Tag: finances

  • Cost of DfE’s school insurance scheme to rise 7.4%

    Cost of DfE’s school insurance scheme to rise 7.4%

    Risk protection arrangement costs have risen by 61 per cent since 2020

    Risk protection arrangement costs have risen by 61 per cent since 2020


    The Department for Education has confirmed costs for its school insurance programme will rise again by 7.4 per cent this year, with the scheme now costing 60 per cent more than in 2020.

    The risk protection arrangement (RPA), first set up in 2014, provides state schools an alternative to commercial insurance.

    It covers risks such as material damage, personal accident and employers’ liability, with government covering the losses.

    Now, the DfE has confirmed the amount it charges will rise from £27 to £29 per pupil from April 2026. This 7.4 per cent increase is far above the current rate of inflation, around 3.5 per cent.

    It said costs were reviewed annually “to ensure breadth of cover and value for money are balanced”.

    While the DfE first charged £25 per pupil for schools in 2014, prices were lowered to £18 per pupil in 2019-20.

    Prices have since increased year on year, with a 61 per cent change from 2020 to 2026.

    Around 12,400 schools were signed up to the RPA in January 2025. The DfE opened the scheme to LA-maintained schools in 2020.

    It was originally launched to reduce the public cost of protecting academies against risk.

    While schools may join at any time of the year, multi-academy trusts can join in a phased manner, where some academies may still have commercial insurance contracts in place.

    The DfE has been approached for comment.

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  • New Watchdog Report Reveals ‘Loopholes,’ Lack of Oversight of Idaho Virtual School Finances – The 74

    New Watchdog Report Reveals ‘Loopholes,’ Lack of Oversight of Idaho Virtual School Finances – The 74


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    Some families enrolled in the Idaho Home Learning Academy public virtual charter school used state funding to pay for virtual reality headsets, hoverboards, hunting equipment, video games and video game controllers, paddleboards, smart watches, admission tickets to water parks and subscriptions to streaming services like Netflix and Hulu, according to a new state watchdog report released Tuesday.

    The nonpartisan Idaho Office of Performance Evaluations, which is commonly referred to as OPE, released the 129-page Idaho Home Learning Academy evaluation report Tuesday at the Idaho State Capitol after the release was authorized by the Idaho Legislature’s Joint Legislative Oversight Committee.

    OPE released the evaluation report after multiple Idaho legislators signed a March 5 letter requesting the office study the Idaho Home Learning Academy’s finances, expenditures, policies, contracts and student achievement results.

    The Idaho Home Learning Academy, or IHLA for short, is a rapidly growing public virtual charter school authorized by the small, rural Oneida School District.

    There were about 7,600 online students enrolled at Idaho Home Learning Academy during the 2024-25 school year, many of which do not live within the traditional geographic boundaries of the Oneida School District.

    New report raises questions about how supplemental learning funds are used by some families

    As part of Idaho Home Learning Academy’s contract, its education service providers administer supplemental learning funds of $1,700 to $1,800 per student to families enrolled in IHLA that were paid for by Idaho taxpayer dollars, the report found. The money is intended to help pay families for education expenses, and the OPE evaluators found that the largest share of the funds were spent on technology expenses, such as computers, printers and internet access. Other significant sources of supplemental learning fund expenses went for physical education activities and performing arts expenses, the OPE report found.

    However, OPE evaluators found that some families used their share of funding for tuition and fees at private schools and programs. Some families also used their funds for noneducational board games, kitchen items like BBQ tongs, cosmetics, a home theater projector screen, video games, Nintendo Switch controllers, a Meta Quest virtual reality headset, movie DVDs, weapons, sights lasers, shooting targets, remote controlled cars, hoverboards, action figures, smartwatches, water park tickets and the cost of registering website domain names, the OPE report found.

    Families with students enrolled at Idaho Home Learning Academy are able to access the funds though both direct ordering programs and reimbursements. The OPE report found that Idaho Home Learning Academy’s three service providers (Braintree, Home Ed and Harmony) spent about $12.5 million providing supplemental learning funds for IHLA families during the 2024-25 school year. Service providers said that some families did not spend any or all of their supplemental learning funds, and the money was retained by the service providers, not returned back to the state or school district, the OPE report found.

    Idaho governor, superintendent of public instruction respond to OPE report’s findings

    Idaho Gov. Brad Little called the report’s findings “troubling” in a letter released with the report Tuesday.

    “We also have an obligation to be responsible stewards of taxpayer dollars,” Little wrote. “The OPE report on IHLA is troubling, especially as it pertains to supplemental learning fund expenses, academic performance, supplemental curriculum and the funding formula that enables virtual programs to receive more funding than brick-and-mortar public schools. The OPE report reveals that statutory safeguards are insufficient, oversight is inconsistent and accountability measures have not kept pace with the fast expansion of the IHLA program.”

    The OPE evaluation report findings come at a time when every dollar of state funding in Idaho is being stretched further amid a revenue shortfall. All state agencies outside of the K-12 public school system are implementing 3% mid-year budget holdbacks, and the state budget is projected to end fiscal year 2026 and fiscal year 2027 in a budget deficit, the Idaho Capital Sun previously reported.

