The University of Newcastle's annual report shows it had more than half a billion dollars in reserves at the end of 2019, placing it in an enviable position to deal with the coronavirus pandemic.
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The report, tabled recently in NSW Parliament, shows the university had $534 million in financial assets, up from $498 million in 2018, and almost no debt. It also had $36.5 million in cash.
Its annual profit was $65.9 million, up sharply from $24.7 million the year before, mainly due to the bullish performance of its investment portfolio, which reaped $11 million in 2018 and $65.8 million in 2019.
Employee costs rose about 3 per cent, from $430.4 million to $444.9 million.
The financial picture will help inform the university council when it meets on June 26 to discuss the institution's response to the loss of an estimated $58 million in revenue due to the pandemic.
The loss of overseas student fees makes up most of the forecast revenue dip, along with anticipated drops in investment and commercial income.
Vice-chancellor Alex Zelinsky has already ruled out participating in a controversial national plan nutted out by the academics' union and universities to ask staff to consider wage freezes or pay cuts to save jobs.
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"Our financial situation is serious but by no means as dire as other universities are facing," Professor Zelinsky said last month.
"We started the year in a strong place with zero debt and less exposure to affected student markets than some of our counterparts."
But he said the university would need to find savings to mitigate the loss, including limits on staff recruitment and reviewing its capital works program.
The Newcastle Herald understands the university could place its $200 million plans for a new STEMM precinct at Callaghan on the back-burner.
The university leadership's enthusiasm for the Honeysuckle campus, where work on the first building started this month, could also wane in the face of COVID-related financial pressures.
However, a University of Melbourne study has shown Newcastle to be one of the best-placed universities in Australia when it comes to dealing with the economic fallout of the pandemic.
Newcastle derived just 14.9 per cent of its income from overseas students in 2018, well below the national average of 26.2 per cent.
The Melbourne study ranked Newcastle 31st out of 38 on a list of universities' reliance on overseas income and placed it in a grouping of 13 institutions facing the lowest financial risk.
It estimated Newcastle's 2020 fee loss at $46 million but said the predicted short- and long-term losses were "all well covered because the university does have substantial financial reserves".
Newcastle had nearly 38,000 students last year, more than 7000 of whom were from overseas.
Early this month, Wollongong University vice-chancellor Paul Wellings asked staff to vote on three options for addressing a projected $90 million loss in income.
The first two options involved pay cuts of up to 15 per cent but would still lead to job cuts of up to 200 full-time-equivalent positions.
A third option to maintain the status quo could result in twice as many job losses.
This despite the Melbourne study saying Wollongong is in a "strong financial position to manage its predicted fee losses" and placing it in the low-risk group with Newcastle.
Wollongong derived 25.7 per cent of its revenue from overseas students in 2018.
The study authors said that for those in the low-risk group "the financial gap will still require prudent disciplined management, but it is not as challenging as for universities in high- and medium-risk categories".
"The modelling shows that ... at the individual institution level each university will to varying degrees need to identify and build additional revenue streams and/or significantly reduce expenditure in order to assure financial viability over the longer term," they concluded.
"Few if any universities have sufficient operating margins or available cash and investment reserves to withstand a sustained reduction in international fee revenue.
"The nature of any 'right-sizing' would be of a dimension no university leader would have experienced previously."
Australian universities, including Newcastle, have been engaged in a competitive rush to build eye-catching new campuses, but the study authors suggested a "delay or scaling back of uncommitted capital works".
Michael Parris
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
