Walter Sisulu University (WSU) is one of four public higher education institutions located in the Eastern Cape and one of two comprehensive universities within the region. WSU came into existence through the merger of the Border and Eastern Cape Technikons, and the University of Transkei.
WSU is a multi-campus university with 13 delivery sites across four campuses located in Mthatha, Buffalo City, Butterworth and Queenstown with its central management and administrative structures located in Mthatha.
WSU has been in a financial crisis for a number of years. In March 2011, the former University Council requested approval from the Minister of Higher Education and Training, Dr BE Nzimande, to increase the university’s overdraft from R147 million to R250 million in order to meet its payroll commitments for March 2011.
Following this request, the department conducted an assessment of WSU which highlighted a number of issues in relation to financial management, human resources, governance, and Information Technology (IT).
After consultation with the University Council, the Minister appointed an independent assessor in July 2011. The assessor reported that the institution was bankrupt and had battled to meet payroll commitments from month to month. In addition, the institution had been operating on a council approved deficit for about 5 years and illegally used earmarked grants provided for infrastructure improvement to pay salaries.
This financial crisis was threatening the viability and long-term survival of the university.Following the assessors report, the Minister appointed an administrator at WSU on 30 October 2011 to restore good governance and management, and implement viable systems in finance, human resources and administration. Most importantly, the administrator was required to restore the financial viability of the institution.
Substantial progress has been made since the administrator was appointed. By June 2013, the administrator reported that financial stability had been achieved in the short-term with all creditors paid, staff salaries secured, backlogs cleared and a break-even budget tabled for 2013.
The administrator within the first year has managed to clear the bank overdraft of the university, improve and implement internal control systems and reduce student debt from R271 million to R40 million. Although substantial strides have been made and a break-even budget for 2013 tabled, WSU’s financial situation remains precarious.
The university remains technically and commercially bankrupt, and will require discipline and determined leadership to ensure that over the long term the university becomes financially sustainable.
The administrator has developed a turnaround plan to address the critical areas of governance, finances, human resources and infrastructure. A feasibility study for the Turnaround Plan has been submitted to the department motivating for additional resources to ensure sustainability over the longer term. It is important that whilst these resources are being sought, the institution stabilises.
The turnaround plan recognises the critical importance of addressing the unsustainable payroll of the university. The independent assessor in his report indicated that personnel cost constituted 80% of the operational income. With the intervention, staff payroll cost is now approximately 75% of income.
The unusually high percentage of salary expenditure at WSU is a consequence of a number of factors with the university’s employees being amongst the highest paid university employees in the country and highest paid university employees in the province. The national payroll norm for universities is currently between 55% and 62%.
As part of the department’s commitment towards ensuring the financial sustainability of WSU, we have provided significant financial resources since the appointment of the administrator to ensure WSU’s stability and future prospects:
- R310 million to address historic debt of students
- R64.2 million for teaching and learning technology of which R32.1 million has already been transferred
- R14.4 million for technical expertise
- R48 million to fund a once-off inflation amount for bonuses of personnel in 2012; and
- R421.8 million through the Infrastructure and Efficiency Funding allocation for the 2012/13 to 2013/14 cycle.
This amounts to over R858 million which is over and above the block grant subsidy allocation, foundation provisioning grant, research development grant, teaching development grant and clinical training grant provided in terms of the funding framework.
It should be noted that the 2013 break-even budget takes into account the 4.25% salary increase offered and any amount above this will result in cash flow problems and significant budget deficits going forward.
The current strike threatens to reverse the significant gains made over the last year. For the first time in the last five years, WSU has tabled a balanced budget where expenditure is in line with the income of the university. This is a significant achievement by WSU given that in the past the institution has been operating on a deficit budget.
All stakeholders at WSU should realise that financial instability will seriously compromise the academic enterprise of the university. This will not only bring into question the short-term survival of the institution, but will also jeopardise the jobs of workers, staff and economy of this region thereby threatening the quality of its offerings and its long-term financial viability.
The Department of Higher Education and Training has been actively monitoring the situation at the WSU and on 12 August 2013, the Director-General of the department met with a range of key stakeholders of the university, including all the alliance structures. However, the unions do not appear to grasp the gravity of their demands and the potentially disastrous consequences of their continued action.
The prolonged strike has resulted in students being put at risk and their right to education being undermined. The risk to the safety of students and prolonged nature of the strike has resulted in the university taking the decision to vacate residences and send students home for a short term. In the meantime the department has been informed that negotiations have resumed with unions.
The administrator has emphasised that all efforts will be made by management to ensure that the academic year is not lost and that as soon as possible, students will be recalled.
The Higher Education Quality Committee (HEQC) report on the institutional audit of WSU in April 2011 found that throughput rates for students at WSU were below DHET benchmarks. Undergraduate success rates at WSU are the lowest overall among comprehensive universities, as are graduation rates. The Panel suggested that the chosen financial model and its implementation must be rigorous and transparent and geared towards providing short and long-term financial stability of WSU.
The HEQC indicated that the university would need to make some hard and difficult choices. WSU was expected to develop a Quality Improvement Plan to address all the issues highlighted in the report. The independent assessor’s report highlighted WSU’s significantly lower throughput rates compared to national benchmarks and the impact this had on the funding provided by the department.
A link was made between poor academic performance and inadequate infrastructure and poorly supported academics as a result of a combination of financial constraints and poor human resource planning.
The department calls on all stakeholders to understand the gravity of the financial problems facing the university and to ensure that decisions made do not threaten the long-term financial viability of the institution. The future of students, staff and other key stakeholders depends on the prudent and responsible financial management of the institution to ensure the long-term sustainability and academic enterprise of the university.
