Time for the Universities to Fail By James Reed
I was pleased to see this article over at the Australian Financial Review, February 8, 2021, reporting on the trouble that globalism has brought to the universities. These rotten institutions deserve everything that is coming to them.
“The failure of universities to keep costs under control and to build adequate financial reserves has left them exposed to default and the biggest threat they face is not the collapsing international market owing to COVID-19, but the vast number of new universities in China, says a new report.
Writing in the Accounting, Auditing and Accountability Journal, professors Tom Smith and James Guthrie, from Macquarie University, say overseas revenue increased by 230 per cent between 2008 and 2019. Domestic student revenue grew by a much smaller 64 per cent.
But universities allowed costs to blow out, especially academic salaries which went up by 223 per cent over the same period. Non-academic salaries went up by 242 per cent and “general expenses” increased by 263 per cent.
“This is unfortunate because the dramatic increase in general expenses and non-academic salaries has undoubtedly contributed to a broad failure to put money aside for lean times,” said Professor Smith.
“The inability to use increased revenues to generate reserves and surplus margins means the Australian public university sector is vulnerable.
“We’re not saying the university sector is about to fall over and the probability of a university defaulting is still only tiny.”
The most “at risk” institution is the University of New England, with a 1.4 per cent probability of default, which is at the top of a ranking which compares debt ratios to revenue-stream volatility.”
The very idea of defaulting universities is exciting, and I hope all of them default, many times over. They cannot die enough.