Mr. Michael Casey:

It is important to make a distinction between accounting reserves - in respect of which there is some confusion - and cash reserves. To be completely clear, universities operate on a break-even basis. They prepare funding statements and are obliged to break even in any particular year. They do this and then their accounts are laid before the HEA and the Houses of the Oireachtas. They will show that in any given year universities, by and large, break even, with minimal or negligible surpluses or deficits, as the case may be. In general, there are small surpluses.

On cash reserves, I reiterate the point made by Mr. Costello. Effectively, there are cash reserves as a result of timing issues. Institutions generally receive their fees in advance; their current grant is paid in advance, as usually is research funding. At any point in time, therefore, universities will have cash on hand which relates to activities in respect of which expenditure is due to be incurred during the coming months or year, whatever the case may be. Let us be absolutely clear - it is not spare cash; rather, it is cash that is held with a view to being run down over the course of the year.

On the specific question of whether this means that universities will go into the red, it is a technical point, but the answer is probably no. The financial year of the universities is based on the academic year, namely, to 30 September, whereas the funding provided through the Estimates process is for the calendar year. There is a little scope for slowing the timing. What will happen in reality is that universities, at the end of the academic year, will carry a debtor for funds to be received - across the higher education sector, both institutes of technology and universities - to the tune of the €25 million identified. That funding will be made good the following year. It is not necessarily the case that universities will end up operating in the red. It is a technical issue which saves the Exchequer money in a given year. However, it is just a timing issue.