    Idaho Superintendent of Public Instruction Debbie Critchfield said the report raised concerns for her as well.

    “(The OPE report) also raises important questions about whether direct and indirect payments to families are a proper and legal use of funds appropriated for public schools,” Critchfield wrote in a Nov. 26 letter to OPE leadership.

    The OPE evaluation report found that limited oversight and accountability create uncertainty about how supplemental learning funds paid for with state taxpayer dollars are used and whether students’ curriculum choices align with state standards and transparency requirements.

    Idaho state laws and administrative rules do not specifically allow or prohibit the use of supplemental learning funds, the OPE report found. That finding was one of several “policy gray areas” that the OPE evaluation report documented.

    Little concluded his letter by saying he is ready to work with the Idaho Legislature, the Idaho State Department of Education and the Idaho State Board of Education to restore meaningful accountability for the use of taxpayer dollars.

    “I have carefully reviewed the recommendations provided in this report and strongly encourage the Legislature to address the loopholes in state statute,” Little wrote.

    Oneida School District superintendent stresses Idaho Home Learning Academy did not break state law

    In response to the OPE report, Oneida School District Superintendent Dallan Rupp, who is also a member of the Idaho Home Learning Academy School board, emphasized that the report did not find that IHLA was guilty of any misconduct.

    “Importantly, the OPE report did not identify any misconduct at IHLA,” Rupp said during a meeting Tuesday at the Idaho State Capitol in Boise. “This outcome underscores the effectiveness of Oneida School District’s oversight and reflects IHLA’s consistent compliance with Idaho’s laws, statutes, rules, regulations and procedures, as well as its cooperative relationship with the Idaho State Department of Education. We remain fully committed to operating within all established guidelines, just as we have in the past.”

    Idaho Sen. James Ruchti, D-Pocatello, said it was beside the point that the school didn’t break any laws.

    “I’m extremely concerned,” Ruchti said during Tuesday’s meeting at the Idaho State Capitol in Boise. “This is public money – public taxpayer money – and we have an obligation to make sure that it’s spent appropriately and with oversight. And so, yes, it may not have violated any statutory requirements at this point. But what I’m saying is that what I saw in that presentation caused me serious concerns about how IHLA and other online teaching institutions are able to spend public dollars in a way that was not intended.”

    Idaho watchdog report found most online virtual teachers were part-time employees

    OPE also found that most Idaho Home Learning Academy teachers were part-time, unlike traditional schools, and the Idaho Home Learning Academy spends much less on salaries and benefits than it receives from the state’s salary apportionment formula.

    The report found IHLA was able to use the savings it realized in state funding provided to pay for staff salaries and health benefits to instead use at IHLA’s discretion or to pay its education service providers.

    The OPE report found that most of IHLA’s teachers are part-time employees and do not provide full-time direct instruction to students. Instead, the report found that Idaho Home Learning Academy’s kindergarten through eighth grade instructional model relied heavily on parent-directed learning and that IHLA teachers typically offered feedback and oversight instead of direct instruction.

    According to the report, IHLA reported $46.3 million in total expenditures from state funds during the 2024-25 school year. While traditional brick-and-mortar public schools’ largest expenditures are for staff salaries and benefits, the report found that only 36% of IHLA’s expenditures went to staff. A larger portion – 45% of IHLA’s total expenditures, or $20.6 million – went to paying education service providers.

    The OPE report also found that Idaho Home Learning Academy’s students lagged behind statewide averages for scores on Idaho Standards Achievement Test, or ISAT. The OPE report found 42% of IHLA students were proficient in English language arts during the 2024-25 school year, compared to the statewide average of 52% of Idaho students.

    The report also found just 25% of IHLA students were proficient in math during the 2024-25 school year, compared to the Idaho statewide average of 43%.

    However, the OPE report highlighted that some IHLA families interviewed for the report said they do not believe statewide standardized tests are a good measure of student learning. The report also noted that many Idaho Home Learning Academy families identified themselves as homeschoolers and said they were using IHLA by choice because they were unhappy with the quality of education in traditional brick-and-mortar schools or felt that their child’s educational needs were not being met by more traditional public schools.

    Idaho Capital Sun is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Idaho Capital Sun maintains editorial independence. Contact Editor Christina Lords for questions: [email protected].


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  • Podcast: AI, uni finances, civic

    Podcast: AI, uni finances, civic

    This week on the podcast artificial intelligence remains front and centre, with a look at the growing concerns around AI-generated teaching content and the student backlash it’s prompted. We also discuss our new project with Kortext on AI in pedagogy and an emerging debate over AI’s place in the REF process.

    Plus we explore the financial strategies universities in England are adopting in response to mounting pressures, and what does a more ambitious civic university agenda look like in 2025?

    With James Coe, Associate Editor at Wonkhe, Jo Heaton-Marriott, Managing Director at the Authentic Partnership, Jonathan Simons, Partner and Head of the Education Practice at Public First and hosted by Mark Leach, Editor-in-Chief at Wonkhe.

