Self-financing Associate Degree programmes: the financial challenge

Securing a high degree of financial viability without sacrificing too much in quality is, perhaps, the most daunting challenge CityUniversity faces concerning self-financing Associate Degree (AD) programmes, once public funding for such programmes is withdrawn by the University Grants Committee (UGC). It means, essentially, bringing the cost down to a level where income can cover expenses while, at the same time, keeping the tuition fee competitive enough to be attractive to prospective students.

In 2002-03, recurrent income (UGC subsidy plus tuition fees) from government-funded AD programmes reached about HK$450 million. UGC funding for 13 of the 19 existing AD programmes, however, will be withdrawn by the year 2007D08. By then, CityU will lose some 70% of the recurrent funding in this area, or approximately HK$300 million.

Currently, the estimated unit cost for the UGC-funded AD programmes hovers between HK$90,000 and HK$100,000, according to figures obtained from the College of Higher Vocational Studies , the largest provider of such programmes within CityU. Of this sum, half is spent on the College itself. That HK$50,000 covers the cost of employing teaching and administrative staff as well as non-staff items such as equipment, office supplies and consumables. The remaining 50% or so is used for on-costs. These are contributions towards the maintenance of the University' infrastructure, for example, the library, IT and sport facilities, as well as for utilities and administrative support services such as payroll management, financial services, admission, registration, student records and student development services. These expenses, of which more than 70% goes to staff costs, largely relate to the physical environment of quality education at CityU.

Tuition fees for a non-UGC funded AD place at CityU now stand at HK$45,000 a year. This is the only income in a self-financing mode of operation. In order for such programmes to break even, expenditure has to be cut by 50%. This goal is perhaps most efficiently met by suppressing the direct cost, now largely made up of staff salary and related benefits. Another cost-saving solution may involve an increase in teaching load and class sizes, in order for the self-financing AD programmes to be launched, and continued to operate, on a stronger financial footing.

The responsibility of determining the parameters of financially viable self-financing AD programmes will, from now on, rest on the shoulder of the soon-to-be established Working Group of the Council when it meets on 23 June.

*** This story appears in Linkage Issue No.223 ***