Induction for Council Members: Planning & Budgeting Process

1. Induction for Council Members: Planning & Budgeting Process

2. Agenda University’s ambition, peer group & KPIs Planning & budgeting process Major challenges Priorities & Key performance targets 2014/15

3. Ambition

4. Ambition “To be firmly established in the top 10 UK universities by 2020” In practice this means being positioned 4th – 9th every year in all the major league tables.

5. Significant improvements in league table rank have contributed to an enhanced reputation but there is still more to do ….

6. Who do we compare ourselves with? Drawing from our strategy, we have established a set of key performance indicators (KPIs) that help direct our investments and measure our progress. We evaluate our performance with reference to a peer group of 10 UK universities who we are competing with as a Top 10 UK University: Target is to be ranked at least 4th within this group – that will ensure we’re firmly in top 10 overall •Bath • Bristol • Durham • Edinburgh • Lancaster • Loughborough • St Andrews • Warwick • York • University College London

7. Key Performance Indicators

8. University KPIs Student-related Others RAE/REF Research £ per academic staff FTE Research students per academic staff FTE EBITDA • Entry standards • Retention • Achievement • NSS • Employability • % international students

9. The KPI chart is used to monitor performance against our peers • These are considered at College and discipline level during the planning round

10. Performance Monitoring in the Planning Round KPIs by discipline and college

11. New Planning & Budgeting Process

13. New Planning Process: Main Components

14. Meetings of Planning Review Group

15. What happens at each set of PRG meetings? Submission preparation meetings Relevant Services meet with each College to review plans / give guidance PRG Pre-meeting PRG meets to look at submissions, and decide key strategic issues to focus on at PRG meetings ALL PRG meetings Meetings for each College and combined PS / PS Commercial / Guild PRG Wash-up meetings PRG meetings and dialogue with Colleges to agree final targets / outcomes. Recommendations to VCEG PRG recommends final targets / outcomes / plans to VCEG for approval PRG3 ONLY Outcomes report to Council VCEG reports to Council on outcomes on Planning and Budgeting round to date

16. Challenges Ahead:Size, Shape, Nature and how we sustain success!

17. Sustainability Challenge … In the context of …. Increased Competition (UK & International) Increasing Student Expectations Research Concentration Austerity & lack of government funding

18. Sustainability Challenge “To be firmly established in the top 10 UK universities by 2020” In practice this means being positioned 4th – 9th every year in all the major league tables. However, we are only JUST in the top 10 and it’s going to be a major challenge to stay there …

19. The Sustaining top 10 Challenge … • REF – high weighting (but already determined) • NSS – high weighting • Employability – increasing focus on student’s return on investment (higher future weighting?) • Tariff – strong correlation (0.8 – 0.9) with completion, achievement & employability

20. Sustaining Top 10 Challenge: NSS • We need to improve to stand still • If not for dramatic Learning Resources improvement, would have slipped to 20th • Importance of appropriate investment

21. Sustaining Top 10 Challenge: NSS Our competitors for NSS are also chasing us for overall top 10 ranking

22. Sustaining Top 10 Challenge: Entry Standards • We are still 40 points behind the leading pack, and • Tariff fell this year for the second year running • But not sure about the others at this stage ….

23. The Size Challenge … In relation to student growth, Council have asked VCEG to consider “the … tipping point at which quality would be affected” so ….

24. We’ve looked at the Size Challenge: How fast have we grown? Why have we grown so fast? • To pay our bills: cost inflation has outstripped growth in the Unit of T Resource for many years • It has part-funded our investment to grow research ‘power’ & capital • The demand has been high from good students This represents growth of 82% which is the highest in the RG. The second highest is Queen Mary with 73% and third, York with 57%.

25. However … • Despite reaching almost 21,000 by 2016/17, using standard intake targets, some growth (UEMS, BUS, & possibly Law) is not included • Infrastructure is already struggling to accommodate all students and staff • And Council is concerned about quality, so ….

26. We’ve looked at Size vs NSS … • Only 11 universities with >22,000, score more than 80% in the NSS (Times Methodology) • No university with > 22,000 scores more than 85% (i.e. among the top 10 or so in UK)

27. And Tariff … • None among the top 10 had an average intake of more than 3,500 in 2011/12 • There’s a finite pool of high quality students so the higher the intake, the greater the pressure on tariff. • Softening this year has made only marginal difference to tariff, but even before softening our tariff was behind Durham, Warwick, St Andrew’s and UCL’s in 2011/12

28. Generally among the top 20, the bigger the intake the lower the tariff • None among the top 10 had an average intake of more than 3,500 in 2011/12 • There’s a finite pool of high quality students so the higher the intake, the greater the pressure on tariff. VCEG proposing we cap total students at 22,000 • No US top 20 has more than 23,000 students

29. The Finance Challenge … “Funding our growth plans has to be one of, if not the biggest challenge that we face.” Vice Chancellor’s report from the VCEG Residential Meeting 2013

30. Finance Challenge • Cost of investment in REF, NSS & employability • Capex too low in later years (£3m vs £67M) • Long-term maintenance + increased debt servicing • Surpluses too low (0.2% - 3.1%) • Pay inflation vs flat fees for home/EU UGs • Dramatically increasing pension costs • Examine baseline budgets to reduce costs • = EBITDA increase to 12.5%, or £12M by 2017/18

31. The Shape Challenge … International students generate a large surplus. Research is costly Could be much improved if REF produces QR premium Publically funded teaching likely to make a bigger surplus as fees roll through But overall pattern will not change …

32. Shape Challenge: How have these activities grown over last 10 years? • Sector-leading growth in research income • Significant growth in student numbers, but … • STEM/M growing faster than HaSS • Current balance: • 65% HaSS • 35% STEM/M

33. Shape Challenge: What will happen in the next 5 years? • Research income growing faster than students • STEM/M still growing faster than HaSS and … • Planned balance will be: • 60% HaSS • 40% STEM/M We have been growing, and are continuing to grow, high cost activities in research and STEM/M

34. Shape Challenge: But growth in STEM/M & Research has been vital for … Research Income 2011/12 • Entry into Russell Group • Enabling us to grow Research ‘power’ • Strengthening our REF submission • Preparing us for research concentration • Beating the competition … However, it does puts pressure on EBITDA, especially when combined with picture for international students ….

35. Shape Challenge:Growth in Exeter’s international student FTEs: 2001 - 2017

36. Exeter’s International Students (including INTO) as Percentage of Total Student Population • Going down as a % • PRG want to halt that trend • Market data shows this is achievable

37. Shape Challenge:Can we combine this with modest growth in home/EU students in high margin areas? • Current growth takes us to a little over 21,000 • Room for small amount of growth within the cap of 22,000 • Look to high margin areas, such as … • BUS School (Penryn?) • Law? • Mathematics? • Computer Science? • Modern Languages? • English? But any growth would need to enhance our quality metrics and would depend on market demand ….

38. We will consider these data for all disciplines in the planning round …

39. Priorities &Key Performance Targets

40. Priorities & KPTs Priorities Key Performance Targets Cap growth at 22,000 students in totalin the foreseeable future. Home/EU undergraduate intake not to exceed 4,600. EBITDA of 12.5% of total income by 2017/18. International student population to remain at 18% (excluding INTO). All non-regulated fees remain in the top decile. • Enhance tariff and NSS – major priorities over the next planning period. • Boost employability – major theme for this year’s planning round – may need investment. • DVCs & COO to review all baseline budgets. • Modest additional expansion of high margin home/EU provision, bearing in mind the need to protect our quality metrics. • Reducethe number of university-funded PGRs, where appropriate .