    On the site:

    The end of pretend – AI and the case for universities of formation
    High quality learning means developing and upskilling educators on the pedagogy of AI
    Counting the cost of financial challenges in English higher education
    Civic 2.0 – the civic university agenda but with sustainable impact

    You can subscribe to the podcast on Apple Podcasts, YouTube Music, Spotify, Acast, Amazon Music, Deezer, RadioPublic, Podchaser, Castbox, Player FM, Stitcher,

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  • The Shrinking Research University Business Model

    The Shrinking Research University Business Model

    For most of the past 30 or so years, big Canadian universities have all been working off more or less the same business model: find areas where you can make big profits and use those profits to make yourself more research-intensive.

    That’s it. That’s the whole model.

    International students? Big profit centres. Professional programs? You better believe those are money-makers. Undergraduate studies – well, they might not make that much money in toto but holy moly first-year students are taken advantage of quite hideously to subsidize other activities, most notably research-intensity.

    Just to be clear, when I talk about “research-intensity”, I am not really talking about laboratories or physical infrastructure. I am talking about the entire financial superstructure that allows profs to teach 2 courses per semester and to be paid at rates which are comparable to those at (generally better-funded) large public research universities in the US. It’s about compensation, staffing complements, the whole shebang – everything that allows our institutions to compete internationally for research talent. Governments don’t pay enough, directly, for institutions to do that. So, universities have found ways to offer new products, or re-arrange the products they offer, in such a way as to support these goals of competitive hiring.

    Small universities do not have quite the same imperatives with respect to research, but this business model affects them nonetheless. To the extent that they wish to compete for staff with the research-intensive institutions, they have to pay higher salaries as well. Maybe the most extreme outcome of that arms race occurred at Laurentian, whose financial collapse was at least in part due to the university implicitly trying to align itself to U15 universities’ pay scales rather than, say, the pay scale at Lakehead (unions, which like to write ambitious pay “comparables” into institutional collective agreements, are obviously also a factor here).

    Anyways, the issue is that for one reason or another, governments have been chipping away at these various sources of profit that have been used to cross-subsidize research-intensity. The situation with international students is an obvious one, but this is happening in other ways too. Professional master’s degrees are not generating the returns they used to as private universities, both foreign and domestic, begin to compete, particularly in the business sector. (A non-trivial part of the reason that Queen’s found itself in financial difficulty last year was because its business school didn’t turn a profit for the first time in years. I don’t know the ins and outs of this, but I would be surprised if Northeastern’s aggressive push into Toronto wasn’t eating some of its executive education business). 

    Provincial governments – some of them, anyway – are also setting up colleges to compete with universities in a number of areas for undergraduate students. In Ontario, that has been going on for 20-25 years, but in other places like Nova Scotia it is just beginning. Some on the university side complain about these programs, primarily in polytechnics, being preferred by government because they are “cheap”, but they rarely get into specifics about quality. One reason college programs are often better on a per-dollar measure? The colleges aren’t building in a surplus to pay for research-intensity – this is precisely what allows them to do revolutionary things like not stuffing 300 first-year students in a single classroom.  

    In brief then: the feds have taken away a huge source of cross-subsidy. Provinces, to varying degrees (most prominently in Ontario), have been introducing competition to chip-away at other sources of surplus that allowed universities to cross-subsidize research intensity. Together, these two processes are putting the long-standing business model of big Canadian universities at risk.

    The whole issue of cross-subsidization raises two policy questions which are not often discussed in polite company – in Canada, at least. The first has to do with cross-subsidization and whether it is the correct policy or not. I suspect there is a strong majority among higher education’s interested public that think it probably is a good policy; we just don’t know for sure because the policy emerged, as so many Canadian policies do, through a process of extreme passive-aggressiveness. Institutions were mad at governments for not directly funding what they wanted to do, so they went off and did their own thing. Governments, grateful not to be harassed for money, said nothing, which institutions took for approval whereas in fact it was just (temporary) non-disapproval. 

    (I should add here – precisely because of all the passive-aggressiveness – it is not 100% clear to me the extent to which provincial governments understand the implications of introducing competition. When they allow new private or college degree programs, they likely think “we are improving options for students” not “I wonder how this might degrade the ability of institutions to conduct research”. And, of course, the reason they don’t think that is precisely because Canadians achieve everything through passive-aggression rather than open policy debates which might illuminate choices and trade-offs. Yay, us.)

    The second policy question – which we really never ever raise – is whether or not research-intensity, as it is practiced in Canadian universities, is worth subsidizing in the first place. I know, you’re all reading that in shock and horror because what is a university if it is not about research? Well, that’s a pretty partial view, and historically, a pretty recent one.  Even among the U15, there are several institutions whose commitment to being big research enterprises is less than 40 years old. And, of course, we already have plenty of universities (e.g. the Maple League) where research simply isn’t a focus – what’s to say the current balance of research-intensive to non-research-intensive universities is the correct one?

