EUR’s consolidated financial result in 2019 is M€-9.6. In the budget of 2019, a consolidated result of the same proportions has been accounted for, M€-8.3. Hence, the realisation of 2019 is more negative than expected, for the amount of M€1.3.
The biggest differences, compared to the budget:
- An increase of the national contribution of M€7.5. This has to do with the compensation for the increase of the number of students and the wage- and price indexation from the Ministry of Education.
- The collection of the tuition fees delivered M€1.0 more than expected.
- The assets ‘Work commissioned by third parties’ were valued higher, at M€11.2.
- The remaining assets were M€16.7 lower.
The differences compared to the budget on the debit side can mainly be found in the following:
- Personnel costs exceeded the budget by € 26.5m. This was mainly due to an increase in our own staff complement (€ 11.8m). In addition, the number of non-salaried personnel (PNIL) increased by 63.6%, amounting to € 14.7m.
- Housing expenses were € 2.6m lower than anticipated. Depreciation charges, including those for fixed assets, were € 1.8 .1m lower than anticipated.
- Other expenditure, financial income and expenses and taxes were € 20.6 lower than anticipated.
The results for third-party interest were higher than anticipated and, in the end, amounted to € 18.5m. This was €13.5m higher than the 2018 budget, and can be attributed to the renovation of the faculty tower of Erasmus MC. This means that the final net result for 2019 works out at € -28.1m for a budget of € -13.3m: a difference of € 14.8m. The different are discussed in this chapter. In respect of liquidity, solvency and other ratios, EUR did better than the sector average. The Ministry of Education, Culture and Science has established performance limits for the current ratio (50%) and solvency1 (30%). EUR scored higher on both ratios.
1 The Ministry of Education, Culture and Science (OCW) is assuming a solvency II (equity + facilities ÷ total liabilities). EUR is following this calculation for comparison purposes, and has adjusted the figures.
Table 5.1: Key indicators
|Key indicators in €m||Statement for 2018||Statement for 2019||Budget for 2019||Budget for 2020||Schedule for 2021||Schedule for 2022||Schedule for 2023||Schedule for 2024|
|Income from work commissioned by third parties||191,6||205,0||193,8||192,9||193,2||198,6||201,2||201,2|
|Cash and cash equivalents||114,2||127,3||45,6||68,5||59,2||47,1||47,1||47,1|
|Balance sheet total||423,9||428,5||396,7||370,4||358,8||373,1||377,8||377,8|
|Average number of FTEs||4.941,0||5.239,0||5.142,9||5.591,5||5.563,7||5.538,4||5.483,4||5.483,4|
|Support and management staff||903,7||970,0||973,2||1.071,5||1.054,9||1.048,9||1.042,3||1.042,3|
|No. of students paying tuition fees||27.060||29.298||27.080||28.595||29.159||29.734||30.321||30.321|
Table 5.2: Results
|in €m||Statement for 2018||Statement for 2019||Budget for 2019||Budget for 2020||Schedule for 2021||Schedule for 2022||Schedule for 2023||Schedule for 2024|
|Income from work commissioned by third parties||191,6||205,0||193,8||192,9||193,2||198,6||201,2||201,2|
|Staff expenditure (EUR staff)||392,6||429,9||418,1||468,1||467,3||466,7||463,1||463,1|
|Financial Income and expenditure including taxes||‑0,8||‑0,4||1,0||0,0||0,0||0,0||0,0||0,0|
|Third-party interest in result||11,7||18,5||5,0||‑1,5||0,2||0,1||‑0,1||‑0,1|
Results compared to result of 2018
Compared to the net result for 2018 (€ -4.5m), the result for 2019 (€-28.1m) is € 23.6m lower. Major differences include:
- Substantial government grant and tuition fees resulting from larger numbers of students.
- More substantial revenue from work commissioned by third parties (€ 13.4m) and other income (€ 5.4m), in particular EMF funds at Erasmus MC and Woudestein.
- In 2018, the staff expenditure for EUR’s own staff was € 42.1m above the 2018 level. This increase is due to an increase of HOKA means and student increase (€13.5m). As there were more projects in 2019, more staff was employed (€13.5m). Wages and retirement premiums have also increased, compared to 2018.
