Financial strategy of University of Latvia in situation of crises

1. Financial strategy of University of Latvia in situation of crises BSRUN Vilnius Gundars Berzins 2010 8/24/2012 1 University of Latvia

2. Vision University of Latvia in 2020 is one of leading universities in Baltic region and holds recognized position among European universities. Scientific potential of LU gives considerable input in to economy and development of sustainable society . 8/24/2012 University of Latvia 2

3. Mission Development of Latvian society. Promotion of Latvia. Quality of higher education and professional skills Scientific creativity Active participation in international academic community Talent of academics and students. Care for student and employees development Traditions and dynamics Latvian language development Develops educators for other institutions, specialists for state and self governing bodies. Develops and cares for collections of national importance 8/24/2012 University of Latvia 3

4. Financial strategy LU gradually moves towards 3 year financial strategy, determining financing principles for period. Maximally equal tuition fee for all study programs for one study level The pricing for programs with high demand are determined according to market situation Increase of other income sources. If organizational unit receives income from outside organization more than 50% to manage as �profit center�. 8/24/2012 4 University of Latvia

5. Financial strategy Increase of academic positions financed by social partners Financing of infrastructure is calculated as depreciation rate of 2% from present value. 130�000 square meters PV 900 EUR per square meter total 2�340�000 EUR annual reconstruction budget. Scientific infrastructure budget is calculated according to depreciation amount of scientific equipment. 8/24/2012 5 University of Latvia

6. Financial strategy Staff cost of academic personal is less than 50% from total study income Total infrastructure costs is limited to 15% from total study budget. Full cost model in used throughout university in next 5 years First stage - infrastructure Second stage � equipment Third stage - overhead 8/24/2012 6 University of Latvia

7. Financial strategy University of Latvia is working towards transparency in use of infrastructure, maximally connecting costs to income sources Up to 1% from study budget is allocated to social, cultural and sports activities for students. 8/24/2012 7 University of Latvia

8. Budgeting procedure Four step process Establishing of overhead calculation method Central (central administration, units and infrastructure) budget 37% Faculty/organizational units budget 63% Establishing overhead percentage Agreement on income budget Agreement on expenditure budget 8/24/2012 University of Latvia 8

9. Challenges Decrease of income Redaction of tuition fee Demographic redaction of student enrolment (expected 5% annually) Reduction of state financing Fixed costs in centralized budget Increase of fixed costs (infrastructure) Decrease of flexibility Co and pre financing of EU projects Interest payments Public partnership projects 8/24/2012 University of Latvia 9

10. 10 Population of Latvia in study age by age groups

11. Challenges 8/24/2012 University of Latvia 11

12. Challenges 8/24/2012 University of Latvia 12

13. Prospects Short term solution: Transfer of fixed costs towards income sources (faculties, income generating organizational units) In process of decision making to use fixed costs reduction as factor for decisions 8/24/2012 University of Latvia 13

14. Thank you for your attention! Questions and discussion 8/24/2012 University of Latvia 14