    Now add the following thought: if the country clearly doesn’t think that university research matters because the knowledge economy doesn’t matter and we should all be out there hewing wood and drawing water, and if the federal government not only chops the budget 2024 promises on research but then also cuts deeply into existing budgets, what compelling policy reason is there to keep arranging our universities the way we do?  Why not get off the cross-subsidization treadmill and think of ways of spending money on actually improving undergraduate education (which the sector always claims to be doing, but isn’t much, really).

    I am not, of course, advocating this as a course of policy. But given the way both the politics of research universities and the economics of their business models are heading, we might need to start discussing this stuff. Maybe even openly, for a change.

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  • The state of the UK higher education sector’s finances

    The state of the UK higher education sector’s finances

    • Jack Booth and Maike Halterbeck at London Economics take a closer look at the recently published HESA Finance data to investigate the financial state of UK higher education.
    • At 11am today, we will host a webinar to mark the launch of the Unite Students Applicant Index. You can register for a free place here.

    In recent years, financial pressures have mounted across the entirety of the UK higher education (HE) sector, and have left many institutions in an exceptionally vulnerable position. In England alone, 43% of institutions are expected to face a financial deficit for 2024-25, prompting the House of Commons Education Select Committee to announce an inquiry into university finances and insolvency plans. Wide-ranging cost-cutting measures and redundancies are taking place across the sector, and the first institution (to our knowledge) has recently received emergency (bailout) funding from its regulator.

    With the recent release of the full HESA Finance data for 2023-24, we now have an updated picture of the scale of the financial challenges facing higher education providers (HEPs). London Economics analysed HEPs’ financial data between 2018-19 and 2023-24 to better understand the current financial circumstances of the sector.
     
    While other recent analyses focused on England only or covered other types of financial variables, here, we include providers across all of the UK and focus on three core financial indicators. 

    What does the analysis cover?

    Our analysis focuses on four broad clusters of HEPs, following the approach originally developed by Boliver (2015), which categorises a total of 126 providers according to differences in their research activity, teaching quality, economic resources, and other characteristics. Cluster 1 includes just two institutions: the University of Oxford and the University of Cambridge. Cluster 2 is composed mainly of other Russell Group universities and the majority of other pre-1992 institutions (totalling 39 institutions). Cluster 3 includes the remaining pre-1992 universities and most post-1992 institutions (67 institutions), and Cluster 4 consists of around a quarter of post-1992 universities (totalling 18 institutions). The latest HESA Finance data were, unfortunately, not available for 8 of these clustered institutions, meaning that our analysis covers 118 institutions in total.

    We focus on three key financial indicators (KFIs):

    1. Net cash inflow from operating activities after finance costs (NCIF). This measure provides a key indication of an institution’s financial health in relation to its day-to-day operations. Unlike the more common ‘surplus’/‘deficit’ measure, NCIF excludes non-cash items as well as financing-related income or expenditure.
    2. Net current assets (NCA), that is, ‘real’ reserves. This measure captures the value of current assets that can be turned into cash relatively quickly (i.e. in the short term, within 12 months), minus short-term liabilities.
    3. Liquidity days. This is based on the sum of NCA and NCIF, to evaluate whether institutions can cover operational shortfalls using their short-term resources. We then estimate the number of liquidity days each institution holds, defined as the number of days of average cash expenditure (excluding depreciation) that can be covered by cash and equivalents. The Office for Students requires providers to maintain enough liquid funds to cover at least 30 days’ worth of expenditures (excluding depreciation).

    What are the key findings?

    The key findings from the analysis are as follows:

    • In terms of financial deficits (NCIF), 40% of HEPs included in the analysis (47) posted a negative NCIF in 2023-24.
    • The average surplus across the institutions analysed (in terms of NCIF as a percentage of income) declined from 6.1% in 2018-19 to just 0.5% in 2023-24.
    • In terms of financial assets/resilience (NCA), 55% of HEPs analysed (65) saw a reduction in their NCA (as a proportion of their income) in 2023-24 as compared to 2018-19.
    • The decline in NCA has been particularly large in recent years, with average NCA declining from 27.4% of income in 2021-22 to 20.0% in 2023-24.
    • In terms of liquidity days, 20% of HEPs (24) had less than 30 days of liquidity in 2023-24, including 17 providers that posted zero liquidity days.

    A challenging time for the sector

    The analysis shows that the financial position of UK higher education institutions is worsening, with all three indicators analysed (i.e. NCIF, NCA, and liquidity days) showing a decline in providers’ financial stability. Major challenges to the sector’s finances are set to continue, especially as the UK government is looking to further curb net migration through potential additional restrictions on international student visas. Therefore, the financial pressures on UK HE providers are expected to remain significant.

    Want to know more?

    Our more detailed analysis, including a number of charts and additional findings on each indicator by university ‘cluster’, can be found on our website.

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  • What the latest HESA data tells us about university finances

    What the latest HESA data tells us about university finances

    The headlines from the 2023-24 annual financial returns were already pretty well known back in January.

    Even if you didn’t see Wonkhe’s analysis at the time (or the very similar Telegraph analysis in early May), you’d have been well aware that things have not been looking great for the UK’s universities and other higher education providers for a while now, and that a disquieting number of these are running deficits and/or making swingeing cuts.

    What the release of the full HESA Finance open data allows us to do is to peer even deeper into what was going on last academic year, and start making sense of the way in which providers are responding to these ongoing and worsening pressures. In particular, I want to focus in on expenditure in this analysis – it has become more expensive to do just about everything in higher education, and although the point around the inadequacy of fee and research income has been well and frequently made there has been less focus on just how much more money it costs to do anything.

    Not all universities

    The analysis is necessarily incomplete. The May release deals with providers who have a conventional (for higher education) financial year – one that matches the traditional academic year and runs through to the end of August. As the sector has become more diverse the variety of financial years in operation have grown. Traditional large universities have stayed with the status quo – but the variation means that we can’t talk about the entire sector in the same way as we used to, and you should bear this in mind when looking at aggregate 2023-24 data.

    A large number of providers did not manage to make a submission on time. Delays in getting auditor sign off (either because there was an audit capacity problem due to large numbers of local authorities having complex financial problems, or because universities themselves were having said complex financial problems) mean that we are down 18 sets of accounts. A glance down the list shows a few names known to be struggling (including one that has closed and one that has very publicly received a state bailout).

    So full data for the Dartington Hall Trust, PHBS-UK, Coventry University, Leeds Trinity University, Middlesex University, Spurgeon’s College, the University of West London, The University of Kent, University of Sussex, the Royal Central School of Speech and Drama, The Salvation Army, The London School of Jewish Studies, Plymouth Marjon University, the British Academy of Jewellery Limited, Multiverse Group Limited, the London School of Architecture, The Engineering and Design Institute London (TEDI) and the University of Dundee will be following some time in autumn 2025.

    Bad and basic

    HESA’s Key Financial Indicators (KFIs) are familiar and well-documented, and would usually be the first place you would go to get a sense of the overall financial health of a particular university.

    I’m a fan of net liquidity days (a measure showing the number of days a university could run for in the absence of any further income). Anything below a month (31 days) makes me sit up and take notice – when you exclude the pension adjustment (basically money that a university never had and would never need to find – it’s an actuarial nicety linked to to the unique way USS is configured) there’s 10 large-ish universities in that boat including some fairly well known names.

    [Full screen]

    Just choose your indicator of interest in the KFI box and mouse over a mark in the chart to see a time series for the provider of your choice. You can find a provider using the highlighter – and if you want to look at an earlier year on the top chart there’s a filter to let you do that. I’ve filtered out some smaller providers by default as the KFIs are less applicable there, but you can add them back in using the “group” filter.

    I’d also recommend a look at external borrowing as a percentage of total (annual) income – there are some providers in the sector that are very highly leveraged who would both struggle to borrow additional funds at a reasonable rate and are likely to have substantial repayments and stringent covenants that severely constrain the strategic choices they can make.

    Balance board

    This next chart lets you see the fundamentals of your university’s balance sheet – with a ranking by overall surplus and deficit at the top. There are 29 largeish providers who reported a deficit (excluding the pension adjustments again) in 2023-24, with the majority being the kind of smaller modern providers that train large parts of our public sector workforce. These are the kind of universities who are unlikely to have substantial initial income beyond tuition fees, but will still have a significant cost base to sustain (usually staffing costs and the wider estates and overheads that make the university work).

    [Full screen]

    This one works in a pretty similar way to the chart above – mousing over a provider mark on the main surplus/deficit ranking lets you see a simplified balance sheet. The colours show the headline categories, but these are split into more useful indications of what income or expenditure relates to. Again, by default and for ease of reading I have filtered out smaller providers but you could add them in using the “group” filter. For definitions of the terms used HESA has a very useful set of notes below table 1 (from which this visualisation is derived)

    There’s very little discretionary spend within the year – everything pretty much relates to actually paying staff, actually staying in regulatory compliance, and actually keeping the lights on and the campus standing: all things with a direct link to the student experience. For this reason, universities have in the past been more keen to maximise income than bear down on costs although the severity and scope of the current pressure means that cuts that students will notice are becoming a lot more common.

    What universities spend money on

    As a rule of thumb, about half of university expenditure is on staff costs (salaries, pensions, overheads). These costs rise slowly but relatively predictably over time, which is why the increase in National Insurance contributions (which we will see reflected in next year’s accounts) came as such an unwelcome surprise.

    But the real pressure so far has been on the non-staff non-finance costs – which have risen from below 40 per cent a decade ago to rapidly approach 50 per cent this year (note that these figures are not directly comparable, but the year to date includes most larger providers, and the addition of the smaller providers in the regular totals for other years will not change things much).

    What are “other costs”? Put all thoughts of shiny new buildings from your mind (as we will see these are paid for with capital, and only show up in recurrent budgets as finance costs) – once again, we are talking about the niceties of there being power, sewage, wifi, printer paper, and properly maintained buildings and equipment. The combination of inflationary increases and a rise in the cost of raw materials and logistics as a result of the absolute state of the world right now.

