University of Sydney posted a deficit

University of Sydney's losses 'threaten operations' | The Australian

NSW universities have been savaged by the global financial crisis, suffering a $500 million loss in the value of their investments, led by the University of Sydney, which recorded a staggering $347 million reversal to its bottom line.

Sydney University posted a surplus of $187 million in 2007, but its annual report shows the country's oldest and wealthiest university filed a $160 million deficit at the end of last year.

The reversal to the university's bottom line flowed from a 23 per cent or $271 million fall in the value of its $1.15 billion investment portfolio, one of the country's largest university-based pools of investments and bequests.

The results from the NSW universities' annual reports - tabled in parliament yesterday - dramatically revise upwards university investment losses previously projected to be about $800 million across universities nationwide.

NSW Auditor-General Peter Achterstraat said the global financial crisis and the volatility in financial markets had the potential to significantly affect universities' operations.

The auditor criticised Sydney University over failing to meet adequate liquidity performance guidelines, describing its position as "high risk".

The university may have to make borrowings to fund capital spending, defer or make significant changes to its capital works program, or even reduce discretionary spending on research grants, scholarships and prizes, the auditor's report said.

But Sydney University chief financial officer Mark Easson said despite the reduction in investment income, the university was in a strong financial position with annual revenue of $1.3 billion.

"We remain debt-free with a pool of discretionary funds available for contingencies. Our investment portfolio is well diversified and performed better than most similar sized balanced funds against which we benchmark," he said.

Mr Easson stressed that there would be no impact on the university's core teaching and research programs.

"Student demand remains high with increased enrolments this year from both local and international students," he said.

As recently reported in The Australian, the state's only other research-intensive university, University of NSW, also posted an $87.4 million deficit for 2008, well up from its $6.5 million deficit the previous year.
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