- In 2018, the number of non-salaried personnel (PNIL) increased by € 4.8m compared to 2017. These non-salaried personnel members include persons who are not actually employed by EUR, but who conduct research or teach at EUR on a temporary basis pursuant to a hospitality agreement. In addition, investments in IT. EUR engaged temporary staff for this purpose.
- The lower depreciation charges (€ 3.6m) are due to a one-off additional depreciation in connection with construction on campus in 2017.
- Housing expenditure is € 4.1 higher due to an allocation for depreciation of appliances.
- The remaining expenditure is € 2.1m lower due to a release from the demolishing provision.
Realisation versus budget 2019
The budget for 2019 showed a negative net result of €-13.3m. The most important cause was a negative result at the faculties. Due to the high solvability of EUR, it is decided to decrease the reserve in the coming years. This is done by allowing faculties to budget for negative results. Due to these results, the faculties’ reserves will be decreased over time (€6.8m). Besides, like in prior years, the reserves meant for among others pre-investments in educational quality and execution of postponed plans and expenses, such as the Research Excellence Initiative, will be used. In total, €6,5m will be used for the meant reserves.
The net result of €-28.1m is €14.8 below the budget. This is due to the extra contribution needed for the planned renovation of the faculty tower of Erasmus MC.
The income from the national government and compensation funds are €7.5m above budget due to an increase in student numbers and wage and price compensation. Besides, the revenue from work commissioned by third parties is €11.2m higher than the budget, due to the increase of this revenue on both Woudestein (€6.7m) and Erasmus MC (€4.5m). The other revenue is lower (€16.7m). An important determinant of the other revenue’s decrease is the decrease in contributions resulting from the different organization of the part-time Master Business Administration at RSM, and a setback in VAT revenue.
The expenses for staff is €26.5m higher as expected. This is due to an increase in employment, as well as higher wage costs and retirement premiums compared to what was budgeted for. The hiring of external staff has also lead to more costs than anticipated in the budget, especially for support services. IT in particular, external staff has been hired due to vacant activities that were necessary for IT security. Besides, staff has been hired to start strategic projects.
In 2019, the business units at Woudestein Campus achieved a joint result of €0.0m. This was due to a negative result at EUR Holding (€ 0.2m) and a positive result at RSM BV (€ 0.2m). The medical faculty obtained a positive result of € 18.5m, while the other faculties obtained a result consistent with the budget.
Table 5.3: Consolidated balance sheet
|Balance sheet in €m||Result 2018||Result 2019||Budget 2019||Budget 2020||Planning 2021||Planning 2022||Planning 2023||Planning 2024|
|Intangible fixed assets||4,1||4,9||3,1||2,1||2,1||2,1||2,1||2,1|
|Tangible fixed assets||269,0||260,7||291,8||234,8||230,1||253,2||256,1||256,1|
|Financial fixed assets||1,9||1,3||1,3||0,7||1,3||1,3||1,3||1,3|
|Total fixed assets||275,0||266,8||296,2||237,6||233,5||256,6||259,5||259,5|
|Receivables from tuition fees||1,2||1,1||1,3||1,3||1,4||1,4||1,5||1,5|
|Cash at bank and in hand||114,2||127,3||45,6||68,5||59,2||47,1||47,1||47,1|
|Total current assets||148,9||161,7||100,5||132,7||125,3||116,4||118,3||118,3|
|of which general reserve||110,6||92,0||105,8||91,7||77,8||68,8||67,4||67,4|
|Allocated reserves (public)||122,2||112,8||114,5||101,8||97,1||97,1||97,1||97,1|
|Allocated reserves (private)||36,2||35,9||35,3||35,2||36,5||39,2||42,1||42,1|
|Designated funds (private)||0,4||0,5||0,5||0,5||0,5||0,5||0,5||0,5|
EUR’s assets are primarily tied up in buildings and terrain, and in cash at bank and in hand. The tangible fixed assets have increased over the years due to investments in Woudestein Campus (CiO I, II and III). Cash at bank and in hand has increased by €13.1m compared to the initial position in 2018.
In 2019, the total provisions decreased by €2.1m, mainly due to the release from the demolition provision.
Overview of expense claims by Executive Board members in 2019
In response to the letter from the State Secretary for Education, Culture and Science, dated 25 November 2011 and concerning transparent expense claims and the rules governing such claims, the expense claims submitted by the Executive Board for 2019 are included above. These claims are in accordance with internal guidelines, that also apply to board members.
