Know the worth of your university’s assets to safeguard funding

The path forward for the higher education sector in Australia has never been so unclear.

Universities are essential in advancing national objectives and ensuring Australia has the workforce it needs to remain strong and prosperous. But they can’t do so if they’re not adequately resourced and, according to Universities Australia, they’re heading for a funding cliff.

A report by the Australia Institute’s Centre for Future Work, states that federal funding for universities from 1995 to 2021 – excluding government-funded Help loans – has declined by $6.5bn, which equates to 46.5% of current higher education funding.

In August 2023 at the National Press Club of Australia, Universities Australia Chair Professor David Lloyd said, “Australian universities are more financially vulnerable than any other time in our history.”

Subsequently, in the latest risk assessment by the Tertiary Education Quality and Standards Agency (TEQSA), over 65 per cent of Australian higher education providers were rated as having ‘moderate’ to ‘high’ financial risk.

The pervasive uncertainty surrounding policies and funding has rendered the strategic planning process, essential for any higher and/or vocational education institution, exceptionally challenging.

In July 2023, the Australian Universities Accord Panel released its Interim Report after reviewing a range of issues across the higher education sector, including funding and regulatory settings.

The Review heard from various stakeholders about significant concerns regarding the current funding system, in particular the implementation of the Job-ready Graduates Package, cross-subsidisation, a reliance on volatile revenue sources, and system transparency.

The success of the Australian higher education system relies on having a secure, enduring and sustainable funding system. This is particularly crucial when it comes to infrastructure funding.

The issue of infrastructure funding is not new. There has been growing concern about the decline in Government funding for higher education infrastructure since the end of the Education Investment Fund (EIF) in 2014.  The EIF, established in January 2009 provided dedicated ongoing capital funding for tertiary education and research infrastructure. It gave $4.2 billion for infrastructure projects through competitive funding rounds held between 2008 and 2011, including projects such as the transformation of Central Queensland University into a dual sector institution, a joint health education facility at Port Macquarie and the Australian Centre for Indigenous Knowledge and Education at Charles Darwin University.

Assets are the second largest expense in Australian universities each year. In 2021, asset value in Australian public universities equalled $102.6 billion ($69.7 billion net).

They’re fundamental for teaching and research and vital for institutions to remain internationally competitive. While many universities have been able to use other sources of revenue to finance updating and building of new infrastructure, some institutions have been limited by their relatively small income.

In the absence of ongoing capital funding (like the EIF), many universities have turned to private sources of revenue to finance updating and building of new infrastructure, while others have been limited by their relatively small income revenue.

With less funding opportunities and the implementation of stringent funding measures, it is imperative for universities to prioritise effective and efficient asset management to be able to do more with less and ensure compliance with government regulations to maintain eligibility for available funding opportunities.

But many struggle to forecast their asset expenditure costs and are unable to accurately work out the depreciation on their millions of dollars' worth of assets due to lack of transparency and visibility.

For many universities, fully depreciated assets are still in use, asset value is determined by historical cost rather than current worth, or useful asset life assumptions are inaccurate. Additionally, many depreciation models fail to consider the cost of replacing assets due to technological obsolescence and advances in teaching and learning practices.

Managing assets the key to financial success

To harness the interconnectedness of asset management and financial sustainability, universities must face a similar reckoning to the one that saw entire courses swiftly move online during the COVID-19 pandemic—it requires digital transformation that meaningfully encompasses the full scope of asset management.

Failure to manage assets correctly can mean dire financial consequences for higher education institutions, including putting funding in jeopardy of being withheld or revoked. A tough pill to swallow when funding is limited.

Government compliance regulations mandate specific standards for infrastructure and facilities within universities and failure to meet these standards due to poor asset management could lead to suspension of funding until deficiencies have been rectified.

More than financials losses, ineffective asset management can mean compromised infrastructure, hindering learning and research experiences for students and faculty and raising safety concerns.

Clear visibility extends asset lifecycles

Modern strategic asset management software plays a pivotal role in helping universities do more with less and proactively manage assets in accordance with regulations, thereby safeguarding funding, upholding their reputation, and improving operational effectiveness in an increasingly regulated environment.

Centralising asset data including financial information, maintenance records and usage statistics creates a single source of truth, enabling full visibility into the cost and performance of every asset so resources can be put to the best possible use.

To best utilise assets and direct budgets, universities need to be able to effectively prioritise and optimise their strategic approach by engaging in effective portfolio, program, and project management.

Asset management software can help identify capital initiatives and prioritise their delivery aligned with organisational objectives and strategies optimised against available funding. Project costs, risks and timelines can be managed and controlled thanks to a unified view of all portfolios, program, and project information.

Using software like TechnologyOne’s Enterprise Asset Management, embedded and integrated with other business functions makes managing assets simple with streamlined processes and the ability to operate more efficiently through end-to-end management of university operations.

Enterprise Asset Management provides higher education institutions with accurate degradation models and depreciation calculations, enabling universities to precisely determine the value and remaining life of their assets. Through a single source of truth, universities can evaluate asset condition, performance, risk factors, as well as prioritise maintenance and renewal activity, which in turn can extend asset life and reduce costs for universities.

TechnologyOne’s Enterprise Asset Management empowers universities to maximise the value of your assets and achieve significant cost savings by optimising asset utilisation and streamlining maintenance processes. To make sure you get the most out of your assets, visit Experience EAM for more information.