the level of the entire UT, but it should also be done in the various units and departments.

WHAT WILL YOU NOTICE?

UT's financial situation affects our daily work. Sometimes UT-wide, for example, in service levels for specific services. But choices can also have an effect at the level of specific service departments, faculties or scientific institutes. Where necessary, they will inform you further about the choices and consequences. Some plans still need further elaboration and will take shape in the coming weeks and months.

The financial discussion is a subject of discussion within our community, which is understandable as it may have its effects on everyone. Sometimes, measures will have to be taken that may be painful but necessary in the current situation. We understand very well that the current situation may bring uncertainty. If you have any concerns, do discuss them in your team, with your supervisor, or with your unit's HR department.

Quality of education comes first
In the coming period, the University of Twente will further elaborate on the choices and measures arising from the budget. You can read more about the main priorities in our earlier news item. The key principles, as formulated in the vision document Shaping2030, remain leading.
Maintaining the quality of education is a high priority. In national comparisons such as the National Student Survey, the UT has consistently scored among the best universities in recent years. UT wants to maintain and continue to strengthen this leading position in student appreciation. This calls for priority in staff deployment, but also the deployment of resources to sustain educational facilities in the broadest sense.
Future-proof choices
The follow-up will also explicitly consider the future-proofing of choices: are they in line with our vision? Do they contribute to our long-term goals and build on what we have achieved in the past in a proper manner?
We are also working on the resilience of our organisation, to be able to respond adequately to changes in the future. The current financial situation and the outlook for the future, for example, due to lower student intake, demand agility and flexibility. Together with the departments and faculties, we will give this issue a lot of attention in the coming period.
Active steering and monitoring
Achieving the intentions as formulated in the budget requires active steering at all levels. Monitoring the progress will play an important role at both university and faculty and service department level, so that the Executive Board, faculty boards and service directors can make timely adjustments when the situation demands it. The participatory bodies, such as the University Council and the faculty and service boards, will each be able to discuss this in their domain. In this way, we jointly ensure that we set a realistic course that leads to what we aim for and limit unwanted side effects.

specific INFORMATION FOR FACULTIES AND SERVICE DEPARTMENTS

In this section, you will find (if applicable) information for specific faculties and service departments.

Below is an overview of all recent news items on this topic.

Updates