The stoniest of the sandstone universities is wielding the axe. And it’s the global financial crisis’ fault, apparently.
MELBOURNE University will slash 220 full-time academic and administrative staff because its financial position has taken a battering in the economic crisis.
In an email to staff, vice-chancellor Glyn Davis said the crisis had devastated investment returns and a so-called ‘‘economic response program’’ would result in 50 academic and 50 administrative staff taking voluntary redundancies.”The University of Melbourne has income from students, it has income from research, it has income from its endowment and with the global financial crisis unfortunately the income from the endowment that’s been built up over 150 years has collapsed,” he said.
Ah, yes, the endowment. At its peak, the fund was worth well over a billion dollars, a considerable fraction of that courtesy of the mugs who were silly enough to pay Melbourne University $85 million for the Melbourne IT domain name business when it floated at the peak of the dot-com craziness a decade ago.
Undoubtedly, the endowment has taken a bit of a battering over the last year or two, but – unless they had the entire thing in subprime mortgage securities and ABC Learning shares – it’s presumably still well over half a billion dollars, and likely to bounce back over the next decade. So, unless I’m missing something the University of Melbourne could easily afford to dip into its endowment capital to cope with the bad times. Presumably they were reinvesting much of the income from the endowment, big-time, during the years of bumper returns on investment. That’s the point of an enduring institution like a university having a big endowment, isn’t it?
Here’s Davis’s full memo, courtesy of the Oz.
Frankly, the University is claiming GFC at any point at which its wholesale hammering of staff and facilities is questioned. The carve-up of the VCA is case-in-point. The glee with which Glyn Davis and his cronies are divesting themselves of any need to run a higher learning institution and are devising a big-money version of the private vocational colleges aimed at overseas students is embarrassing. Something tells me these cuts won’t be at the expense of the future doctors, lawyers and accountants at UniMelb…
If they spend capital now then that capital won’t be available to grow with the recovery so the long term net benefit of consuming capital is negative. Interestingly the economic defintion of investment is deffered consumption.
I don’t know what the investment or spending plans of the University Fund are but I see it is prudent management to cut expenditure in the face of falling capital values and falling income. This doesn’t make it any easier for those people who may lose income and/or employment because of this.
Ideally they should have built up reserves in the good times to smooth out consumtpion in the bad times, but hindsight is a marvellous thing.
I wouldn’t be suprised if much of their portfolio is in real estate, which will take much longer to recover than shares.
If you’ve turned yourself into a business (and the universities were forced to do that some years ago), I suppose it depends on whether you think ‘cope with the bad times’ means ‘save the bacon of as many staff as possible’ or ‘maintain profit margins’. I don’t blame either the GFC or the Vice-Chancellor, particularly; I blame the now prevalent world view that sees everything including education and knowledge as a commodity, and profit-making as the most important activity in the world. Just ask the bank, the telco and the parking-station company whose combined efforts have gouged a total of 43 non-budgeted-for ripoff dollars out of me since I woke up this morning.
Just a point of clarification.
As a non-profit organisation, UMelb doesn’t make a profit per se, but rather an operating surplus, if they are fortunate enough to do so.
A profit is distributed among investors. A surplus is ploughed back into the enterprise.
P7 @#1 is correct. Undoubtedly the admin is using this crisis as a pretext for pruning UMelb into a shape that it will continue to have long after the passing of the GFC.
PC is correct. The commodification of education results in an impoverished culture and a crassly stupid nation vulnerable to many forms of exploitation and trumpery.
The NTEU is going to go absolutely bananas.
I did a BA Hons at Melbourne in the late 70s. As an extremely moderate earner I always laugh when their letters arrive on my doorstep, regular as a calendar, asking for money. As if I would give them anything now when they pushed out the academics and courses which inspired me when I was there. “Dream Large”? Crikey.
I have to hand it to the Uni’s executive — never let a good crisis go to waste. The press appear to have swallowed the loss of income due to GFC party line, hook line and sinker. I wondered why they claimed such a big dependance on investments income, when full fee paying student income had really ballooned for them over the last 10 years, more than compensating for declines in govt funding under Howard. So I spent a few hours reading the Universities 2008 and 2000 annual reports, to glean some facts about how their financials had changed over the last 9-10 years. I compared 2008 with the 1999 figures given in the 2000 report. The reports are available as PDFs on their website.
Before I begin, for a little perspective, the Reserve Bank of Australia inflation calculator says CPI rises from 1999 to 2008 was 34%.
Here’s what I found:
* In 1999 investment income was $21M out of total revenues of $614M, just over 3% — hardly substantive 10 years ago.
