Dr. Hugh Brady:

I thank the Chairman. UCD welcomes the opportunity to discuss with the Committee of Public Accounts the issues raised in the Comptroller and Auditor General report, Matters Arising out of Education Audits, dated February 2012. By way of background I will provide some facts and figures on UCD and refer members to our briefing paper, which I hope they all have received. UCD is Ireland’s largest comprehensive, research intensive university and ranks among Europe’s top universities in the world rankings. Some indicators of UCD’s scale of activity for the 2011-12 year include the total number of students being approximately 25,000, of whom approximately 18,000 are undergraduates and 7,000 are postgraduates. Moreover, of the total student body, approximately 5,000 are international students. In addition, UCD delivers courses to more than 4,000 students at overseas locations, including Spain, Sri Lanka, Malaysia, Hong Kong, Singapore and China.

Between 2004 and 2009, UCD undertook a major change programme with the goals of enhancing the quality of its educational programmes, growing its research base, enhancing its international footprint, growing its non-Exchequer income streams and developing its campus infrastructure. During this period, the following fundamental changes were delivered, namely, the restructuring of UCD’s academic units from 11 faculties and 85 departments to five colleges and 35 schools, the complete reform of the undergraduate curriculum with the introduction of the modular, semesterised, credit-based UCD Horizons curriculum, reversal of the trend in CAO first preferences and consolidation of UCD’s position as leader in first preferences, and the formation of graduate schools to support the largest postgraduate cohort in Ireland. In addition, there has been major growth in international students such that UCD now hosts one third of all Ireland’s full degree international students.

There was a trebling of research income, a major growth in research outputs of various types, expansion of incubation facilities and innovation services and the establishment of the alliance in innovation between Trinity and UCD. Moreover, there was completion of a new campus development plan and the launch of a capital programme of €300 million, of which 62% is funded from non-Exchequer sources. When one uses industry norms, that will create approximately 2,000 construction related jobs. We also expanded the university’s global footprint and overseas income.

Over the past three years, the university has for the most part maintained the quality of its education and research programmes through changes and efficiencies, thereby absorbing a cut in State income of €58 million or 28%. Moreover, with 10% fewer staff, including 17% fewer core-funded staff, it accommodated 10% more students. The financial profile is also presented in our briefing paper. We have an annual turnover of €411 million, of which €227 million is Exchequer funding and €184 million or 45% is non-Exchequer income. The university has produced a modest surplus in each of the past three years.

As for the issues raised in the Comptroller and Auditor General's report, with regard to cash balances, UCD’s operational cash balances, as at 30 September 2011, were within the recommended sectoral norms. In respect of bank concessions, UCD generates €62 million in commercial income per annum. The university’s bank concession income has been used to fund the capital development programme and capital projects on the Belfield campus, which, as I stated, amount to more than €300 million in total, of which 62% is non-Exchequer funding, thereby creating approximately 2,000 jobs. As for pension related reserves, the pension issues raised in the report are sectoral in nature and UCD has been compliant with the instructions of the HEA at all times with regard to the pension scheme.

University College Dublin, UCD, has fully complied with all of the provisions of the various employment control frameworks which have been applied to the sector and achieved all of the targeted reductions in core-funded staff numbers which have been imposed. In the past three years UCD has provided funding for UCD Foundation for running costs of €3.9 million, while UCD has received gifts and pledges of over €40 million. When benchmarked against other national charities and equivalent UK institutions, this cost-income ratio rates UCD Foundation as among the best in the class. The main projects to benefit from this fund-raising have been the Science Centre and the Sutherland School of Law, as well as funding for academic posts and student supports.

With regard to higher responsibility allowances for academic staff, UCD notes the conclusions in report No. 78 on the issue of senior staff remuneration. UCD has confirmed to the Higher Education Authority, HEA, that it will co-operate fully in the steps regarding the reallocation of the moneys in question as set out in the report and as recently advised by the authority with the approval of the relevant Ministers. It should be noted the allowances in question were halted by UCD in 2009. However, we wish to reiterate the context in which these allowances had been paid in the period in question and the problems that their cessation has caused.

These allowances were not gratuitous payments to staff but were paid in respect of specific roles such as dean, head of school and college principal which involve significant leadership and management responsibilities over and above the normal academic duties and which are not covered by national salary scales. In many cases, these duties involved specific objectives relating to the generation of non-Exchequer income for the university, a process which led to a substantial increase in such income in the relevant years. This income now stands at some €184 million, which represents 45% of UCD’s total revenue. This has contributed to a significant offsetting of the reduction in Exchequer funding in the period in question. Most of these categories of allowances predated the 1997 Act and the approval provisions which it contains. Furthermore, the principle of allowances for management posts was acknowledged as recently as 2008 by report No. 43 of the review body on higher pay and management allowances have been approved by the HEA in other institutions. Allowances of this nature for the functions in question such heads of school, college principal and dean, are the international norm in higher education, the market in which UCD competes in staff recruitment. In the absence of a prescribed form for seeking or granting approval, UCD notified the HEA annually from 1999 of the detail of these allowances and regularly sought approval. UCD’s legal advice was to the effect that approval by acquiescence had developed over this period of seven years. When the HEA indicated that it had a problem with these allowances and requested that UCD cease payment, we engaged constructively with it between 2006 and 2008 to work through the contractual issues associated with each of these allowances such that we were able to cease all such allowances by April 2009. The constructive nature of UCD’s approach was acknowledged by the HEA chairman in writing as late as July 2008. Again, I stress that all of these allowances had ceased by April 2009 and that UCD has indicated its willingness to co-operate with the resolution mechanism put in place by the HEA that will result in specific funds being allocated for student services over and above the normal allocation. I must stress, however, that, without these incentives, it is becoming increasingly difficult to persuade staff to take on these important leadership and management roles, thereby compromising both the university’s international competitiveness and revenue generating capacity.

UCD's financial statements and audits are up to date. Copies of the audited financial statements are available on the UCD website.