Financial Crunch: KP’s Leading Universities Struggling to Survive

Their administrations have sought bailout packages from the provincial and federal governments, writes Sohail Khattak

Financial Crunch: KP’s Leading Universities Struggling to Survive
Three leading universities of Khyber Pakhtunkhwa (KP) are struggling to survive due to a financial crisis. It appears these universities desperately need a bailout package from the government to continue their operations.

The province’s three oldest universities are the University of Peshawar, University of Agriculture and Gomal University. Administrations of all three universities are struggling to pay salaries and pensions due to the financial crunch and have sought bailouts from the Higher Education Commission and the KP government to overcome the situation.

“We have sent summaries to the prime minister and the chief minister of KP for a bailout package,” said Dr Jehan Bakht, vice chancellor of the University of Agriculture. “We held a meeting with the KP’s Higher Education Department secretary last week where we presented our situation. The secretary will discuss the matter with the chief minister,” he said, adding that 85 percent of the university’s expenditures were salaries and pensions. “We cannot do anything to reduce these expenditures,” he said.

University administrations say that a steep increase in expenditures is also tied to inflation and yearly increases in salaries, pensions and allowances. They say the HEC is not giving enough grants to the university to meet raises in salaries, pensions and to grapple with the inflation.

“About 40 percent of our funds come from tuition fees and 60 percent from government grants. We cannot increase students’ fee to meet the gap between expenditures and revenue because our students come from rural and poor backgrounds. On the other hand, the government has cut our grants, limiting our options compared to previous years. How should we make arrangements to fill the fiscal gap?” asked Zulfiqar Ahmad, finance director of the University of Agriculture.

He said the issue had been communicated to the KP government and the HEC. “We informed them we will continue to face this financial crisis and will be unable to pay salaries and pensions till the university gets a bailout package. The government has not given us any kind of relief in this regard.”

University employees protested before Eid and demanded that administration pay their salaries and pensions. “Obviously they will protest if they are not provided their salaries and pensions on time. This can become a serious law and order situation and we also have communicated all this to the government,” Zulfiqar said.

He said that the university will make an estimated Rs700 million from tuition fee while the HEC had allocated Rs877 million for it for 2019-2020.

He said expenditures were estimated at Rs2,285 million. The total deficit stood Rs885 million as the university also has to pay liabilities of the previous year. “We are running from pillar to post for a bailout package, otherwise the university will sink,” he said.

He added that the university applied for a supplementary grant of Rs263 million for the previous fiscal year to cover the increases in salaries and pensions this year, but the HEC released a Rs25 million supplementary grant. “This deficit from the previous year will haunt the university this year while the current year’s deficit has also increased due to the government’s announcement of increase in salaries, pensions and allowances. Costs are also escalating due to inflation.”

The university has demanded Rs5 billion from the federal government and Rs1 billion from the KP government.

The University of Peshawar (UOP), often referred to as the parent institution of higher education in the province, is in a similar situation. The UOP has also asked for a bailout package to overcome the fiscal deficit.

According to the UOP administration, the total budget of the university in 2018-19 was Rs4 billion while receipts stood at Rs3.318 billion, including Rs2.068 billion generated from its own sources and Rs1.250 billion released by HEC against the allocated Rs1.425 billion.

UOP spokesperson Ali Imran Bangash told The Friday Times that the government didn’t increase grants to the university to meet reoccurring expenditures that rise every year due to government announcements to raise salaries and pensions.

According to Ali, there were 3,000 employees at UOP and 1,500 pensioners.

He said the university tried to increase fees in last year but it had to reverse the decision as students began protesting. Ali said the government had opened 25 universities across the province and had limited the jurisdiction of UOP only to Peshawar. He said it had also limited the number of affiliated colleges which ultimately led to the revenue of UOP to shrink.

“We are taking austerity measures to cut down running expenditures like fuel consumption. We also launched operations in hostels to expel outsiders and constituted a task force to chalk out a plan for commercialization of a property owned by the university to increase our revenue base for sustainability,” he said.

To a question regarding the surplus staff in the UOP which is said to be a factor for its expenditures, Ali said that the university has grounds, 14 hostels, residential housing colonies for its faculty and a huge area of 10,000 acres which needed gardeners and security guards.

The main reason behind the financial crunch being faced by universities is the rising pension liabilities which is also a challenge for the KP and the federal governments. The KP government has increased the retirement age for its employees from 60 to 63 and it has temporarily controlled the rapid growth of its pension liabilities. Sources in the KP government say that the federal government is also adopting the KP policy to defer liabilities of its employees who are going to retire in the coming years.

The UOP pension expenditures reached to Rs1,100 million in 2018-19 from Rs84 million in 2006-07. The UOP administration says that pension liabilities have increased by 900 percent in the last 12 years and they will rise even more rapidly as employees retire in the coming years.

Similarly, the University of Agriculture is spending 18 percent of its revenue and grants from HEC on pension payments.

The UOP administration say that Islamia College University, which was affiliated with UOP, received university status in 2008 which took away UOP’s assets and revenue but left a liability of 262 retired employees for which the UOP is paying Rs90 million annually.

The administration of University of Agriculture says that they have sought a Rs5 billion bailout package from the HEC to make a self-sustaining pension fund but have not heard from the HEC in this regard.

“The only way to overcome pension liabilities is to bring the contribution system. Only five percent contribution from employees to the pension fund will make a difference and the fund needs to be invested to make profit. If we keep it limited only to government’s contributions, then we will not be able to overcome the issue,” said a senior official of KP government who has been working on pension reforms for the provincial government. The official said that the universities are like any autonomous body in the country which has to work on pension reforms, otherwise the liabilities would become a problem.

Universities administrations also say that the KP government and its Higher Education Department is not providing any funds to universities to meet their expenditures. “The HED has a say in policymaking of the university and representatives of the provincial government sit in the syndicates’ meetings and influence the decision making but do not provide funds for expenditures of the universities,” said an official of UOP.

When asked for comments, Additional Secretary KP Higher Education Department Khuda Bukhsh said, “the universities are autonomous bodies and their syndicates makes decisions. Vice Chancellors of the universities can better respond to queries regarding their financial crisis.”

The writer is a journalist based in Peshawar