* By 2008 total revenues had grown by 133% to over $1.4Billion
* Student load had grown by 24%
* Equity was up 84%, from $1.7B to $3.16B (yes thats Billions)
* on p84 of the 2008 annual report they reported UNREALISED capital losses of $251M which they CHOSE to treat as IMPAIRED assets (i.e. written off, and hence the loss appearing on operations income statement) rather than having the “fair value” accounting change simply show up as a loss of equity i.e. on the balance sheet. Whilst they hide behind accounting standards AASB 39/IAS 39, that this is purely an interpretive choice is very well explained here: http://moorestephensresources.com.au/articles/197/1/Impairment-of-available-for-sale-investments/Page1.html
IMHO their claims to have “lost investment income” is dubious for the “unrealised” component, an example of the “mark to market” controversies surrounding the GFC. At the very least the actual attributions of impairment i.e. the specific investments, need to be revealed and itemised.
But also one can observe these interesting facts:
* growth in executive saleries of 160% versus ordinary staff rise of 82%;
* “contracted and professional services” from unlisted in 1999 to a sum of over $71.3M (over a third the sum of general staff saleries!!);
* “grants” listed in “other expenses” from $12M in 1999 to a whopping $157M in 2008 — thats well over an order of magnitude increase!;
* “computer software and services” from not itemised at all in 1999 to $20.6M in 2008;
* a 1600% increase in consultants fees itemised;
* staff costs in 1999 were 55% of expenses, and shrunk to 50% in 2008, whilst “other expenses”, some of which listed above, grew from 31% to 36%.
GFC to blame? Utter bullshit and classic spin. Here we have a decade of explosive growth in income, accumulation of reserves/investments, and utter failure by management to control/contain their costs, particularly their own rewards.
I contend that a decade of managerial hubris and incompetence in cost containment is to blame (A ‘Harvard by the Yarra’ — see Nina Monk’s great piece on Harvard in Vanity Fair). They ONLY cared about raising revenue. I say CUT exec saleries back to where they will be in line with the rises recieved by the non-executive staff over the last decade, and get rid of the expensive consultants and the explosion in HEW10 and above administrators.
To apply an across the board 3% cut to staff is hypocrisy of the first order. I doubt though if they are in any danger of their bullshit being exposed — it would mean the press having to do some investigation, wouldn’t it?
Cheers to all.
@ Helen
It’s even funnier receiving those letters when you are actually an employee of the University that you graduated from and you know how upper level management has increased the size of their own little empires, increased their salaries, reduced industrial democrac and cut funding to the Libraries.
Even if they were in lowish risk investments, Oz Shares etc, they might well have taken a 20% drop in capital value in addition to a reduced income flow from dividends.
It would be not out of the ordinary for the last five years until Oct 2008 to have generated anywhere from 12% – 14% on capital, and better than bank rates before then for many years. Rivers of gold. Used to expand and do things no other funding provided for.
Now the rivers have dried up. Capital may be down at least 10% – 20%.
BUT the BIG thing is that many of the endowments, such as the Helen Cast Iron Balcony $20m Fund for Blogging Female Drummers Research,Teaching and Development,(HCIBFFBFDRTD) which in the good years was generating, from $2m – $3m a year to spend, now has no income at all and even a reduced priciple if marked to book.
In addition, it is not uncommon for an endowment, such as Helen’s, to specify that the original principle be maintained in perpetuity and only the income used. To further complicate matters, it may be that strict interpretation is that the original principle PLUS CPI or similar needs to be used to maintain the value of the original principle.
So – UniMelb may well be in the situation of having to maintain the above HCIBFFBFDRTD principle at, (at least) $20m, but the fund value has been reduced to $17m if marked to market or impaired. Lost revenue is the only problem.
Multiply this by any figure you like and see the Finance committee’s problem.
This post is no comment on the educational value or wisdom of anything.
.
Should read:
Lost revenue is NOT the only problem
prudence your post wasn’t up when I hit send
Thanks for the comments, everyone.
Fxh, let’s assume that you’re right and the problem is that they are hamstrung by restrictions on various parts of their endowment The university must have known about this potential problem for years, probably even decades. So the university should have been reinvesting more of its endowment income during the good times (which must have been well above the amount budgeted) to ensure that it wouldn’t have to cut expenditure during a downturn as is now occurring.
To fxh,
You say: “In addition, it is not uncommon for an endowment, such as Helen’s, to specify that the original principle be maintained in perpetuity and only the income used.”
If so, shouldn’t the risk profile of said investment match the endowments requirements i.e. should have been put in low/no risk term deposit or long term government bonds, not in risky volatile instruments?
Yes, they have a complex task, but my point is until they itemise their attributions of “impairment” of “unrealised capital losses”, I don’t trust their claims of crying poor. See p94 of their 2008 annual report.
