• The state’s four public universities and 11 state training providers were generally low risk in 2013 when measured against selected key indicators for assessing financial performance.

This section of the report provides a summary of selected key indicators and key financial ratios that are commonly used to analyse the financial health of agencies. Most of this information has been reported in each agency’s tabled annual report but is summarised here for the convenience of Parliament.

 

Universities’ Financial Performance

The Australian Government Department of Education has a number of benchmark indicators for assessing the financial performance of universities. These measures include liquidity, diversity of revenue, dependence on international student fees, operating result and borrowings to equity ratio. Each university’s performance against these indicators for the four years from 2010 to 2013 is presented below, based on the audited financial statements.

Liquidity

The liquidity or current ratio is based on the traditional formula of current assets divided by current liabilities. This ratio assesses an entity’s ability to meet their debts as and when they fall due. The Commonwealth considers a ratio of more than one is low risk.

 

Diversity of Revenue – Dependence on Australian Government Funding

One way universities can reduce their financial risks is by diversifying their revenue sources. Each university has a different capacity to generate revenue, depending on factors such as location, size, courses offered, extent of research activity, perceived standing and student profiles. The Commonwealth considers universities with 55 per cent or less of revenue derived from Australian Government funding represents a low risk and between 55 to 65 per cent to be medium risk. Australian Government financial assistance includes Commonwealth Grants Scheme and other grants, HECS-HELP payments and FEE-HELP. Curtin, Murdoch and UWA were considered low risk and ECU was considered medium risk for this indicator in 2013.

 

Dependence on Overseas Student Fees

Some universities diversify their revenue sources by encouraging overseas students to study their courses. However, it is generally accepted that universities should not be overly dependent on this source of income. The Commonwealth considers universities with 15 per cent or less of operating revenue from fee-paying overseas students to be low risk and between 15 and 25 per cent to be medium risk. Based on these criteria, ECU and UWA continue to be considered low risk while Curtin and Murdoch would be medium risk for this indicator.

Operating Result

Universities are not-for-profit organisations but their operating result is a useful measure of financial performance. Large deficits or a trend of a number of consecutive deficits would require review and analysis.

All four universities reported a surplus for 2013.

Note: Murdoch received revenue of $49 million from its subsidiary, Murdoch Retirement Services Pty Ltd, in 2012. Without this revenue the ratio would have been 11 per cent.

Borrowings to Equity Ratio

Universities are permitted by their legislation to finance their activities by borrowing. The Commonwealth considers universities with seven per cent or less of their equity represented by borrowings to be low risk. Greater than 10 per cent is considered high risk.

ECU’s borrowings increased during 2012 and UWA’s increased during 2012 and 2013 to fund building programs. Both universities consider they have sufficient funds to meet all their debt obligations which are considered to be medium risk against this indicator. The other two universities remain low risk against this indicator for 2013.

 

Note: Curtin’s borrowings exclude amounts for the Chemistry Centre (WA) which are offset by lease revenue.

Universities’ Graduate Survey Information

The information in the following tables is based on graduate responses to the annual national Course Evaluation Questionnaire conducted by Graduate Careers Australia four months after students complete their courses. The 2013 results were not available in time for audit and inclusion in this report. Unless otherwise noted, the KPI data below appears in each university’s annual report.

Graduate Satisfaction for University Students

Domestic and international bachelor level graduates’ satisfaction with the quality of their course is listed in Table 9.

 

 Graduate Destination for University Students

The graduate destination survey results relate to domestic students who completed undergraduate courses and are seeking employment and, when surveyed four months after completing their course, were employed in their desired mode of employment (either part-time or full-time).

 

Financial Results of State Training Providers

The selected key performance measures for state training providers (STP) below were reported or have been calculated from information presented in each STP’s annual report. Goldfields Institute of Technology commenced from 1 July 2012, so trend data is not available.

Current Ratio / Liquidity

The liquidity or current ratio is based on the traditional formula of current assets divided by current liabilities. This ratio assesses an entity’s ability to meet their debts as and when they fall due. A ratio of more than one is generally accepted as low risk.

 

Financial Result

A number of factors can determine whether an agency achieves a surplus financial result. However, a surplus is generally an indicator that an entity is adequately funded, and has sound financial management and/or good budgeting. For the year-ended 31 December 2013, six STPs recorded an operating surplus compared to two the previous year.

 

Note: STPs are not funded for their depreciation expense.

Cost per Student Curriculum Hour

The cost per Student Curriculum Hour (SCH) is calculated by dividing the total cost of services measured on an accrual basis by the total number of SCH of training delivered. The total SCH is the total number of enrolments multiplied by the hourly duration of the modules.

Many factors influence these indicators, such as regional location and economic conditions, the relative cost of different courses offered and student demographics, so this data alone should not be used for comparison between STPs. However it provides a high level indication of efficiency.

STPs in the north west recorded greater fluctuations in their Cost per SCH than other STPs. Five STPs have recorded less than 10 per cent increase in their Costs per SCH over the four years.

State Training Providers’ Student and Graduate Survey Information

Surveys to establish student satisfaction, the achievement of their objectives for studying and the proportion that gained employment are key measures of STP performance. These measures have been used by STPs for many years, however in 2012 the survey methodology was changed. As a result, comparative information from years prior to 2012 is not included in the tables 14 to 16 on the next pages.

Student Satisfaction for STP Students

The student satisfaction survey for STPs is administered through the Department of Training and Workforce Development. The annual survey is used to measure the quality of the service which is provided by the STPs.

The student satisfaction rating is based on the number of ‘satisfied’ and ‘very satisfied’ respondents to the survey.

Graduate Achievement and Destination Rating for STP Students

The student outcomes survey of STP graduates is conducted on behalf of the National Centre for Vocational Education Research (NCVER). The aim of the survey is to measure vocational education and training graduates’ employment, further study and other opinions of the training undertaken. Tables 15 and 16 show data from the survey of 2012 graduates. Results from the survey of 2013 graduates were not available in time for audit and inclusion in this report.

The Graduate Achievement rating is an indicator measuring the extent to which STP graduates have fully or partly achieved their main reason for undertaking their training.

The Graduate Destination rating is the proportion of graduates in employment and shows the extent to which the STP is providing relevant and quality training that improved student employability.