FINANCES. After many years of surpluses, the Faculty is now facing rising costs, with rent increases being particularly significant. Even those operations that have plenty of money will find it harder to balance their finances. This is the message from Sahlgrenska Academy’s Head of Finance Kristina Johansson, looking ahead to 2024.
“I don’t want to be too alarmist at this point, because I am confident that we will come out the other side in one piece. With many good years behind us, several of our operations have built up a surplus that will help them cope with these more difficult times. But we can’t ignore the fact that some operations will have to work hard to balance the books,” says Kristina Johansson.
Education is underproducing
The institutes finalize their budgets for next year at the end of November, and based on these, the Faculty budget is then agreed a few weeks later.
“I think the budget work is going to reveal a deficit in education, because we don’t have enough students going all the way through to graduation. This may mean that we have to pay back some of the funding we have already received for student places. Some areas have the capital to cover the deficit, but not every one,” says Kristina Johansson:
“Several programs are doing well, such as doctors, occupational therapists and biomedical analysts, but other programs are struggling.”
For 2023, Sahlgrenska Academy has a margin of SEK 15 million before we reach the debt ceiling. But that margin will probably be gone by next year, and any underproduction in 2024 will have to be repaid.
Three of Sahlgrenska Academy’s institutes already have surpluses in undergraduate education, which will help in dealing with the new financial situation (Clinical Sciences, Medicine, and Neuroscience and Physiology). The other three institutes have less capital for education, and in some cases it is negative.
“Those currently tackling a deficit have a tough time ahead of them, perhaps with an increased workload for some. Everything is becoming more expensive for the operations, while revenue is not keeping pace,” says Kristina Johansson.
Higher premises costs
Premises costs for Sahlgrenska Academy are set to rise by an estimated 16 per cent next year. Part of this is the upward rent adjustment that is made automatically in line with the Consumer Price Index (CPI).
To equal out the differences between operations in premises at Campus Medicinareberget and activities conducted at our regional facilities, the Faculty has a model under which it pays 57 per cent of the premises cost. To increase the incentive for operations to use the premises efficiently, the compensation will be gradually reduced. However, teaching facilities are paid for entirely by Faculty funds. Almost all operations are now looking at how to use premises more efficiently, for example by sharing rooms or otherwise increasing the use of every square meter.
“When we vacate premises, they go into the University’s common pool of real estate, for which Sahlgrenska Academy has to pay part of the cost. In the long run, the premises may be returned to the property owner and that brings a substantial cost saving,” says Kristina Johansson.
Multiple causes
The increase in premises costs is also down to the new premises to which several operations moved in connection with the construction of Natrium. These replacement premises were subsidized by the Faculty of Science during construction, but now entail a higher cost than the previous premises.
The increased premises costs are also due to the agreements on market rent that Higab negotiated before selling Odontologen and Hälsovetarbacken to Platzer two years ago. These agreements provided for a gradual increase in rents.
“The departments concerned planned for these rises, but they couldn’t foresee the general cost situation we are in now, and how it would affect the rents,” comments Kristina Johansson.
Sahlgrenska Academy also shares student accommodation costs with the Faculty of Science, as well as costs for teaching facilities at the new Health Science Center (HVC, formerly the Earth Science Center). In connection with the move to HVC, Sahlgrenska Academy is giving up the Zoology building and large parts of Occupational and Environmental Medicine at Medicinaregatan 16.
“Overall, Sahlgrenska Academy has a large surplus on its balance sheet. This capital can’t be used to run daily operations, but it can be used to bridge gaps or to finance initiatives. This large capital reserve can therefore give us a certain amount of leeway,” concludes Kristina Johansson.
BY: ELIN LINDSTRÖM