Available here:
http://www.unimelb.edu.au/publications/archives.html#Annualreports
See also the 2008 investment report — still over a billion at hand and given their long term focus, why would you realise the paper losses i.e. “fair value”? Hence I question their motives for asserting impairment (effectively a write-off of UNREALISED capital losses). Sounds like a useful baseball bat to beat the NTEU up with to me. I suspect its an accounting trick, boiling down to interpretations of ‘significant’ (they say 20%) and prolonged (they say 9 months). That’s THEIR judgement call. Check out the link I gave above regards impairment of available for sale financial assets.
Its truly a minefield, as discussed here: http://ftalphaville.ft.com/blog/2009/07/28/64136/accounting-semi-officially-exonerated-from-causing-crisis/
prudence: I’m curious as to how they treated the years of windfall gains when the markets were bubbling.
Furthermore, I’m curious as to how much their investments have recovered in the last few months, particularly if substantial bits of it are in listed equities…
merkel – I’m not saying it accounts for everything, I just don’t know – but I am saying that even very, very very, prudent people didn’t expect Oct 2008 (Spanish Inquisition) to be so dramatic and sustained. Except maybe Steve Keene but then …..
It was always reasonable to plan for a bottom line of bank rates + 1% for any half sensible investment. And when did bank rates last drop below 6%?
Prudence – I’m not going to look at the annual reports but when is the uniMelb reports – june /july financial or calender?
Again to fxh,
“prudence your post wasn’t up when I hit send”.
You still make a fair point fxh — trust/endowment investing is a complex job. The point I was trying to make is that back in 1999 they were not nearly so reliant on investments as now. Which underlies Roberts original post about the gravy train when times were good. I mean, you have to have surpluses, right, to accumulate this kind of equity?
But my main point is to look at what HAS been entirely under their control regards expenses, and how these have exploded way in excess of what is justified by student/research workloads. I say make the management be accountable for that, but they are hanging the staff out to dry. The bastards.
I don’t know why I keep writing Oct2008 – what I mean is when everything took a dive.
Prudence – I’ve spent months debating when to impair – what is significant, etc etc I would say UniMelbs 20% and 9 months is actually reasonable and conservative. Others would argue for at least 12 months.
Wait till you see the schemmozzle some Quangos, NGOs and semi gov bodies have got themselves into this reporting/parliament season (oct .nov) – a lot of it was able to be hid last season because of that vagueness about “significant” and “prolonged” around impairment – especially watch the $quillions NSW Local Government has lost forever on CDOs.
Robert,
You ask : “I’m curious as to how they treated the years of windfall gains when the markets were bubbling.”
In 1999 their total investment assets were $492M (see note 2.5 p59 2000 annual report). It reached a peak of $1.4 Billion in 2007, now down to a mere billion (see 2008 investment report). In addition to socking it away and accumulating like mad, they were also spending/expanding like crazy. Like I said, from 1999-2008, they enjoyed 133% growth in income, also a 130% growth in expenses, with student loads up by 24%. Poor Melbourne? Absolute rot — just look at what they have chosen to spend it on. Follow the money — its all there buried in their annual reports.
Note I have no problem at all in increased spending on adding value for students, researchers and the public, none at all. Its the obscene admistrative bloat I bemoan.
One example — see the table of staff numbers at bottom of p59 in the 2008 annual report. 1994 to 1998 hew10 (senior) admin staff numbers went from 117 to 171, while total teaching/research staff numbers went from 1916 to 1983. It would seem the entire trend of flattening management structures over he last 20 years has passed Melbourne by.
Another example — huge wads of $ spent on their finance, HR and research admin systems. 1n 1999 they had cheap inhouse customised admin systems which did exactly what was asked of them. Then they ditched all that for expensive packaged software and armies of consultants. Must be $50-70Mill spent on this in toto and they are still waiting for vendors to deliver a new student system. Ten years on! But hey, they think that projects a great success! Talk about delusional.
One mystery to me is the “Grants” rise from 12M to over 150M. WTF? Why isn’t this itemised/explained — that’s a crap load of money. Other than the $30M footnoted for the Gratten Institute in the 2008 report, I have NFI as to what all those “grants” actually are or how core they are to the Uni’s purpose. Does anyone know?
As another poster observed above, the money hasn’t gone to library materials. That expense DECLINED from $5.5M in 1999 to $2.8M in 2008.
Smart universities never spend all their endowment income. They might spend 5% of the endowment per year, so if it’s returning 15%, they spend 5% and reinvest the other 10%. That way, when the stockmarket tanks, as it inevitably does, they can keep spending 5%, year in year out.
Looks like the University of Melbourne spent all or nearly all of their boom time investment income, so they have little choice but to cut when that income falls.
You could say this was dumb financial management, but the demands on universities exceed their ability to pay even during boom times. You can sort of blame them for not saving for a rainy day, but I imagine the NTEU wouldn’t have been impressed if back in 2006 the university had said that they weren’t going to hire people because they were taking a prudent approach to their finances.
