University resumes bank overdraft credit to survive
UWI in the red
THE University of the West Indies (UWI), Mona Campus, says that for the first time in 20 years it had to turn to an overdraft credit facility with its bankers to meet its expenses in 2012/13.
"After avoiding an overdraft facility for almost 20 years, the campus had to access credit to support operational cash flow," the university admitted in a report tabled in Parliament last week.
The university said that the measure was taken in tandem with continuing efforts to reduce or contain costs where possible, including closely managing payroll costs, the largest component of the campus' budget.
The report said that several factors led to the campus' negative position during the academic year -- the main concern being the continuing economic and fiscal limitations being faced by most contributing governments, which impeded their ability to disburse committed funds to the campus in a timely manner.
The other major problem was the four-year cumulative effect of prior reductions in Government of Jamaica subventions to the campus, which resulted in a major funding gap to finance operations.
"The net effect of the lag in contribution receipts and the reductions in Government funding is clearly seen in the substantial deficit incurred by the Government-sponsored academic programmes for yet another year, as revealed in the audited financial statements for the year ended July 31, 2013," the UWI reported.
It said that a third factor involved the "personal financial difficulties being faced by a large proportion of the student body, resulting in their inability to meet normal fee payment deadlines".
The university said that, recognising the plight of its students, in some cases the campus allowed fee payments through formally agreed instalment plans spread across both semesters. However, in spite of these arrangements, the campus receivables grew and its cash flow suffered, as students struggled to meet their obligations.
"Significant increases in total student enrolment and tuition fees for all programmes, which resulted in growth in billed tuition revenues on both government-sponsored and self-financed programmes, did little to alleviate the situation," the university explained.
Another contributing factor, the university admitted, was the funding challenge experienced by the Students' Loan Bureau (SLB).
"The SLB's struggle to secure funding to back the loans it granted substantially delayed the disbursement of loan proceeds to educational institutions, like the UWI, Mona Campus. The Mona Campus also experienced delays in collecting tuition fees from some third party individuals and organisations responsible for making payments on behalf of students."
Faced with uncertain cash inflows, the campus said it had to employ creative strategies in order to maintain normal operations.
"Firstly, the university sought to ensure that it maintained good relationships with suppliers, securing their understanding of the challenges it faced and asking for their patience regarding outstanding payments. The campus kept communications lines open with suppliers, holding meetings to keep many updated," the university reported.
It said that, secondly, it had to reintroduce use of the overdraft facility to support operational cash flow, while seeking to reduce costs as much as possible.
But UWI Mona said that, despite the difficulties, it has remained focused on advancing its strategic agenda. The main area of focus has been developing additional and more sustainable income streams and utilising its resources more efficiently. Emphasis, it said, has been placed on completing and bringing into operation key capital progress initiated in previous academic years.