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Report
of the Treasurer to the Council on the Institute's Financial
Statements for the Financial Year from 1 July 2004 to
30 June 2005
Overview
The reduction in recurrent funding from the University
Grants Committee ("UGC") for the 2005-2008
triennium, the implementation of the Voluntary Departure
Scheme ("VDS") and Compulsory Redundancy Scheme
("CRS") for academic staff, and the Salary
Delinking proposal were some of the major issues which
were discussed/occurred during the financial year 2004/05.
These issues have major immediate and long-term financial
implications, and the Institute will strive to manage
these changes with great care and prudence.
In determining the funding level for the UGC-funded
institutions for the 2005-08 triennium, the Government
adopted a 0-0-5 formula in which the level of funding
for the UGC sector would be maintained in the first
two years of 2005/06 and 2006/07 but then be reduced
by 5% in the year 2007/08. Amongst the eight UGC-funded
institutions, the Institute faces the largest reduction
in funding, mainly as a result of the reduction in student
numbers and the removal of the front-end loading (i.e.
start-up funds) received by the Institute in the previous
triennium. The Council, the senior management, the staff
association and students made repeated requests to the
Government for a relatively smaller funding cut but
unfortunately we were not successful. While the 0-0-5
model, which would be the worst case scenario, had been
adopted for planning purposes, the Government has committed
to undertake a review of the funding level of 2007/08
before the middle of 2006, taking into account a number
of factors including the economic outlook at that time.
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In response to the substantial reduction in the number
of Full-Time Equivalent ("FTE") students,
the amount of UGC funding, and the changes in the mix
of academic disciplines of students as decided by the
UGC for the 2005-08 triennium, a VDS followed by a CRS
were implemented for academic staff whose academic expertise
no longer match the future needs of the Institute, and
those staff who had become surplus to the staffing requirement
of the Institute. The total compensation for the exercise,
including pension payments to staff who moved to the
Institute from the Government when the Institute was
first established in 1994, amounted to $133 million
and the UGC provided $30 million from its Restructuring
and Collaboration Fund to fund part of this cost.
Following the Government's approval of the delinking
of university salaries from the civil service pay scale,
the Institute had commissioned a remuneration review.
The purpose of the review was to establish a remuneration
structure that would be sufficiently competitive, flexible,
and equitable to attract, motivate, and retain high
quality talent that would help to position the Institute
as the leader in teacher education in Hong Kong. While
cost saving is not the primary objective in the review,
it is envisaged that the new remuneration structure
would have financial implications in the longer-term.
Although the Institute faced a 20% cut in the UGC recurrent
grants in 2004/05, cost control measures implemented
since 2002 had continued to generate savings and help
keep costs under control. Together with improved income
from non-UGC funded programmes and improving returns
from the investment of idle cash, a surplus of $38 million
was achieved and transferred to the General Development
Reserve Fund ("Reserve"). This Reserve has
now been built up to $575 million, which is at a satisfactory
level in preparation for the difficult financial situation
in 2005-08.
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Programmes
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Part-time |
Full-time
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Taught Postgraduate |
Part-time |
Full-time
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Undergraduate |
Part-time |
Full-time |
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No.
of FTEs |
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