Yep, Katz’s and FXH’s are both fair points. It’s the broader issue of the business-business-über-alles mindset dominating the workings of a university of all places that gets up my nose.
fxh – pretty sure their reports are by calander year.
PC 20, you can’t put this down to a business mentality. If the revenue is not there to pay for the expenses, what are they supposed to do? Pray for a Tattslotto win?
If anything, it was the lack of a business mentality that is the problem. If they’d been smarter with their investments and their investment income, that is, more business-like, they wouldn’t be facing this problem now.
I’m not defending UniMelb at all but just adding some complexity to the investment issue – anyone would think I might have been dealing with something similar.
blockquote>If so, shouldn’t the risk profile of said investment match the endowments requirements i.e. should have been put in low/no risk term deposit or long term government bonds, not in risky volatile instruments?
Oz blue chip shares, infrastructure and back then even property trusts were not considered risky at all. In fact staying with oz shares and property was seen as underperforming. Anyone unilaterally taking Oz shares returning 12% -14% and whacking them in cash at 7.3% or whatever would have been be kicked up the arse for losing $1.4m income per year.
merkel – I wouldn’t be surprised if the original 2006 principles in endowments were back up around the original amount in the last few months. Unless they had a % in some higher risk/higher gain punts. Again it wouldn’t be unreasonable to have say 5% in overseas property – to spread / hedge kind of outside Oz and take a small punt. Trouble is even good international property has gone down 30% and doesn’t look like coming up. Bad international property is a swamp in Thailand or Queensland with resort plans someones desk.
fxh says
“Prudence – I’ve spent months debating when to impair – what is significant, etc etc I would say UniMelbs 20% and 9 months is actually reasonable and conservative. Others would argue for at least 12 months.”
Yes I do agree with — its a tough judgement call. I did wade through the relevant bits of AASB 139 and yes, they can make a case for what they have done regards the “unrealised” capital losses. I still think the details (actual investments) should be itemised. And if stocks/whatever these assets are bounce back on markets they will have to record a POSITIVE cash flow on the income statement to account for a reduction in the “impairment” next year. But if they’ve been holding onto the shares the whole time, these losses/gains are not “really real”, are they? I bet they’ll be saying then, thats just paper gains.
My opinion is that if the assets were held with a view to short term trading (e.g. a hedge fund maybe), then impairment is appropriate i.e. a loss/write-off which appears on the income statement. If assets are to be held for the long term, I’d be declaring the change in fair value on the balance sheet. The “standard” allows either depending on circumstances/judgements. But I am not an accountant, and its a minefield. Mark to market/mark to myth. Its all wildly over complicated for mine.
I’m sorry I’ll read that again:
Anyone unilaterally taking $20m Oz shares returning 12% -14% and whacking them in cash at 7.3% or whatever would have been be kicked up the arse for losing $1.4m income per year.
pav – a bit of what sam said.
Lets say I’m in charge of a bunch of funds worth $50m that goes to research and services supplying fluffy cute homeless kittens to kids with some evil life threatening disease.
Do I stick the money in a savings account at BIG BANK and get 4.5% interest (say 2003) which barely keeps up with CPI/inflation etc and returns $900,000 a year to buy kittens with 3,000 kids missing out or do I invest in AAA rated Oz blue chip shares that return $1.8m and buy more kittens and kitty researchers and fund people blogging their PhD on Kittens and kids, and a few (evil) admin types to maintain blogs, feed kittens, empty kitty litter….
anyway – thats enough – its only Melbourne Uni
Robert 14, even with the stellar stock market performance of the past few months, it would have to go up another 65% to reach pre GFC levels. That’s a minimum of three years ago on the most optimistic of projections.
That Vanity Fair article prudence referred to is Rich Harvard, Poor Harvard.
Interesting article! Thanks for posting.
Frankly, I think there is something wrong in the state of Denmark when it comes Australian Universities. I work at another non-Melbourne uni and have contacts who work in other universities. What we have seen over the past 4 years (yes, since before the GFC) is a similiar pattern of behaviour that never quite make the papers – things like the offering of voluntary blanket redundancies, permanent full-time staff leaving and either not being replaced or being replaced by sessional contract staff, and other measures with the net result being less staff to do the same amount of teaching and research. This has led to unsustainable workloads and the resultant lowering of quality and work life stress. I know of several academics who teach 300 students a semester, with face to face classes of almost 20 hours a week with tuts and lab sessions and who then get criticised for their inability to meet research targets.
