Download the Annual report 2011 - Unisa

Total nominal spending by households on education was
approximately R50 billion in 2011. Based on information
provided by National Treasury about 19% of government
spending was allocated to education, of which
spending on higher education amounted to 15.1%.
Government expenditure on higher education will increase
from R28.3 billion in 2011/12 to R31.5 billion in
2012/13, thus constituting an 11.3% growth in nominal
terms (approximately 5.1% in real terms).
Higher education environment
during 2011
In his Budget Vote speech at the National Assembly in
May 2011, the Minister of Higher Education and Training
signalled that his department’s goals were located
within the overall objectives of amongst other, prioritising
job creation and the Human Resources Development
Strategy. Access to decent education and training was
emphasised as being essential for the completion of the
liberation struggle, whose foundation must be economic
liberation. Education is therefore the apex government
priority and now accounts for 19.4% of the total
national budget for April 2011 to March 2012. Of this
allocation universities received R19.4 billion while
R4.3 billion was allocated for Further Education and
Training (FET) colleges. R4 billion was allocated to the
National Student Financial Aid Scheme (NSFAS). With
contributions from universities’ own coffers, NSFAS was
expected to disburse R5.4 billion in loans and bursaries,
double the R2.7 billion disbursed in the previous year.
The block grant allocation to higher education institutions
has decreased from 86.7% of the total government
funding of higher education in 2004/5 to only
75.8% in 2009/10. This percentage has increased
slightly to 76.8% for 2011/12. As a result, the higher
education sector is facing a number of funding challenges:
• A decline in State subsidies may result in increases in
tuition fees, which in turn may lead to an increase in
unpaid student debt
• Inadequate funding of the NSFAS; already the demand
for financial aid is outstripping the amount available.
More than 25% of the total undergraduate student
population is on financial aid and the demand is still
unfulfilled and rising.
As a result of the above, the management of the increasing
student debt has become an onerous task for most
higher education institutions, as has the management of
UNISA ANNUAL REPORT 2011
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the balance between the recovery of outstanding debt
and the interest of students to continue with their studies.
Overview of financial achievements
For the financial year under review, Unisa recorded an
operating surplus of R639.9 million (2010: R797.6 million).
One of the main reasons for the decrease in the
operating surplus is the fair value adjustment of investments.
Investments are exposed to the volatility of the
global equity markets and the fair value adjustment
changed by 54% from R377 million in 2010 to R174
million during the year under review.
Although tuition fee increases were contained at below
10% on average for the past few years, revenue from
student fees was 16% higher than in 2010. This increase
is largely due to the continuing strong growth in
student numbers during the year under review. However,
it should be noted that included in expenses is an
amount of R38 million that was expended to top up
NSFAS funding to Unisa students. Expenses also include
an amount of R34 million written off as irrecoverable
and doubtful. Net income from tuition fee income for
the year was therefore R2.147 billion.
The phased implementation of Unisa’s Admissions Policy
should result in a decrease in the growth of student
numbers, or even a negative growth, from 2013 onwards.
This would have an adverse effect on income
from tuition fees.
The gross subsidy has increased by 12% to R1.789 billion
in 2011 from R1.605 billion for 2010. However,
R19.7 million (2010: R67.4 million) of the teaching and
development grant was deferred to 2012. At the time
of reporting it was unclear what the effect of the revised
subsidy formula of the Department of Higher Education
and Training (DHET) would be in future years.
Total expenditure for the year, including operational and
personnel costs, amounted to R4.012 billion in 2011
(2010: R3.501 billion) – an increase of 15% compared
to the previous year. This increase in spending leaves
some cause for concern; the year-on-year increase in
spending for 2010 over 2009 was 9% against an average
inflation rate of 4.09%. In 2011 the average CPI inflation
in South Africa 5.03% against the increased
spending of 13% at the university: