Management

Ing. František Gale, Bursar

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The year 2000 marks the end of the decade of MU annual reports in which the development of selected indices characterizing the financial performance of Masaryk University and documenting its results in individual years between 1991 and 2000 were monitored.

With this in mind, I am going to focus this year's comments, traditionally accompanied with tables and graphs, in two directions:

1. evaluation of the year 2000

2. comparison with annual results of the past decade.

The year 2000, as mentioned in the MU 1999 annual report, was perceived as a very important year for a number of reasons:

• most importantly, the year 2000 was the first year when public schools of higher education in the CR operated in a stabilized legislative and property situation following the adoption of Act 111/98 Sb. in the watershed year 1999;

• MoEYS decided to change the basic normative subsidy allocation system and introduced a new system whereby education activity subsidies are allocated via study programmes;

• the total volume of non-investment funds for Public Schools of Higher Education in 2000 again failed to reach the necessary level, which, as in previous years, meant that Public Schools of Higher Education and, consequently also MU Brno, operated with insufficient resources;

• fundamental systemic changes were made in university regulations for allocation of resources when the negotiated procedure between MU and its faculties was discontinued and funds for the year 2000 were distributed according to an agreed algorithm emphasizing the duty to generate the missing resources with one's own activities.

Financial results of the year 2000 should be viewed through the prism of the above factors. For the sake of objectivity, it should also be noted that the MoEYS failed to provide additional financing corresponding to the increase in the number of students in spite of the arguments of the developing faculties and study disciplines on the one hand and the decision of MU management to maintain the rate of development of MU infrastructure unchanged. The year 2000 was also significantly influenced by the decision of the Ministry to assign a common (lower) demand coefficient to study programmes for teachers, which, in the case of MU, was particularly damaging for the Faculty of Science. This was the situation in 2000, framed by operation requirements from faculties based on the price development in 1999-2000, which in the initial stage of internal university allocation of subsidies led to a budget deficit of about 50 million CZK. In spite of the negative sign before the economic result figures for the year 2000, it should therefore be viewed as a success.

The net loss in the year 2000 was 2.236 million CZK.

We should, however, also admit that in the second half of 2000 it was necessary to set up reserves that were eventually used to cover the most complicated cases of operational losses. The year 2000 showed the need for central MU interventions without which the MU overall results would have been much worse.

The overall MU performance in 2000 is given in tables and graphs below, documenting the fact that in spite of the loss incurred in the year, some remarkable results were also achieved that practically eliminated the initial handicap of insufficient MU financing.

It is, however, necessary to view the situation at MU in 2000 critically and to introduce such organisational and economic measures that would return the MU economic performance to a level that will guarantee a shift back in the black.

A number of parameters in the results of the year 2000 indicate that a turning point has been reached.  It will, however, be necessary to focus attention to the behaviour and economics of the Medical Faculty, Faculty of Arts and the Faculty of Education, which were largely responsible for the loss incurred by MU, although their reasons were different.

A long-term assessment of the university's performance that takes into account the trends of the past decade will show that in the past 10 years MU expanded at a rate unprecedented in its 81-year history. The expansion of MU on the one hand and insufficient subsidy appropriation on the other are the reasons for the accounting loss.

In spite of the increase in non-investment subsidies from 296 million in 1991 to 924.6 million in 2000, the funding lags behind the MU developmental needs.

The number of MU students increased from 9.7 thousand in 1991 to 21 thousand in the year 2000, Over the decade, the student/staff ration increased from 4.46 to 8.29, which is a proof of increasing MU efficiency without any adverse affects on the quality of outputs.

MU, just like the rest of other Public Schools of Higher Education in the CR, has not yet recovered from the fluctuating budgets period between 1995 and 1999. This is reflected in one of the indices monitored, i.e. non-investment funds per student, which was 44.0 in the year 2000 compared with 46.62 in 1999 and 49.64 in 1995.

A very important result was the annual increase of about 63 million CZK in non-investment funds from special-purpose grants to reach a total of 163 million CZK in the year 2000.

Compared with the past decade, all indices show a dynamic growth with the exception of extramural activities where in the past two years we have been trying to identify reasons for lower earnings.

If we ask why, in spite of a number of positive trends, our economic results showed a loss, although a small one, in the past two years, we might find the answer in specific indices that characterize the overall situation:

• The development of MU is not accompanied by an equally dynamic process in state subsidies, particularly for educational activities, and MU has not been able to generate enough income by its own activities to compensate for the difference.

• The development of university infrastructure means relatively fast-growing depreciations, which non-profit organisations like MU must cover mainly from operating resources that, in turn, come mainly from subsidies. Depreciations thus have a negative impact on MU management of operating costs.

The situation might be resolved by a combination of systemic changes in appropriation policies at the ministerial level and an increase in income from MU's own activities. These also are the objectives of tasks set by the MU management.

Investments, as in previous years, are an independent part of evaluation in 2000.

From the MU infrastructure development point of view, the previous year was, just as the years before, successful.

The financial plan of investments was fulfilled. In the case of the largest structure, the Morphological Centre I, payments from the Investment Property Reproduction Fund were partly transferred to the 1st quarter of 2001 to ease the situation in large-scale maintenance projects in 2000.

Our major achievement is the start of construction work at the Bohunice site. The above-mentioned Morphological Centre I and the successful completion of architectural competition for the university campus are the events that determine the conditions for the MU development in 2001 – 2006. The start the construction of the library for the Faculty of Arts and School of Social Studies paid the long-term internal debt to the two institutions.

 After the completion of the project in 2001, it will be possible to focus the attention to MU, and the Bohunice university campus in particular.

Although other capital investment construction projects were under way at halls of residence, Faculty of Science and Faculty of Informatics, the main thrust of our efforts in 2000 was directed to the above key projects, whose completion in 2001 is a precondition for the start of construction work at the campus, which has been the MU objective since 1992.

The year 2000 has brought us nearer to the construction of the university campus in Bohunice. The realistic date for the start of construction works is the year 2002, when the Ministry of Education is to provide for the repayment of the planned loan, although some work is to be done on the site even in 2001.

In 2000, two steps essential for the start of the construction work were made:

• in December 2000, MU and the City of Brno executed a technical infrastructure contract worth 300 million CZK;

• in November 2000, the Minister of Education confirmed the priority status of the Bohunice campus and reiterated the commitment to finance it through a long-term loan and repay the loan from the funds of the Ministry.

 

The programme of capital investments in 2000 was, however, much broader than the above two key construction projects and included a number of other construction, grant and R&D projects. Their specifications are given in tables below.

To conclude the survey of financial performance in the year 2000 we can state that the loss, reduced over the year to approximately 2.3 million CZK, is a manageable problem – provided it is tackled as early in 2001 as possible in order to prevent its escalation.

The extent of positive results in selected economic indices and the trends established in individual parts of the university, particularly those at selected faculties, are a promise for the future.

The tasks for the year 2001 for the faculties that failed in 2000 are clear. They can be summarized as follows: to reduce costs and increase the income. There is no other option but to fulfil the task and thus to enhance MU goodwill. That is a task for the MU management at all levels, particularly when we are applying for loans from international institutions for the building of the campus. The final achievement of the objective is a task not only for the faculties and departments in financial straits. It is a task for the university as a whole, as well as for all of its constituent parts. And that is our task for the year 2001.