The GFC has undoubtably hit universities, as it has hit other institutions. But I think Robert hit the nail on the head when he commented that “I blame the now prevalent world view that sees everything including education and knowledge as a commodity, and profit-making as the most important activity in the world.” Universities do have to protect their bottom line, and the drain of funding from the Howard years wreaked an untold amount of havoc with univeristies. It seems to me that the GFC is used as much as a political whitewash as much as a real threat. Don’t get me wrong; I know it has financial implications, and I know that universities have to make adjustements. I was at an public (ie all uni) enterprise bargaining meeting where management resorted to tactics like “The global position is very bad. The workers at XXX took a pay cut in order not to have staff layoffs. Think about it” at an institution who according to public record and their own books appears to have lost very little in the way of interest and nothing in the way of prinicipal (though maybe principle lol) in the GFC. Such things make me highly skeptical.
If universities continue on the path that they are now I am concerned that they will be nothing more than glorified TAFE’s with none of TAFE’s experience and focus on vocational training.
Minxy, that was Pavlov’s Cat, not me, though I would agree with the general sentiment!
Minxy@29
I’m in a similar situation.
The disconnect between the Universities “Business” and the Universities activity is a little worrying.
The business is the flow of money. That means enrolling students and getting them to pay. There seems to be some bewilderment (and fear) amongst the management about the thought that a drop in prestige, or a reputation as a degree mill, might lower the numbers of students coming in the door. Almost like that can’t see what is happening, what they are doing, and that it could be a bad thing.
As someone on the inside looking out, I have to say that the University had this coming, and the GFC is what has precipitated the inevidible. Melbourne’s problem has been its inability to run like a unified entity, and is now paying the price for the fifedoms that have been running for so many years in the place. It looks to me that senior management continues to get rolled by more powerful forces at school and faculty level who just won’t operate for the greater good. I am well aware that there are some people with very heavy workloads, but there is also a fair bit of underperformance and dead wood and maybe a crisis like this will break through some very intrenched positions, and create a much better University in the longer run.
“inevidible”? “fifedoms”? “intrenched”?
Are you perchance part of the dead wood as far as English expression goes? I assume you’re in the administrative side, not the teaching side, we sincerely hope.
Check out the lovely response to this from Tim Blair (‘Fries with That’)and his winged monkeys.
Not only do they seem to find delight in overworked and underpaid admin staff losing their jobs in the middle of a financial crisis, their hatred of tertiary education, their staff and students reminds me of…oh, I don’t know,…Pol Pot..
You zung ‘im good there, little drummer girl.
Hilarious, Chav.
I also liked their sophisticated analysis of whether Ford’s proposed new engine for the Falcon. It’s clear none of them ever went near an engineering school…
Thanks for the feedback, Erratum. I guess we are all allowed an opinion here. Yes I’m one of the “lesser” people on the non academic side of things, and was a bit pushed to do the spell check before sending, sorry to offend. Your assumption seems to be that I see the dead wood among the academics – far from it. I think this is where growth should be taking place – it still is a university after all and teaching and research is what the place should be about.
Sometimes we post in haste and forget to spellcheck, Omni. I do it often enough!
As to your substantive point, you may well be on to something. From what I hear, Melbourne University, even more than some of the other universities in Victoria, is a collection of fiefdoms which are to some extent a law unto themselves.
This may be because the university is so large; it may also be that the “vocational” faculties (medicine, law, vet science) are in many ways more responsible to professional bodies than they are to the university itself.
Its also about history, Robert. A number of the modern day faculties started outside of the University of Melbourne and came in under the Melbourne umbrella over the years, but I guess they also brought with them a culture that doesn’t necessarily fit in the same way that a relatively modern university like Monash or UNSW has developed its schools and faculties internally.
“A number of the modern day faculties started outside of the University of Melbourne and came in under the Melbourne umbrella over the years, but I guess they also brought with them a culture that doesn’t necessarily fit in the same way that a relatively modern university like Monash or UNSW has developed its schools and faculties internally.”
When was the last time an external entity became part of the University of Melbourne? I’m thinking Dawkins reforms, which is plenty of time to deal with ‘cultural’ issues.
d
I think that University of Melbourne will be retrenching teaching and administrative staff in the remaining uncommercial Arts type departments in line with their long term plan to make Melbourne Uni into a postgraduate university. Their portfolio performance is just a smokesecrren
Well, Melbourne used to have the highest rated history dept in the country. With management’s uncanny flair for self-destruction, you can bet they’ll be 3rd or 4th this time next year.
Melbourne aint alone, as Minxy notes. Anyone who think the NTEU is ‘pattern bargaining’ wants to look at the AVCC’s approach.
Fortunately for the NTEU I doubt there’s a more incompetent bunch of employers in the whole country. Exhibit A: VU. They were completely rolled by the NTEU, left wearing no pants and hitchign a lift home. Those bozos couldnt organise a sacking in late Rome.
The VCA became an affiliated college of the University as part of the Dawkins reforms, but didn’t completely merge with the University until 2007. That’s not quite what was being suggested above, I know.
