HoD News - 25 October 2021

Niels Haldrup
Head of Department Niels Haldrup

Dear colleagues,

I hope you have all found some time for relaxation in the autumn break.

During the next couple of weeks, I have decided to have meetings with all sections (including the PhD and admin sections) in order to give a brief report on the financial situation of the department and provide a presentation of the prerequisites for the current 2022-2025 budget and the challenges that we potentially face.

I will answer questions to the best of my ability and provide an overview of the budget model of Aarhus BSS and the department to focus attention on the parameters that are in play when addressing the revenues and costs of the department. It is my belief that the university, Aarhus BSS, and the department are aware of the structural challenges that potentially can hit the social sciences and the humanities more generally and will find appropriate solutions.   

Even though the department has recently been hit by a number of negative shocks and faces unresolved potential challenges in the future, it is very important for me to stress that my personal belief is that I do not see any hiring or promotion freezes as a solution to these challenges. Such freezes will have destructive effects on the development of our department.  

ECON budget 2022-2025

In 2020, ECON accumulated a deficit of DKK 3.5 million, and in 2021 as well as for the budget years 2022-2025 an annual deficit of approximately DKK 2 million is projected. These figures are based on a number of prerequisites such as:

  • The temporary increase in education revenues (det midlertidige taxameterløft) is assumed to continue beyond 2022, even though it presently appears to be suspended. A suspension amounts to app. DKK 5,000 per STÅ (student man years = 60 ECTS), which is significant. Our hope is that the political negotiations will result in a different outcome.
  • The effects of the planned geographical dimensioning and reduction of student admissions dictated by the government are not incorporated in the current budget. In November, the university will announce how this task will be implemented across educations and departments. Aarhus University has been asked to reduce admissions or to relocate educations corresponding to approximately 1200 students. Potentially this can affect revenues from 2024 and onwards. Our hope is that because our educations generally have low unemployment rates amongst graduates and our graduates earn relatively high salaries, ECON will be relatively less hurt by the dimensioning plans.

In addition to these future uncertainties, our funding of research and teaching has been reduced significantly over the past 4-5 years:

  • In the period 2016-2019 the government has cut education revenues annually by 2% (omposteringsbidraget). Moreover, in 2017 a new reform for education funding (taxameterreformen) was implemented, which for educations with an increasing production of STÅ has reduced the average allowance per STÅ. Starting this year, the government has also decided to remove the so-called quality allowance (kvalitetstilskud). In total, all these factors mean, ceteris paribus, that the average allowance per STÅ has decreased by 11-12% in the period mentioned, which corresponds to lost annual revenues of DKK 12-13 million.
  • The past 4-5 years, the department has received strategic university support to increase recruitments in the business fields, and we have received funding of the Dale T. Mortensen Center (via Universitetets Strategiske Midler, USM). From 2022, this support, corresponding to approximately DKK 5 million annually, will expire, and only very limited USM support can be expected the coming years. From a strategic perspective, the university has decided primarily to support the technical sciences with USM funding in order to particularly promote and expand the engineering educations.
  • During the covid-19 lock-down, our operating expenses have been reduced significantly, and compared to 2020 and 2021 our operating costs tend to increase towards an anticipated new lower level relative to the pre-corona period.
  • Finally, it has been an ongoing challenge that even though the department generally is successful in attracting external research funding, too many grants have no or little overhead to cover administrative costs and contributions (including the BSS graduate school, administrative centers at BSS, the common university administration, building expenses and rents and so forth).

Net revenues from our educations (uddannelsesindtægter) amount to approximately 40% of all revenues. There are many more aspects of our economy that are important, but they are far too complex to describe here. For instance, it is important that we also have an understanding about revenues from basic research funding (basisforskningsmidlerne), which are driven by the relative performance of ECON (compared to other Aarhus BSS departments) in terms of teaching, BFI-production, external funding, and the number of PhD students graduating timely from the Aarhus BSS Graduate School. These revenues amount to approximately 30%. Finally, external funding itself constitutes 25% of all revenues.

I look forward to meeting with you in the coming weeks to discuss and further clarify all these matters and to answer your questions.

Best regards

Niels Haldrup