    [Full screen]

    Though this first chart defaults to overall expenditure you can use it to drill down as far as individual academic cost centres using the “cc group” and “cc filters”. Select your provider of interest (“All providers” shows the entire sector up to 2022-23, “All providers (year to date)” shows everything we know about for 2023-24. It’s worth being aware that these are original not restated accounts so there may be some minor discrepancies with the balance sheets (which are based on restated numbers).

    The other thing we can learn from table 8 is how university spending is and has been split proportionally between cost centres. Among academic subject areas, one big story has been the rise in spending in business and management – these don’t map cleanly to departments on the ground, but the intention to ready your business school for the hoped-for boom in MBA provision is very apparent.

    [Full screen]

    That’s capital

    I promised I’d get back to new builds (and large refurbishment/maintenance projects) and here we are. Spending is categorised as capital expenditure when it contributes to the development of an asset that will realise value over multiple financial years. In the world of universities spend is generally either on buildings (the estate more generally) or equipment (all the fancy kit you need to do teaching and research).

    What’s interesting about the HESA data here is that we can learn a lot about the source of this capital – it’s fairly clear for instance that the big boom in borrowing when OfS deregulated everything in 2019-20 has long since passed. “Other external sources” (which includes things like donations and bequests) are playing an increasingly big part in some university capital programmes, but the main source remains “internal funds” drawn from surpluses realised in the recurrent budget. These now constitute more than 60 per cent of all capital spend – by contrast external borrowing is less than ten per cent (a record low in the OfS era)

    [Full screen]

    What’s next?

    As my colleague Debbie McVitty has already outlined on the site, the Office for Students chose the same day to publish their own analysis of this crop of financial statements plus an interim update giving a clearer picture of the current year alongside projections for the next few.

    Rather than sharing any real attempt to understand what is going on around the campuses of England, the OfS generally uses these occasions to complain that actors within a complex and competitive market are unable to spontaneously generate a plausible aggregate recruitment prediction. It’s almost as if everyone believes that the expansion plans they have very carefully made using the best available data and committed money to will actually work.

    The pattern with these tends to be that next year (the one people know most about) will be terrible, but future years will gradually improve as awesome plans (see above) start to pay off. And this iteration, even with the extra in year data which contributes to a particularly bad 2025-26 picture, is no exception to this.

    While the HESA data allows for an analysis of individual provider circumstances, the release from OfS covers large groups of providers – mixing in both successful and struggling versions of a “large research intensive” or “medium” provider in a generally unhelpful way.

    [Full screen]

    To be clear, the regulator understands that different providers (though outwardly similar) may have different financial pressures. It just doesn’t want to talk in public about which problems are where, and how it intends to help.

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  • Podcast: Finances and cuts, VC pay

    Podcast: Finances and cuts, VC pay

    This week on the podcast we discuss “naming and shaming” over vice-chancellor pay packages when student outcomes fall short.

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  • Talladega College lands $15M loan as it cleans up its finances

    Talladega College lands $15M loan as it cleans up its finances

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    Dive Brief:

    • Talladega College has secured a $15 million loan to help the institution as it tries to right its finances after recent years of enrollment declines. 
    • In a Tuesday news release, leaders of the historically Black college in Alabama described the working capital loan from Hope Credit Union as a sign of confidence and an investment in the institution. The proceeds will be used to help Talladega refinance its debt and pay vendors.
    • The college has made other moves to shore up its finances as well, including cutting athletics programs, ramping up collections on unpaid tuition, folding some vacant employee positions into other roles and working with a third party to boost enrollment, officials said at a press conference last week. 

    Dive Insight:

    At a press conference last September, Talladega officials acknowledged the steep financial challenges facing the college after double-digit declines in enrollment in recent years on top of rising expenses, particularly in staffing. 

    One of the main causes for concern was the college’s struggle to make payroll that spring — typically a sign of deep distress that can send institutions into a tailspin. Shortly after the cash issues surfaced, Talladega’s then-president resigned, as did its chief financial officer. 

    Since then, the college has pared down its expenses, including by shuttering sports programs, which has garnered the institution plenty of media attention. 

    In a February editorial, Talladega Interim President Walter Kimbrough, who joined in June, noted that the college under his leadership has cut four sports programs “that all began in the last 3 years without any plan for funding,” which he described as “bad decisions, point blank.”  

    He also addressed the decision to cut Talladega’s gymnastics program, which lost the college significant amounts of money. 

    “One of my first tough decisions was to end gymnastics, a feel-good program that cost almost $400,000 and generated no revenue,” Kimbrough wrote. “Just from a practical perspective, we did not have a place for our gymnasts to train, which meant traveling to Trussville three days a week for practice, adding to costs.”

    Perhaps the college’s largest source of financial pain, though, has been its shrinking student body. Between 2018 and 2023, Talladega’s fall headcount dropped nearly 31% to 837 students. That decline has brought revenue pressure with it. Just between fiscal years 2022 and 2023, net tuition and fee revenue fell by just under $1 million to $5.6 million. 