Darryl, The Melbourne Business School (which has been half owned by Uni of Melbourne) is in the process of amalgamating with the Graduate School of Management in Eco and Commerce, Vic College of the Arts has come under the Melb banner a year or so ago, and in earlier times it was parts of Education (1980s), dentistry, vet Science and some other areas. Sometimes cultural issues hang around for a long time in organisations as they do amongst communities and ethnic groups.
As omni has pointed out UniMelb is a bit like the Balkan states both before, during and after the Soviets.
RE 5 Andos “The NTEU is going to go absolutely bananas”
You bet, we are. We are not going to lie down and be run over by a steamroller.
MU has dropped a bombshell to contain our currently being negotiated Agreement. We are prepared, and have a members meeting on Tuesday.
ML Branch Secretary MU
What was the business plan for a graduate university? At Monash, you can get a med degree in 5 years, or you can get an accredited engineering degree in 4 years. At Melbourne, you can play around over a 3 year undergrad degree, then compete to enter graduate med and, if you are lucky, you can do another 4 years (total of 7). For Melbourne engineering, you can do a similar 3 year general undergrad degree, then compete to get into graduate engineering, and do only 2 years of actual engineering, to be a Master of Engineering! I believe that degree is still not professionally accredited. Engineering is so worried they have retained both degree systems, and are now in a critical financial position.
The problem with this model is that intelligent school leavers can usually read, and add, and will most likely opt for the fastest most secure route to a professional qualification. So, why choose Melbourne? Good looking buildings and a few high profile professors, are not sufficient to make up for the huge class sizes and understaffed departments. The figures already show that the brightest Australian school-leavers are avoiding Melbourne. If it was not for the scholarships and guaranteed entrance given to the bright ones that do apply (so these elites don’t actually compete for graduate entry), then the majority would enrol elsewhere.
The whole Melbourne Model was a solution to a problem we didn’t have, and the result of overriding the expertise of academic staff by a visionary and ruthless VC, is, well, what everyone can now begin to see. Where was the university council during all of this?
Can you provide a link to those figures, BRY?
Yes, my money is on the NTEU to strategically rout management at Melbourne. Budget problems start with the highest paid and least productive – lets see 33% of upper management RESIGN.
I suspect there wont actually be a budget problem after that.
Thank you BRY for pointing to a likely cause of their financial woes.
The ‘Melbourne Model’ has always had a whiff of the unlamented disastrous “Melbourne University Private” which had hoped to attract hundreds of fee-paying local students and grow rich. There’s a record of hubris here. It comes before a fall. Many staff opposed the new ‘Melbourne Model’ did they not?
Meaning?
Sorry GregM, I tried to find the article again and couldn’t. As I recall, MU admitted to a 6% swing of the very top TER scoring applicants away from MU. I suspect the actual figures are worse. In any case, the official excuse was that this was unfair criticism, because they no longer offered the same courses as other universities (i.e. undergraduate medicine, etc). Interesting excuse if you think about it. If high school students had been waiting for this change, one might have expected an increase. I suspect it was a very difficult sell to tell them it takes longer at MU, and you must compete for a place in the course you really want after 3 years. MU actually commissioned a private survey to find out what school leavers thought about the Melbourne Model. For some reason, the results were not allowed to be disclosed to staff below head of department level.
The finances are also interesting. The Faculties have been supported from central admin by large subsidies to ‘implement’ the new Model. We are talking millions here. Those subsidies are about to cut out. Even in 2007, the Faculties had done their own sums and predicted that, most likely, the model was financially unsustainable. The Model was sold to staff on the basis of (eventually) lower enrollments, smaller class sizes, and so, better teaching, and more time for research, but no-one could understand just how this was going to be possible. What academic staff actually saw was incredible friction between the fiefdoms (Faculties), chaotic planning, forced implementation of new courses, class sizes getting larger, and the teaching load heavier.
The waste of time, money and human resources has been very sad to witness.
Meaning management are generally clowns and pushovers Greg. Its not like serious industries, where where management tend to match or surpasss the workforce for nous.
In general, uni employees are WAY brighter than their managers, who tend to be useless under-achievers who give a shit about admin, rather than important stuff like research and teaching.
generally its a walk in the park to do them like a dinner.
Thanks for the explanation, Lefty. When can we expect the complete management cave-in and reversal of their decision to cut 220 jobs?
I haven’t received that info from NTEU sapper teams yet Greg, but rest assured
-
Suffice to say: if 33% management at Uni Melb resigned tomorrow no one would even notice the difference. Its a much better strategy to tackle the debt – which they occasioned through their own ineptitude.
Whatever happened to taking responsibility for ones actions?
“useless under-achievers who give a shit about admin, rather than important stuff like research and teaching.”
Yeah, ’cause who cares about enrollments or payroll or libraries or buildings or purchasing or lab assistants or any of that other admin shit.
grumble, mutter, etc
d
Upper management doesn’t do any of that stuff, Daz!
