It is with a heavy heart that I write to inform you about the financial challenges our university and the sector as a whole are currently facing; challenges which could significantly impact our financial sustainability if not addressed appropriately.

As you may be aware, negotiations with the labour unions have reached an impasse. The unions are demanding, among other things, a 7% increase, which is higher than the 4% increase the University had already indicated it cannot afford. Regrettably, this has led to the issuance of a notice indicating that the unions will embark on a strike. I understand the concerns and frustrations this may cause among our dedicated staff, and I want to take a moment to explain the financial constraints we are currently navigating.

Our main income streams include government subsidies, tuition and accommodation fees, and third-stream income. Government subsidies constitute between 55% and 60% of our income, tuition fees make up approximately 40%, and the remaining portion is derived from third-stream income.

Over the past few years, government subsidies have not kept pace with the increases in operating expenses, and tuition fee increases have been capped by the Minister of Higher Education, Science and Innovation. In 2024, we experienced a 1.7% decline in government funding, which places further strain on our financial resources. Coupled with capped tuition-fee increases and limited opportunities to increase third-stream income, our overall income saw an average increase of only 2.5%.

An important indicator when assessing the long-term financial health and sustainability of a university is total staff costs expressed as a percentage of total revenue. Guidelines indicate that a healthy and sustainable staff cost percentage of total revenue is 62%. The University’s staff cost as a percentage of total revenue was 72% based on the latest budget for 2023. Moreover, the institution is grappling with a staggering increase in student debt, which currently stands at more than R650 million and is expected to increase after the finalisation of the 2023 financial year.

This has placed immense strain on our financial resources, impacting our ability to settle short-term obligations and maintain the stability of our operations. Additionally, the extra costs associated with loadshedding have doubled in 2023 from the previous year, amounting to more than R80 million spent on diesel. This unforeseen challenge further compounds our financial predicament.

To address these challenges, the University has over the past few years been utilising once-off reserves to finance budget shortfalls. However, this approach is unsustainable in the long term, as it jeopardises the institution’s financial health. The University has recognised the urgency of finding a more sustainable solution to ensure our long-term financial stability.

In this regard, we have developed a Financial Sustainability Plan, approved by the Council in 2019 and revised in 2023 to account for the impact of COVID-19. The plan aims to enhance our main income streams while implementing austerity measures to reduce operating expenses. Successful implementation of this plan relies on the cooperation of all role players, including our staff.

Your commitment to our University is highly valued, and we trust that, together, we can navigate these challenges and work towards a sustainable future for the University of Pretoria.