Table 5.4: Expense claims of Executive Board members
|Expense claims in €||ir.drs. H.N.J. Smits, (Interim chair EB)||drs. K.F.B. Baele (Chair EB until 30/11)||prof. dr. R.C.M.E. Engels (Rector magnificus)||drs. R.M. Ritsema van Eck (Member EB)|
|Domestic travel expenses||-||18.058||31.352||29.509|
|International travel expenses||-||15.418||20.503||11.112|
EUR receives public funding for sustainable development of the humanities. To encourage research in the humanities, EUR has invested these funds in research, staff professionalisation, talent management, workload reduction and exemptions from teaching duties for the purpose of writing research proposals. As a result, we were able to recruit three PhD students for whom it would otherwise have been difficult to obtain funding.
Graph 5.1: Comparison 2018 and 2019 income (in €m)
The purpose of the continuity paragraph is to provide insight into the way in which EUR deals with the (financial) consequences of past and future policy: future developments, operating results, investments and asset developments.
EUR’s financial and economic policy safeguards continuity of business operations in a financial sense. The most important principles are a balanced distribution of resources, structurally sound budgets, and sound liquidity and solvency (i.e. exceeding the Ministry of Education, Culture and Science’s performance limits). Deficits are exclusively systematic and of a temporary nature.
Over the next few years, EUR will invest substantially in the further development of the campus, as well as in digitisation, educational development, educational innovation and research. Proper operational management must be ensured to safeguard continuity in the organisation.
We will be examining the following issues in greater depth in this paragraph:
- the anticipated investments and their impact on key indicators, including liquidity
- cash management, interest rate management and funding requirements
- operation and asset developments
1. Anticipated investments
Upon completing the co-creative Strategic Design Labs in 2018, the second stage of the Strategy2024 has started off. In this stage, we have worked towards the release of an institution plan (the strategy), that has been proudly presented in September 2019. With the new mission of ‘creating positive societal impact’, EUR shapes her ambition to formulate solutions for complex societal issues, departing from our responsibility and unique profile of disciplines. With the launch, we have a new stage: Implementing our ambitions. Some prioritized projects had already started in 2019 in an exploration stage.
It is our aim for 2019-2024 to allocate an amount of €15m annually, for the execution of initiatives/projects that put our strategic aims into practice. In part, the budget has already been allocated for initiatives that originate from earlier strategic terms. New strategic projects are mapped out, and further elaborated upon in project plans and budgets that strive towards new investment plan for the full strategic term, to be delivered in 2020. In 2019, several projects have been started with preliminary financing. This concerns among others the projects Impact week, Erasmus Enterprise (Incubator), Erasmus Design Initiative, Community building Professional Services, Repositioning EUR and Sustainability in Education.
Tabel 5.5 Uitgaven strategie en strategische ruimte 2019-2024
|Annual Reservation Strategic Innovation Budget||17,5||17,0||17,0||17,0||17,0||17,0||102,5|
|Free strategic budget||2,2||5,5||9,5||10,8||15,3||15,5||58,9|
Campus in Ontwikkeling (CiO)
At the end of 2010, EUR resolved to transform Woudestein into a campus of international stature where it is pleasant to study and work. The work entailed has been split into three phases. “Campus under Construction I” (CiO I) delivered the campus’s new hub and basic infrastructure. CiO II focused on the refurbishment and maintenance of educational facilities and offices, and on the development of new facilities. This phase was completed in 2018, and work began on CiO III. At the end of 2019, it was decided that the renovation of the monumental buildings (Tinbergen Building) will be postponed, and to start with the new educational buildings MFO II in 2019. Besides, at the end of 2018, an investigation was initiated to determine the possibility to start the renovation of the Mandeville Building’s office floors earlier. RSM’s question whether ‘One School, One Building’ was possible has also demanded a lot of attention. Besides, it was decided to definitively release the budgets for the new recreation facilities and MFO II. Due to the shifts in work order, the total processing time has shifted with two years. In the remaining timeframe of 2020-2026, an estimated investment of €200m has been accounted for.
