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Institutions must be given the autonomy to respond, says European University Association
The Covid-19 pandemic will have a long-term impact on the finances of many universities, the European University Association has warned in a new briefing paper looking at the lessons that can be applied from the 2008 financial crisis.
“The overall impact of the current crisis will be large and long-lasting, and universities must prepare for operational and financial difficulties in the coming few years,” says the paper by Thomas Estermann, Enora Bennetot Pruvot, Veronika Kupriyanova and Hristiyana Stoyanova, which was published on 18 May.
If the pattern from the financial crisis repeats itself, public funding for many European universities is likely to be cut, but perhaps not immediately. There is “a significant risk” of cuts in the next two to four years, the paper says.
“Only a few systems, such as Iceland, the Baltic States and Greece, introduced drastic cuts to public funding in the first two years after the outbreak of the [2008 financial] crisis”, it says. “The situation changed gradually: 2012 was the worst year, when 14 out of 24 systems captured by the EUA Public Funding Observatory at the time reduced funding compared to 2008.”
Universities that get a large share of their income from tuition fees could be affected quickly, but also for years to come, the authors warn. “Travel restrictions, reduced family income and continued health risks will result in falling international enrolment, at least for the next academic year, and massively affect university finances and operations,” the paper says.
These effects are likely to increase differences in investment levels between European countries, according to the authors. They also warn that universities “will have limited options to reduce their costs”, because they lack autonomy in areas such as use of assets and staffing levels.
EU funding will continue to provide an important source of income, making it “all the more important” to secure ambitious 2021-27 funding for EU R&D and education programmes, make them simple to participate in, and improve synergies between those programmes and national funding mechanisms.
But universities will struggle to compete for EU funding, or to maintain their operations more generally, without adequate funding from other sources, the authors warn. They say that universities will need to demonstrate their value to society to help convince governments of the need to ensure there is ambitious investment both at EU and national levels.
Nevertheless, universities must do what they can to diversify their income sources and plan for strategic changes, the authors recommend, while policymakers should give them the autonomy to do so effectively.
“National and European policymakers should provide universities with both enabling frameworks and financial resources to support them in seizing arising opportunities,” they say. “With the right support, universities will be able to strengthen their capacity to produce top graduates, deliver high-quality research output and play a vital role in our social and economic recovery.”
This article was amended on 19 May to state that differences in investment levels are likely to be increased, not reduced.