Dr. Maria Hinfelaar:

Under the Institutes of Technology Acts, the institutes are obliged not to incur deficits. There is nothing in the legislation which states we must break even or that we cannot build up a service. The legislation clearly states, however, that if a budget is drawn up for the following year and approved by a governing body and it states we will not have enough recurrent income to cover our recurrent costs, we must notify the HEA and the Minister and that we must try to close the gap.

It does not say anything about the outcome if we do better than break even.

The other point that needs to be made is that in publicly funded institutions internationally, a rule of thumb would be to aim for a surplus on operating costs of up to about 5% each year. That money would not be sloshing around in the bank, as was just pointed out, but to provide reserves for investments, such as refurbishing buildings or for new recruitment. We all know that State funding for capital development on our campus has effectively been obliterated. Let me give one clear example. The main campus of Limerick IT has 7 sq. m. per student and that includes circulation and teaching space. The national norm in Ireland is 10 sq. m. per student. The international norm is 15 sq. m. per student. We must desperately find some way of increasing our footprint. We are in the fortunate position of having a little bit of reserve put away but it is earmarked for that development. It is to compensate for the fact that we had been approved under the PPP scheme for a new facility developed as part of the main campus to try to address that deficit, which has been abandoned. We now need a plan B. Our plan B is that our reserves may be earmarked and targeted towards capital development, which is obviously not an annual operating expenditure. It is multi-annual expenditure in order to be able to maintain the quality of the learning environment. We could spend our reserve in that manner.

Speaking for my own organisation and some of the colleagues in the sector, it is not only cash flow but there may be reserves that are restricted to capital development. There is also a restricted reserve from the student services contribution, which is earmarked for keeping student services and the facilities outside the classroom up to standard. It is quite a complicated picture.

In the IOT sector there are some institutions that have no reserves whatsoever and that is not a healthy place to be.