I think you’ll find that general staff who do all those important things are not only NTEU members behind the academic staff, but also themselves directly in the firing line from upper management at Melb.
Upper management should take the hit for their failed investment policies and growth strategies, rather than making academic and general staff pay.
No, upper management doesn’t do that stuff, but it’s ‘admin’ stuff without which none of the teaching and research would get done. I know you and others here know that, but it does bug me that in conversations on this kind of thing it collapses into ‘academics verses management’ which sheets the blame for problems back at what we used to call the ‘non-academic staff’ and neatly avoids the otherwise obvious fact that the people who call the shots in Universities are academics. I’ve very rarely heard academic staff complain about other academics in charge of departments, but I’ve heard vicious complaints from academics about general staff that work for academic managers. All the general staff in universities are accountable to academics and no academics ever report to general staff, but the complaints flow against the chain of accountability.
I sit on one side of the industrial landscape in Universities and I know that the field will always be tilted towards academics, just like in health it will always be tilted to doctors and nurses. I’ve a lot of empathy for the increasingly difficult situation academics are facing. (I don’t think there’s any credible case to make that they are underpaid, but they are awfully overworked and burdened with a lot of ‘admin’ stuff they are generally not good at and prevents them from doing their actual job.) I’ve chosen a career supporting the academic needs of universities and I’m very happy with my choice.
I’m not an member of the NTEU, I don’t trust the NTEU and I urge my colleagues to stay away from them and join a more appropriate union like the ASU, the CPEU or the Misos, but that’s a stoush for another day.
d
I agree with much of that Darryl (aside from the NTEU v other union membership bit – as I dont know the issues there), but I remain absolutely convinced any dead budget weight in unis lies at the top of the management pyramid, not in teaching and research staff. Or in the general staff who make the place run – in case that wasnt clear.
If you read the UniMelb VCs comments recently – he’s just put a freeze on all general appointments as well. That place is going to go to the dogs, quick smart.
Here’s a great example: the management numnuts at both Southern Cross and Deakin decided to go to a trimester model this year.
Both put around the view that this is what students wanted – more flexibility, faster timeframes.
The only problem is: students didnt want that. And nobody asked them. Those jokers didnt do any market research.
Turns out international students liked the break to have a look around australia and go on hols; and (wait for this amazing heads-up) domestic students are working so many hjours they wont even contempate doing MORE subjects in a year.
Who didnt know that? Only upper management.
As a result:
- students are now doing the same number of subjets, but over three semesters instead of two
- so stafff get no research done
- labout costs have gone up, as expected
- BUT no additional fee inocme is being earned,
So, its a NET LOSS to the unis! Nice one, morons!!
And who’ll get the sack to cover it??? Those incomeptent bozos?? No siree.
I ask: would disasters like this have happened under the old collegiate management models? Who holds tese bozos to account? University Council on all too rare occasions, but basically no-one.
RE: Darryl, yes the people who call the shots are academics, and they are certainly not dumb but, like politicians, they are generally a ‘special breed’ that yearn to be at the top of the power pyramid. As Lefty E (#60) remarked, they are usually distant from the student population. As far as MU is concerned, the very top levels are like a mafia. Glyn and his cronies took tight control of what was once a fairly open and transparent system. Just remember the previous VC; he went on 6 months leave to the UK, and everything went smoothly. He worked hard to get his next job in Manchester, and the staff back home could concentrate on research and teaching without interference. I didn’t hear of people griping about senior general staff, or support staff. And even if they did, those staff do what they are told/paid to do, as you would expect, and from what I saw, worked hard.
The fear and uncertainty since Glyn’s arrival wiped out any unified response by the majority of the academic/teaching staff. Things became secretive, no-one was sure of the real goals, the hype and advertising became ever harder to swallow. But you realized it was not a good career move to state the obvious contradictions – your job was potentially on the line. You saw others being pushed out. Hard working academics derided, leaving one-by-one. There was a time when the campus newsletter used to accept letters, and people could say what they liked. Now, it is a propaganda machine; everything on its pages is carefully selected, and is sweet and rosy. You can talk about anything as long as it in no way reflects badly on MU. Sounds a bit like China, doesn’t it.
Let’s see how many staff respond to the ERP on the uni website, or if indeed the request for staff feedback is yet another blind. Management have already stated publicly they prefer to get rid of staff rather than delay high-profile building projects.
And when you as an individual staff member are being targeted, where do you go? Human Resources? You have to be joking. They are admin employees who are paid to quickly get rid of problems, and they side with management (admin, heads of departments,Deans). Unless it is an obvious misdemeanor or criminal act, they treat anyone below HoD level as the problem. Afer all, their careers are most likely to be negatively influenced if they don’t side with their employer. An appeal system? Check out the enterprise bargaining agreement at MU. It is a panel selected by the admin. Great. The only folks on MU campus that can give non-admin biased assistance, and that give a damn, are the NTEU. (note: I am not an NTEU employee).
