Despite various measures already taken, the board of governors had to approve a budget for 2023 with a temporary negative balance. Why is this, and how do we tackle it together? A look at the result of some measures, and at the future.

To balance the budget in 2023, Ghent University currently lacks 13.6 million euros. And that while the university has already taken measures worth 9.3 million euros in 2022. If there are no adjustments to the policy, the negative balance will rise to 31.5 million euros in 2027. That is not great news, but it is reality and we have to work with it.

The causes of the deficit can be found on both the expenditure and income sides of the budget. Providing solutions will require creativity and decisiveness. In any case, it is certain that high-quality education and research are given absolute priority.

“The circumstances make it difficult for everyone, including Ghent University. Making efforts, and having to conclude that these are not enough, is no fun for anyone. Nevertheless, I believe that this difficult situation will also offer opportunities for a structurally financially healthy future.” (Rector Rik Van de Walle)

The greatest pressure is on the general, university-wide budget that funds our teaching and research base. But that does not mean that there are no challenges with regard to the research projects carried out in the faculties. There, too, the increased personnel and energy costs will not always be covered by the acquired or expected project income.

Expenditures: strong increase due to inflation and energy crisis

Inflation and the energy crisis are hitting everywhere and of course also affect Ghent University. Both lead to significant increases in our expenses:

• five wage indexations already implemented in 2022 and two still expected in 2023 lead to a 17% increase in personnel costs;
• the costs of energy will double, despite the energy-saving measures taken and the fact that Ghent University already invested a lot in the past in alternative energy sources, such as wind turbines and solar panels;
• for the same reasons, the increase in expenses is also reflected in contracts with external parties, such as cleaning and maintenance, use of infrastructure (e.g. at HOGENT and HoWest), insurance premiums, etc.

These expenditures put increasing pressure on available resources. After all, the share of remaining operating resources that can be freely spent is getting smaller, while these resources are crucial to optimally support education and scientific research at Ghent University.

Income: decreasing share and deficit in funding by decree

The university income consists largely of the funding that Ghent University receives from the government for its basic education and research activities. The share of this so-called operating allowance in relation to the total income has fallen since the start of the current mechanism in 2008 from 48.0% to 43.2% in 2023.

This is partly the result of the increase in research fundings that Ghent University researchers successfully obtain (BOF and FWO projects, ERC Grants, …). But there is mainly a negative impact due to the government subsidy not evolving in line with the sharply increasing student population at our university. To put it more concretely: where Ghent University received about 8,000 euros per student in 2008, in 2023 this will only be about 6,650 euros, and this is due to the non-implementation or only partial implementation of some mechanisms laid down by decree:

• indexations are not (fully) implemented;
• the 'clicks' (the evolution of funding in line with student numbers) are not applied;
• promised growth paths are postponed.

“Last year, Minister Weyts made major changes to the indexation mechanism and provided compensation; this is of course greatly appreciated. But it is not enough for the future. Ghent University will continue to strive for full implementation of the financing decree and therefore for adequate financing from the Flemish government. Because we have to, for our students and staff, for our high-quality education and research.” (Rector Rik Van de Walle)

Have measures already been taken?

Ghent University has already taken various measures that have a significant impact on the (long-term) budget:

• the implementation of the decisions in the context of the key tasks memorandum already yielded 9.3 million euros in 2023 and that figure will rise to 12.3 million euros in 2027. These decisions are approximately 50-50 divided between income and expenditures;
• no indexation is applied to the faculty and central operational credits; there is no budgetary room for new initiatives;
• the energy saving measures announced earlier should have a positive effect. Its impact will only be apparent after one season;
• the VLIR, on the proposal of Ghent University, decided that the overhead on newly concluded research and service agreements will amount to 20% from 2023. Up until now this has been 17%;
• the new student housing plan ensures structurally healthy student facilities.

Does Ghent University not have any reserves to cope with this?

Ghent University does not have a large reserve; every euro received by Ghent University immediately gets a destination. Ghent University does have a liquidity reserve, which can be used temporarily for one-off investments. In anticipation of that destination, the funds are invested in a sustainable manner.