Profile & Trends 2008: New Zealand's Tertiary Education Sector

Sector capability

In 2008, the financial performance of the public tertiary education institutions⁴ was similar to that achieved in 2007. The institutions collectively met three out of four benchmarks set for prudent operation of a tertiary education institution, compared to four in 2007. The aggregate operating surplus decreased from 3.4 percent of revenue to 2.8 percent – slightly below the benchmark of 3 percent. Net cash flow also declined slightly from 17 percent to 16 percent but was above the benchmark of 11 percent. The working capital ratio – which gives a snapshot of an institution’s current assets maturing   within one year against its short-term obligations maturing within one year – increased from 103 percent to 104 percent, compared to a benchmark of 100 percent. The liquid assets measure – liquid funds   as a percentage of annual operating cash outgoings – also rose to 20   percent, compared to a benchmark of 9 percent.

This result was achieved despite a difficult operating environment.   The reduction in international student enrolments continued while   institutions faced increases in costs. The government provided   additional support for polytechnics and wānanga through the Quality   Reinvestment Programme, which was designed to help institutions   move to a more sustainable business model.

There was considerable variation among the tertiary education   institutions, with some recording very strong performance, while nine   of the 31 institutions had an operating deficit in 2008, compared to   seven in 2007 and none in 2003.

Overall, the universities experienced a slight decline in financial   performance in 2008. For the first time since 2001, two universities   recorded an operating deficit. Collectively, the surplus of the eight   universities was 2.7 percent of revenue, compared to 3.7 percent a   year earlier and to the benchmark of 3 percent. The net cash flow and   working capital ratio of the universities also declined in 2008, while the value of liquid assets rose.

The financial performance of the polytechnics in 2008 was very similar to that achieved in 2007. Among the polytechnics, financial performance was helped by funding provided through the Quality Reinvestment Programme. There was a slight improvement in the value of liquid assets, the working capital ratio and net cash flow, while the operating surplus declined slightly. The largest operating surplus, 13 percent of revenue, was reported by the Southern Institute of Technology, while the largest operating deficit, 12 percent, was reported by Tairawhiti Polytechnic. Seven of the 20 polytechnics recorded an operating deficit, compared to four in 2007.

Another notable feature of 2008 was the continued improvement in   financial performance of the wānanga after several years of declining   performance. In particular, Te Wānanga o Aotearoa has improved its performance significantly since 2004. This institution recorded a surplus of 4 percent of revenue in 2008, compared to an operating deficit of 13 percent in 2006. In part, the healthy performance of the three wānanga was due to high earnings from interest. 

Figure 1.10: Strategic financial position of tertiary education   institutions

In 2008, the total number of staff employed by tertiary education   institutions remained virtually unchanged compared with the   previous year. Staff numbers in private training establishments   decreased for the third consecutive year.

There was a slight decrease from 2007 to 2008 in the number   of academic staff at tertiary education institutions and a slightly   larger increase in the non-academic staff. Over the same period,   the percentage decrease in the number of academic staff in private   training establishments was matched by a similar size fall in the   number of non-academic staff. 

In wānanga, the number of teaching staff fell significantly while the   number of students increased, raising the 2008 student to academic   staff ratio to 42 to 1, compared to 34 to 1 in 2007. An increase in the   number of teaching staff at polytechnics, together with a decrease in   the number of students, lowered the student to academic staff ratio   in 2008 from 19 to 1, compared to 18 to 1 in 2007. In universities, the   student to academic staff ratio remained virtually unchanged.

Total expenditure on personnel in public tertiary education institutions   rose from 2007 to 2008, while personnel costs as a percentage of   total operating expenditure increased by one percentage point to 58   percent in 2008.

Footnote

4. In 2008, there were 31 public tertiary education institutions. However, to allow comparisons to be made over time, the data from the colleges of education has been merged with that of the universities in this chapter unless otherwise stated. In January 2007, the last two colleges of education, the Christchurch and Dunedin Colleges of Education, merged with the University of Canterbury and the University of Otago, respectively.