    Talladega leaked money in other ways as well. At the April press conference, Kimbrough noted the college had not previously employed a debt collection agency to recoup unpaid tuition and fees. 

    Since the fall, a team of staff from across the university has worked to reach out to students to reduce the college’s bad debt — moving the figure from $1 million down to under $100,000 “in a couple of months,” Kimbrough said. 

    To help boost enrollment, Talladega has recently worked with a marketing firm that has done some pro bono work looking at ways the college can stand out, Kimbrough said. 

    Providing a loan to the college was “a no brainer,” Bill Bynum, CEO of Hope Enterprise Corp. and Hope Credit Union, said at the April press conference. Bynum noted Talladega leadership had what he called a “clear strategy” for moving the institution forward. 

    “Pound for pound, no one does more with less than HBCUs,” Bynum added. “So it’s a bet that we’re glad to make.”

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  • Saint Augustine’s U faces ticking clock to fix finances

    Saint Augustine’s U faces ticking clock to fix finances

    Approaching a critical vote on its accreditation status next month, Saint Augustine’s University has made controversial moves in recent months to stabilize its shaky financial position, but so far none have paid off, putting the beleaguered institution in a more precarious position.

    First, the historically Black university in North Carolina took out a $7 million loan last fall that many critics have described as predatory given its 24 percent interest rate and 2 percent management fee. The university also put real estate up as collateral in case of a loan default.

    Then, in November, SAU officials also struck a $70 million deal with 50 Plus 1 Sports, a fledgling Florida company, to lease its campus and develop university property for 99 years. The deal would have provided a much-needed financial lifeline for the cash-strapped university that needs to urgently fix its finances before the accreditation review. (The college was previously stripped of accreditation due to university financial and governance issues but appealed.)

    But that lifeline is in legal limbo after the North Carolina attorney general declined to sign off on the deal Monday.

    The North Carolina attorney general’s office, which reviewed the deal due to state law on the transfer of assets from a nonprofit, announced it would not approve the arrangement with 50 Plus 1 Sports as written due to a lack of “sufficient documentation to support the proposal” and concerns that the payout “is too low to justify transfer of the lease rights” for SAU’s campus, which is appraised at $198 million. The attorney general’s Office also expressed concerns about SAU’s “ability to continue to operate.”

    Ongoing Financial Struggles

    Saint Augustine’s has faced rising pressures since December 2023 when it fired then-president Christine McPhail, who subsequently lodged a gender-based discrimination complaint against the board. That same week the Southern Association of Colleges and Schools Commission on Colleges announced it had voted to strip SAU’s accreditation due to board and finance issues.

    (SAU lost an appeal to that decision but won a reprieve in court in July before SACSCOC voted again in December to strip accreditation. The accreditor will vote on SAU’s appeal next month.)

    Since early 2024—under the guidance of interim president Marcus Burgess—SAU has navigated a series of challenges in a bid to stay afloat. In February, it was hit with a $7.9 million tax lien. That same month, local officials encouraged SAU to explore a merger with nearby Shaw University, another HBCU. Months later, SAU board chair Brian Boulware cast the proposal as an aggressive effort to ramrod a partnership. (Local officials have denied his account.) In May, a group called the Save SAU Coalition sued Boulware and other trustees, alleging malfeasance and self-dealing by the board.

    That case was later dismissed due to a lack of standing.

    Enrollment has also plummeted, falling from more than 1,100 students in fall 2022 to a head count of around 200 students last fall, according to recent estimates. SAU has also announced major staff reductions.

    As its financial pressures added up, Saint Augustine’s borrowed $7 million from Gothic Ventures, an investment firm, and secured a $30 million line of credit. The deal, which came with a 24 percent interest rate and a 2 percent loan management fee, sparked alumni protests in the fall.

    Mark DeFusco, a senior consultant with Higher Ed Consolidation Solutions and sector finance expert, told Inside Higher Ed the terms of the Gothic Ventures loan were “crazy” and “irresponsible.” DeFusco agreed with the description of the loan as “predatory.”

    SAU officials have defended the agreement, writing that the deal is “crucial for maintaining educational services” and securing the loan contradicted “claims of irresponsibility in financial dealings” leveled by critics. SAU has cast criticism of the deal as a “smear campaign.”

    Earlier this month, two local publications, INDY Week and The Assembly, reported that last fall SAU turned down a more favorable loan offer of $19.5 million with a 9 percent interest rate. That offer, from Self-Help Credit Union, stipulated that two board members, including Boulware, resign, and would have included purchasing the existing Gothic Ventures loan. The university balked at the attached conditions.

    To DeFusco, the board resignations as part of the loan conditions were a reasonable request.

    “There are provisions in leadership for all kinds of lending. And with all due respect, it was a wise provision, because you have a board that’s allowed [financial issues] to go on for several years now. This isn’t something new,” DeFusco said. “They haven’t broken even for at least five years from what I could see in their records, and their accrediting body was going to close them down, except for that arbitration. And now they’re about to close them down again.”

