1. Presentation to Heads and Managers Forum 26th September 2012 Dr Michael B. Murphy, President, University College Cork

2. Presentation Outline 1.Financial Situation 2.HR Summary 3.Research Funding 4.UCC Response to the Financial Situation

3. UCC Financial Performance 2007-12 Recovered recurrent deficit position Improved Cash position Improved Capital Deficit position 46% reduction in Core Grant since 2008 peak of €84m (€46m in 2012) Exchequer funding has fallen from 84% to 62% Not all of this income reduction felt in annual budgets given pay cuts and higher student contribution, however Annual reductions in total budget available across University Negative service impact UCC must minimise expenditure in September 2012 Further cost reduction will be required to break-even this year

4. Overview of Last 5 years Financial Performance 2006/072007/082008/092009/102010/11 €000 Total Income261,167261,719301,154284,000268,510 Total Expenditure266,611260,829290,293282,505267,959 Surplus / (Deficit)(5,444)89010,8611,495551 Cumulatative Deficit(13,923)(13,033)(2,172)(677)(126) Capital Deficit(42,000)(35,000)(22,000)(13,300)(14,000)

5. 2013 Budget Overview Further 6.5% reduction anticipated in Core Grant from 2012 level Non Exchequer income at same level as 2011/12 except of year 2 of ACMS Non exchequer income not growing at a pace to match reductions in exchequer funding Changes to PG supports will lead to a reduction in PG income Increase in student contribution charge of €250 offset by corresponding €250 reduction in “free fees” – student payment issues Savings required across the University to deliver a balanced budget All areas to contribute – try to minimise impact on student facing areas Limited scope for investment and essential maintenance ECF will require reduction in FTE and pay

6. 2013 - 2015 Scale of Immediate Fiscal Challenge €8.6bn reduction in public expenditure to reach 3% deficit target by 2015 Since 2008 income including research has dropped from €313m to €252m in 2012/13 Based on 2012 reduction, impact on UCC to 2015 assessed at a further exchequer income reduction of €21.1m This will have knock on effect on other sources of exchequer income - Research Funding and overhead, HSE funding, Skills, Fottrell, GEM, Access, Quality When adjusting for the above and unavoidable increases in expenditure (e.g. Increments, maintenance) over the next 5 years, UCC will be required to make good c€25m of a funding adjustment to deliver similar level of service as in 2012 Student Contribution anticipated to grow to €3,000 no net gain  Tuition Fee will fall pro rata  likely bad debt impact and no net gain to University No opportunity for critical/strategic investment unless the €25m can be found

7. 2013 – 2015: Assessment of Impact on UCC (€m) 2012 Actual 2013 Forecast 2014 Forecast 2015 Forecast 2012-15 Change Forecast Net Annual Reduction in Funding in Exchequer Related Funding5.708.487.475.11 21.1 Staffing Increase - Super Critical Posts3.200.00 * Increments0.80 0.90 2.6 Research Overhead Reduction2.500.800.50 1.8 Strategic Funds1.200.00 0.0 Non Pay Pressures - Energy/WGB/VAT0.600.00 0.0 Total Funding Gap14.0010.088.876.51 25.5 Cumulative Funding adjustment/Savings14.0024.0832.9539.46 25.5

8. 5 Year Impact of Income Reduction across UCC Income Change 2008/9 to 2012/13 - Excluding Research €,000UCCCACSSSB & LM & HSEFSCentral/ Other 2008/09210,61644,40830,93648,24552,27834,749 2012/13194,58342,33425,83252,28942,07932,049 Movement(16,033)(2,074)(5,104)4,044(10,199)(2,700) Final Budget Movement 2008/9 to 2012/13 - Excluding Research €,000UCCCACSSSB & LM & HSEFSCentral/Other 2008/09210,61628,94517,67836,21633,89293,885 2012/13194,58328,55718,08142,24230,87074,833 Movement(16,033)(388)4036,026(3,022)(19,052) - While Income has fallen by €16m since 2008/9 - priority has been given to maintaining budgets in Colleges - As a result most Colleges have had limited reduction in final budgets with the exception of SEFS - M & H net budget has increased due to the introduction of GEM and ACMS - To avoid reductions in Colleges budgets beyond 2012/13 - must grow non exchequer income

9. Reduction in Staff FTE 2008-2013 FTE figures (Core Staff) December 2008  1,911.50 FTE figures (Core Staff) as at December 2012  Target: 1,728.60  9.6% reduction from 2008 Anticipated FTE Ceiling 2013  1676.7  52 FTE reduction from December 2012 figures  12.28% reduction from 2008

10. Staff Reductions 2008-2012

11. Research Funding: Challenges and Opportunities Increasingly competitive national funding programmes Sustainability of research infrastructure Significant change in emphasis  Excellence with Impact  National Research Prioritisation Exercise Proportion of non-exchequer income increasing to compensate for decrease in national exchequer funding opportunities Increased resource from FP7; Horizon 2020 will bring further opportunities with considerable alignment with UCC research strengths SFI Centre programme Research career framework – clarity

12. Input: Research Expenditure — Exchequer versus Non-exchequer (% Contribution)

13. Input: EU-FP7 New Award Research Income (€k) Since 2008-2009, there has been a 222% increase in the value of new research awards secured by UCC researchers from the European Commission

14. FP7 Performance [to Nov 2011] *FTE data taken from last Forfás HERD survey

15. Inputs: Industry New Award Income (€k) New Awards 2007/20082008/20092009/20102010/2011* Industry- sponsored Projects 1 19 29 35

16. Non Exchequer Income 2008 - 2011 (€k) University Total

17. UCC Steps to Protect Education Quality: Income Growth 1.The pace of exchequer funding reduction is not being replaced quickly enough by new income 2.UCC must continue to do more with less - if we cannot replace reductions in exchequer income with new non exchequer income - unavoidably have to reduce expenditure 3.University 2009 Income Generating Policy being updated 4.Income generation now incorporated as part of strategic planning process 5.All staff must participate in income generation 6.Incentives to foster income diversification 7.Cap EU undergraduate admissions 8.Focus on fee-paying EU postgraduate recruitment 9.Focus on non-EU undergraduate, postgraduate and PhD recruitment 10.Focus on part-time, distance and adult learners 11.Overseas programme delivery where feasible and profitable

18. UCC Steps to Protect Education Quality: Efficiencies 1.Manage the teaching burden through new learning technologies 2.Reduce the examination burden 3.Robust review of current bureaucracy -  Mapping of support staff deployment  moratorium on support staff appointments  adoption of redeployment 4.Employ all new staff funded by non-exchequer income, through a wholly-owned UCC subsidiary company 5.Prioritise research that is important and affordable 6.Procurement 7.Opportunities to close/ merge/consolidate programmes must be taken – should not continue with unviable programmes 8.Engage vigorously with government (via IUA) on the national policy imperatives