The University of the West Indies (UWI) appears to be heading towards financial collapse.
That’s the grim warning from a regional group of professionals who were appointed by the Chancellor of the university, Robert Bermudez to look at the performance of the regional educational institution with respect to its management practices, transparency and accountability in keeping with the 1972 governing charter.
Headed by retired Chief Justice of the Caribbean Court of Justice (CCJ), Sir Dennis Byron from St. Kitts, the group reported that the myriad of problems facing UWI calls for rigorous restructuring in all segments of the institution to reduce operating costs, while pursuing feasible means of increasing revenues.
It said: “These trends suggest that institutional reengineering, substantive programmatic adjustments, and a structured cash conservation programme, in combination, are now probably all due”.
As a public service, THE NEW TODAY highlights some of the findings of the Byron-led group of professionals:
The Commission noted that the current funding model of The UWI is a cost-sharing model in which the economic costs of teaching are shared: students (20%) and regional governments (80%). This model is not sustainable, primarily due to ongoing fiscal challenges being faced by the governments coupled with rising operating expenses, resulting in increasing operating deficits.
A key financial metric to assess the financial health of the University, the Composite Financial Index (CFI), reflects deteriorating trends to the point where The UWI appears to be heading towards financial exigency, which calls for rigorous restructuring in all segments of the institution to reduce operating costs, while pursuing feasible means of increasing revenues.
These trends suggest that institutional reengineering, substantive programmatic adjustments, and a structured cash conservation programme, in combination, are now probably all due.
While the observed deficits are directly related to challenges with the current funding model (how The UWI gets its income), it is also related to the effectiveness of the operations and financial management of the University (how The UWI spends its money). These two critical components need to be addressed holistically to ensure that The UWI can survive to deliver on its mandate of providing tertiary education to the people of the region for the foreseeable future.
Governance – Financial Management
With respect to financial management, the Commission identified specific governance gaps which exacerbate the weak financial health of The UWI.
(a)the inability under the existing governance structure to effectively oversee and ensure accountability for execution of a sustainable strategic plan;
(b) delay in responding to deteriorating financial metrics;
(c) inadequate supervision of Campus Bursars;
(d) lack of clarity and transparency in the billing process;
(e) weaknesses in the review of strategic initiatives prior to implementation;
(f) gaps in the review process for commercial projects, and gaps in the process for executing, monitoring and reporting these arrangements;
(g) lack of adherence to documented processes, and noncompliance with rules governing private consulting arrangements by The UWI staff.
Recommendations – Financial Management
The Commission recommends the following to improve governance in financial management:
(a)With the proposed new Governance structure outlined in Section 6, the Council, through its various Committees, should review and approve the Strategic Plan, establish frequent reporting and continuous performance assessment of the Executive Leadership in meeting established objectives, and make interventions as needed.
(b) The Council must ensure that it has the appropriate data for decision-making, and should direct any gaps to be addressed promptly.
(c) Resource allocation, cost and revenues need to be made visible and transparent across the defined segments within the University in order to monitor and evaluate financial performance and sustainability.
(d) Greater effort must be made to address the financial challenges through implementation of aggressive cost-reduction and efficiency initiatives. These pro-active efforts are important not only to ensure survival of the institution, but also to instill greater confidence among key contributors that The UWI leadership is executing an effective plan that will put The UWI on a more sustainable path for the future.
(e) Implement improved governance processes to ensure greater prudence and fiduciary responsibility with focus on:
(i) Clear definition of authority levels and approval limits
(ii) Improved oversight by the University Bursar of the exercise of functions by the Campus Bursars.
(iii) Approval processes for capital expenditure and borrowing
(iv) Process for undertaking strategic initiatives and commercial projects
(v) Accountability for meeting financial metrics
(vi) Compliance framework with appropriate sanctions for breaches, along with incentives for compliance
(vii) Monitoring mechanisms and reporting, including whistle-blower mechanisms
(viii) Improved independent oversight – Audit function.
(f) Once these processes are developed and documented, a robust programme of communication and training will be required to ensure that there is full awareness of the procedures and of the expected role that all persons involved must play to ensure compliance.
(g) A team should be established with key stakeholders to review and agree on a methodology to calculate the economic costs and to allocate those costs through an agreed billing process. Teaching and learning costs and revenues should be visible and transparent across the board.
(h) A specialised team should be created at The UWI Centre level to be accountable for the commercial activities across all campuses.
(i) For private consulting arrangements, a requirement be instituted for the submission, by staff members to whom the consultancy rules apply, of quarterly reports on the consultancies undertaken by them during the previous quarter with confirmation that the prescribed percentage of the fees received in respect of such consultancies have been paid over to The UWI. Appropriate sanctions are to be applied if false or incomplete declarations are submitted.
New Funding Model
The Commission took note of initiatives undertaken from time to time by the University to address these challenges, including the establishment of a UGC task force to review the funding model, and noted its December 2017 report which recommended a new, sustainable funding model.
The Governments’ commitment to offer affordable tertiary education to citizens, is circumscribed by the harsh realities of the fiscal challenges which they face.
The Commission supports in principle the idea favoured by the UGC of establishing a trust fund to which the various governments would contribute. However, it felt that current fiscal realities (especially in a post COVID-19 world) would adversely affect the governments’ ability to seed the fund.
The Commission also supports the Augmented Income Contingency Loan Model – the funding model recommended by the UGC task force.
It regards as sound the principle that the students, being the primary beneficiaries of tertiary education, should contribute a greater portion of the economic cost of such education, supported by up-front funding with manageable repayment terms tied to their income levels. Such a revision must be carefully crafted to minimise disruption, disenfranchisement of financially challenged students and reduced enrolment.
The Commission recommends aiming for a base scenario for cost-sharing of 60% by governments and 40% by the student, recognising that other scenarios would need to be assessed before a final one is agreed with the relevant stakeholders. Such a change in model should be accompanied by adequate student funding arrangements and a variety of risk-mitigating elements.
The Commission recommends that there be a more rigorous examination and modelling of this cost-sharing proposal, in order to determine, with more confidence, the most optimal cost-sharing ratios and most viable characteristics that would make the model as affordable as possible to governments and students.
The funding should be supplemented by enhanced private sector contributions and alumni contributions. On the basis of further research, the University must make a decision on the most effective models for obtaining financial support from these sources. In addition, the University needs to make greater investment in increased administrative capacity to bring alumni engagement in line with best practice norms.
To be continued next week