    Continued financial struggles ultimately led SAU to a deal with 50 Plus 1 Sports, which describes itself on its website as a financing and development firm. That agreement, according to a university statement, would “generate a $70 million upfront investment” from the company.

    But the North Carolina attorney general’s office shut down that proposed deal.

    Beyond the lack of documentation on the proposal and the low payout, Assistant Attorney General Kunal Choksi also raised questions about the university’s due diligence of the deal.

    “SAU’s board and trustees were obligated to perform due diligence on whether 50+ can meet its obligations under the transaction and has the experience to develop revenue-generating property on the leased land,” Choksi wrote in a letter shared with Inside Higher Ed.

    Choksi added that the attorney general’s office had requested “sufficient proof that 50+ has the financial ability to comply with its obligations to SAU and avoid default with its financiers” and “details about similar deals 50+ has developed, including deals with other universities, or the company’s audited financial statements.” Choksi indicated in his letter that SAU had not yet provided those details on the proposal.

    In a Tuesday statement, SAU officials said little about the concerns raised by the attorney general about the 50 Plus 1 Sports deal or its ability to operate. Instead, university officials took aim at Self-Help Credit Union.

    SAU noted concerns “about the process that led to the recent rejection” of the agreement. Specifically, they pointed to a meeting between Marin Eakes of Self-Help Credit Union and alleged that the attorney general’s letter reflected comments made by Eakes in unspecified media coverage and alleged the 50 Plus 1 Sports proposal was shared without SAU’s consent.

    SAU officials wrote in the statement that they “suspect that the Attorney General’s Office used Mr. Eakes’ counsel and input to subsequently influence their decision. Such interference by Self-Help raises significant concerns about fairness. It suggests their attempt to weaponize the NC Attorney General’s Office to obstruct the approval process for the 50 Plus 1 Sports deal.”

    An Unknown Partner

    With the North Carolina attorney general’s office shutting down the 50 Plus 1 deal, SAU has little time to fix its finances ahead of a looming vote on its accreditation status in late February.

    And questions about both the deal and the company linger.

    Information on 50 Plus 1 Sports is sparse and it is unclear, as noted by the attorney general’s office, whether the nascent company has the resources to back the deal. Little is known about 50 Plus 1 Sports, which unsuccessfully big on a $800 million stadium development deal in St. Petersburg, Fla., in early 2023. The firm was not selected for the project amid questions from local officials about how it would finance the deal and a lack of experience as a lead developer.

    In its St. Petersburg proposal, 50 Plus Sports listed a $1.4 billion deal to develop a sports and entertainment district for the University of New Orleans among its reference projects. However, a UNO spokesperson told Inside Higher Ed by email it is not “moving forward with the project.”

    Monti Valrie, founder and CEO of 50 Plus 1 Sports, did not respond to a request for comment.

    What’s Next for SAU?

    The attorney general’s office did leave the door open to reconsider the deal. But the university would have to provide more details to the office, including evidence that SAU conducted due diligence on 50 Plus 1 Sports and its finances.

    SAU officials noted in their statement that “despite these challenges, SAU remains committed to working collaboratively with the Attorney General’s Office. We believe transparency and open dialogue are essential in securing the funding for our university’s sustainability and growth.”

    But SAU is facing a ticking clock to get that information to the attorney general or rework the deal. University officials have said that the deal needed to close by Jan. 31. Otherwise, “SAU risks failing to demonstrate financial sustainability” before its appeal hearing next month, according to a university statement.

    But DeFusco wonders if SAU’s finances are too far gone to fix.

    “Their finances are so bad they may be criminal,” he said, pointing to payroll and tax issues. (The university also allegedly failed to maintain worker’s compensation for employees recently.)

    As pressure mounts, DeFusco believes the board needs more scrutiny for SAU’s financial problems, arguing “they missed it for years” as the university slipped deeper into the red.

    “Now the question is, is the board acting as a fiduciary?” DeFusco said.

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  • Podcast: Free speech, uni finances, regional inequality

    Podcast: Free speech, uni finances, regional inequality

    This week on the podcast the government is to press on with implementing parts of the Higher Education (Freedom of Speech) Act 2023 while seeking to repeal others – we discuss what will (and should) happen next.

    Plus there’s a report on more resilient and sustainable higher education finances, and NEON has been looking at regional inequality in university admissions.

    With Richard Sykes, Partner at Mills & Reeve, Paul Greatrix, HE expert and until recently Registrar at the University of Nottingham, Debbie McVitty, Editor at Wonkhe and presented by Mark Leach, Editor-in-Chief at Wonkhe.

    Read more

    Bridget Phillipson reaffirms commitment to free speech

    Resolving the tensions in campus culture requires leadership from within

    Connect more: creating the conditions for a more resilient and sustainable HE sector in England

    New NEON research shows widening regional inequalities in university admission for poorer students

    Widening access needs more flexibility

    You can subscribe to the podcast on Acast, Amazon Music, Apple Podcasts, Spotify, Deezer, RadioPublic, Podchaser, Castbox, Player FM, Stitcher, TuneIn, Luminary or via your favourite app with the RSS feed.

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