Executive Board: ‘We can afford this financial setback’

Faculties upset over CAO raise

geld Foto: Shutterstock
Photo: Shutterstock

Suddenly, people were no longer happy about the 9-percent raise agreed by universities and trade unions in August. The considerable increase is going to generate financial stress among faculties. "The wage increase is going to be reimbursed by the Ministry of Education, but not for those who have an NWO grant from the second flow of funding or those who do research on a project basis, the so-called third flow. For these two groups of employees, the raise will have to be paid for by universities themselves." At UU, the two groups correspond to a third of all staff members, explains Van der Starre. "Faculties roughly estimate it at 10 million." 

What's more, the wage increase had another negative aspect for faculties' 2023 budget. "There is a large reservoir of vacation days." That means vacation days that have not been used. Each day corresponds to a certain amount. Employees about to retire or whose employment relationship with the university is about to end are entitled to receive the money that corresponds to all the vacation days they didn't take. "Due to the raise, an unused vacation day will become 9 percent more expensive."

Next year's budget will also be affected by the raise. The university must advance the salary increase for a number of months in 2024 "because the university will only get those resources in the course of 2024." But she is not very worried about next year's finances. "However, we do think that we will be getting less money from the Ministry of Education and we have quite a lot of real estate expenses, so we will be sailing in the wind's direction."

Softening the blow
Utrecht University is not the only one where people are restless regarding the raise. Through their association Universities of the Netherlands (UNL), the thirteen research universities will be asking the financing agency NWO to contribute, according to van der Starre. “Projects via NWO are not generously budgeted, so researchers do not receive any extra money from them. There is usually a bit of room in private market projects, so it is especially problematic when it comes to NWO-funded research.”

As for UU, the Executive Board is holding talks with deans and directors. In principle, the wage increase for second and third-flow employees will have to be paid for by faculties themselves. "The sum we will get as a university will be distributed directly to the faculties using the University Distribution Model. But that includes the money for salaries." The Executive Board is not interested in using the university's reserves to pay for this setback, explains van der Starre. "We really need that money to pay for all our real estate plans."

She adds that 10 million euros is a relatively low sum considering a budget of 1.2 billion. "Faculties should be able to afford this setback." But she acknowledges that the situation makes people uneasy, which is why the Executive Board is considering how it could soften the blow somewhat. Van der Starre also thinks that the 10 million estimate is too high. "The faculties are now working on a more realistic estimate."

In the words of the University Council, UU's faculties are afraid that this setback will mean they will have to save money in other areas, which might lead to redundancies and reorganisation. According to Van der Starre, that's not how things are going to go, although things can vary according to department.

Staff planning
It is striking that the university has done well financially for many years. It always finished the year with money left thanks to financial windfalls and a budget in which more money was spent than expected. The Executive Board has spent years trying to make faculties come up with more realistic budgets and to give them more financial confidence. These past few years, due to increasing workload and a rising number of students, efforts have been made to hire more assistant professors who combine teaching with research. They will now get permanent contracts. The number of teachers on temporary contracts (who don't do any research and only get a contract for up to 4 years) may drop thanks to this staff expansion. 

But faculties were hesitant about this: what if things don't go very well, financially speaking? This means they will have to fire people. And now that the number of assistant professors will increase due to the Executive Board's incentives, they asked for a staff member plan." Faculties will need to look five years ahead and estimate what its staff body will look like then: how many people will retire by then, what are the expected progressions, and how many teachers will be needed? This way, according to Van der Starre, faculties will be equipped to better assess which financial risks to run if they want to hire new colleagues.  "I think that faculties  will be able to see that paying for the financial setbacks is not going to have any significant consequences."

Vacation days
Accumulated vacation days are a recurrent topic. It just keeps coming back year after year. Not all employees take all the days off that they are entitled to in a year, which means that they will "take them over" to the next year, which increases their credit for vacation days. All those unused vacation days put pressure on the budget. "You should hand to pay workers when they leave the university, when they retire or when they leave UU," says Van der Starre.

Although it is not realistic to expect all employees to retire at once, the university must have the entire amount. Due to the salary raise, those days have become more expensive, so the budget faculties earmark for vacation days must increase too. But that means money will have to be taken from other projects from the faculty "and that is a shame," says Van der Starre. "The university has been trying to ensure that everyone takes all their vacation days for years because, if everyone does that, then we don't need to have so much money set aside for this goal. Maybe this will be an incentive to nudge employees to take their days off, especially considering this is good for them as well."