Can this university survive?

One year after it came into being, Walter Sisulu University (WSU) is facing financial disaster. This follows the recent award of a staff salary increase for which the university has no budget.

Documents in the possession of the Mail & Guardian show that WSU management, headed by interim vice-chancellor Nicky Morgan, strongly opposed any increase. Despite this, the council overrode management, with the result that retrenchments could soon become unavoidable and the institution’s sustainability is in question.

WSU was born in July last year from the merger of the University of Transkei (Unitra), Border Technikon and Eastern Cape Technikon.
It has about 20 000 students and more than 2 000 academic and other staff.

Financial legacies deriving from before the merger combined with this year’s salary increase mean that the university faces a deficit of R73-million next year. Morgan told the M&G that spending on human resources is a “runaway train” at WSU and consumes far more than the institution’s government subsidy covers.

On May 10, staff embarked on a strike, initially demanding a 12% increase across the board, and later lowering this to 8%. Management insisted the institution could afford neither demand, and the strike persisted into June. Last month, the university announced that an agreement of a 5% increase across the board had ended the strike.

But the M&G has since learned that the council brokered this agreement in the teeth of opposition from management. Late in May, management issued a “disclosure document” to the council, staff and students, detailing financial burdens WSU inherited from two of the three merger partners and how these limited the options the new institution could employ to become sustainable.

Management also provided the council with another document, on June 11, advising that any diversion of funds to recurring expenditures such as salaries could lead to retrenchments and the closure of one WSU campus, and even that the university might be declared non-sustainable

The disclosure document says that WSU’s personnel costs alone are budgeted at R385-million this year; while the university will receive a state subsidy of only R315-million. It also says the university is not prepared to seek additional income by raising student fees—its only other income—which have already increased by 5%.

The 2006 budget “was balanced with much difficulty by reallocating revenue from critical areas, such as improving research and learning and teaching, to cover human resource costs instead”, the document says. “WSU now finds itself in a worse situation because the sacrificed research and teaching grants [from the government] will not be received next year.”

One millstone derives from the former Border Technikon’s granting of salary increases amounting to 20% in the two years before the merger. The business unit of WSU that this former technikon now constitutes has a monthly salary bill of R8-million, but subsidy income of only R6-million per month. It has no other income.

In addition, salaries at two of the business units, Border and Eastern Cape, are 30% above market-related norms, whereas Unitra’s are at the norm level, according to the disclosure document. The 5% increase has now widened pay gaps at WSU. As a result, the so-called harmonisation process, which all merged institutions have to undertake to achieve parity of salaries, will further strain the university’s finances from next year.

Council chairperson Somadoda Fikeni told the M&G that after the strike had been on for three weeks and unions had rejected management’s offer of a once-off payment of 3,5%, the council was confronted with two alternatives: either settle for an increase and the difficulties of funding that, or sacrifice a semester’s work if the strike continued.

“If the semester’s work was lost,” he said, “this would entail firstly the loss and fruitless expenditure of half of WSU’s 2006 budget, an amount of more than R300-million, and secondly the loss of future Department of Education subsidy based on the zero level student throughput and the radical drop in students moving up to the next level of study ... Ending the strike was therefore paramount in the decision before the council.”

Fikeni said the council plans to tackle the financial crisis caused by the increase by means of an “immediate austerity drive and cost cutting; aggressive fundraising ...; [and] reorganisation and restructuring of the institution”.

Morgan said it was the council’s prerogative to make its decision, and management “now has the duty to find mechanisms to bring the university’s finances back to some form of sustainability”. He questioned, though, whether “a turnaround would be possible in the short term”.

Molapo Qhobela, chief director in the Department of Education, said the department’s merger unit “continues to provide technical support to WSU on the management of its resources including human resources ... We will continue to work with the management and council to assist them to ensure that the university is viable.”

David Macfarlane

David Macfarlane

David Macfarlane is currently the Mail & Guardian's education editor. He obtained an honours degree in English literature, a fairly unpopular choice among those who'd advised him to study something that would give him a real career and a pension plan. David joined the M&G in the late 1990s. There, the publication's youth – which was nearly everyone except him – also tried to further his education. Since April 2010, he's participated in the largest expansion of education coverage the M&G Media has ever undertaken. He says he's "soon" going on "real annual leave", which will entail "switching off this smart phone the M&G youth told me I needed".   Read more from David Macfarlane

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