Well, BRY
that sounds grim…. Is it as bad as this at other Unis? Are we seeing the long-term effects of Unis having to scramble to find new funds because Fed Govt support has slowly dwindled away?
Now and then someone bemoans the rise of “corporate thinking” in Uni management. What I wonder is this: if “corporate thinking” is bad for Unis, could it also be bad for corporations??
But then I’m reassured because a large company would never over-pay its senior management, especially if they made foolish decisions leading to financial difficulties…. Just wouldn’t happen! The shareholders wouldn’t stand for it.
Well, yes Ambigulous. A most apposite contrast.
Now take all the known problems with corporate accountability and add in the following:
- no shareholders. Not ‘weak as piss ones with few actual rights’. Just none.
- no tradition of corporate governance, or managers having, like, management quals.
- an almost limitless ability to sack blameless underlings to cover up your own incompetence.
- no actual bottom line
OTOH, as noted, the incompetence has upsides. They’re pretty easy to roll in a stoush, if you’re determined and united. But it takes a lot of time and effort we dont really have.
As someone who is just about to graduate with a history PhD from the University of Melbourne, here’s my modest contribution to the discussion. It’s mainly written to inform overseas historians of the situation.
http://airminded.org/2009/08/03/a-dispatch-from-harvard-by-the-yarra/
Here is another response on what is happening at Melbourne. It includes the response from the school of historical studies.
Oops! Here is the link: http://blogs.theage.com.au/thirddegree/
RM: link fixed
It is very sad and unfortunate that education can be manipulated and tainted in this way. The outlook is grim, the student must be aware that it is about bums on seats and not about the University having the student’s best interests at heart.
These so called executives are morally unstable. They expect thousands of dollars for an unsubstantiated education whose classes are overfilled – under the guidance of overworked lecturers. The debt that then incurs is of concern in this scenario. Are there work opportunities out there for the amount of places they allow (especially in post grad courses), and is a student of an international standard under this crap banner of a ‘new model’? Nope!
November 2009, and the rot continues unabated at the University of Melbourne. A 30 per cent drop in first preference applications by students to do a degree at Melbourne, Dean of Law throwing in the towel (while the staff remain furious), senior HR manager Liz Baré leaving, Dean of Arts under pressure from his (remaining, and furious) staff, VCA protests and their 15,000 signature petition to Parliament, huge numbers of staff applying for redundancy…. Meanwhile, on Jon Faine’s radio interview (7 Nov, ABC 774), Glyn Davis maintains that everything is going very well – couldn’t be better… One wonders what it will take before a radical change occurs at that campus.
Those first preference figures are interesting: rises for Monash, Latrobe, Deakin, etc. Looks as if demand for university places in Victoria has grown, yet demand for places at Melbourne Uni has dropped (so in relative terms even worse….. stocks falling, in a rising market).
But they’re “vacating the undergraduate market” so why should they care? Glyn Davis an old mate of the PM’s? Did any of the 2020 Summiteers criticise his new “Melbourne Model”?
Here are the raw figures from riday’s “Age”. First preferences for 2010: Monash 14,364 (up 12%), RMIT 10,443 (up 2%), Deakin 9,978 (up 16%), Melbourne Uni 8,372 (down 14%), La Trobe 6,732 (up 15%).
Nov 15: Christopher Webb states in a piece titled: Flawed model? that “GOSSIP in academic circles at the University of Melbourne continues about how long the so-called ”Melbourne Model” can survive. Indeed some critics claim it’s on the verge of collapse.” (http://www.theage.com.au/business/raking-in-the-fees-for-the-folk-at-cooper-20091114-ifjp.html)
Nov 18: Adam Schwab takes apart the hype issued by MU spokesperson Christina Buckridge (http://www.crikey.com.au/2009/11/18/comments-corrections-clarifications-and-cckups-126/)
Nov 20: Melbourne University staff protest by with-holding exam results (http://www.theage.com.au/national/uni-staff-withhold-marks-20091119-ioy6.html)
Was the adoption of the so-called “Melbourne Model” a very brave decision, in the sense of Sir Humphrey Appleby (distinguished civil servant, now nobly sipping very fine port in his role as Provost of a distinguished Oxbridge College)?
Was the Model widely debated in the University of Melbourne before adoption, or was it fait accompli by executive fiat.
Let there be light shone upon these groves of academe.
I believe it’s not OT to link to this post.
Just to clarify the figure of 30%, relative to the comments in #68 and #70, was from the following article, and represents the cumulative drop over 2 years:
http://www.abc.net.au/news/stories/2009/11/06/2735008.htm
Razor @#2: Ideally they should have built up reserves in the good times to smooth out consumtpion in the bad times. THAT WOULD BE CALLED AN ENDOWMENT MATE.
So?