The outcome of Twynstra & Gudde’s investigation concerning risk management within the EUR in 2019, has lead to a risk approach on both programme as well as project level. On the programme level, it has been decided to lay the responsibility for the programme management and the financial administration of this extensive programme within the EUR organisation. The organisation within RE&F has the means to do so. Another important measure, ‘benchmarking the real estate strategy’ has also been put into practice. In Royal Haskoning DHV’s report, the real estate strategy has been tied to the new EUR strategy. An audit of the recommended growth scenario is scheduled for 2020. Apart from Woudestein, Hoboken also has an ambitious investment programme. In 2027, the renewal of the faculty building is scheduled. This will be paid out of reservations that have been made for years, through the facility ‘advance payments capital charges’.
Higher Education Quality Agenda (‘HOKA’)
On 9 April 2018, the Ministry of Education, Culture and Science signed an agreement with the National Student Organisation (ISO), the Dutch National Union of Students (LSVb), the Netherlands Association of Universities of Applied Sciences and the Association of Universities in the Netherlands (VSNU) concerning the details and elaboration of the quality agreements. These agreements form part of general sector agreements concluded with the latter two associations. These agreements reflect a shift from greater government control to more trust in universities and universities of applied sciences. The quality agreements are linked to the resources for student loans. In 2015, the Student Loans (Higher Education) Act came into force, abolishing basic grants for students.
In July 2019, the University Council approved all plans that were developed by the faculties and services, as part of the means quality agreements for the years 2019-2024. These plans fit the development of Strategy2024, and therefore also help reinforcing EUR’s profile and strategy. The Community for Learning and Innovation (CLI) was assigned a multi-year budget of €2m per year, meant to stimulate the faculties’ investment agenda, share knowledge on innovation and quality improvement and further professionalise lecturers. Faculties have spent all funds received from the Ministry of Education. Apart from the means that the faculties received from the quality agreements, in 2019, the EB made extra investments towards projects aimed at personal and professional development, additional coaching of students and the development of a differentiated (online) educational offer. The project wellbeing was somewhat delayed in its realisation in 2019. The remaining budget will be spread out over the budgets of 2020 until 2024.
2. Cash management, interest rate management and funding requirements
Cash management is intended to ensure prompt availability of cash at bank and in hand under acceptable conditions. In addition, excess cash at bank and in hand is deposited in order to optimise the return within the risks indicated. The treasury statute reproduces the guidelines and frameworks within which EUR can conduct its treasury activities.
In the year under review, these treasury activities were limited to depositing excess assets as favourably as possible. EUR uses the treasury banking facilities at the Ministry of Finance, where we deposit the greater part of the resources. We also deposited resources incurrent and savings accounts at Dutch banks. These banks have an A rating at the very least. EUR does not use derivatives.
For the time being, the investments will continue to be financed entirely from EUR’s resources. At the end of 2019, the total amount of cash at bank and in hand held by EUR and its business units totalled € 127.3m (this was € 114.2m in 2017). Of this amount, € 71.9m (€ 59.0m in 2017) is the university’s property and € 55.4m (€ 55.2m in 2017) is the property of the business units. The public and private resources are entirely separate.
EUR is monitoring the anticipated course of the operating cash flows and the investment plans. Supplementary funding will be raised through treasury activities if required.
Operation and asset developments
The investments required to fulfil EUR’s ambitions have been incorporated into the multi-year budget. In 2019, the new strategy has been presented during the opening of the academic year. For the strategy’s implementation, a budget has been allocated. The consolidated budget of 2020 shows a consolidated deficit of €25.3m. . In line with EUR’s financial policy, we see that the deficits will decrease between 2021-2023, with a positive result anticipated for 2023. The deficit for 2020 may be explained by the following:
• Anticipated increase in the number of staff
• Additional expenses resulting from accommodation for Erasmus MC and expenses for IT (including IT security)
Due to the rise in student numbers, the credit side shows an increase in public funding. We expect this increase in student numbers to be accommodated by a similar increase in staff numbers. The number of staff will also increase as a result of the use of the HOKA funds. EUR foresees a challenge in respect of filling vacancies due to increasing shortages on the employment market and competition from other international universities, among other places. In addition, EUR expects both tuition fees and third-party revenue to display a slight increase in the years to come.
Construction of the campus will continue during the next few years. In combination with the scheduled investments, development of cash at bank and in hand is being closely monitored in order to ensure that adjustments can be made in good time.
The balance sheet does not include Erasmus MC’s assets, but it does include the assets of EUR’s business units. The balance sheet reflects the investment programme on Woudestein Campus via the tangible fixed assets and the planned restructuring via the staff provisions.
Grafiek 5.2: Aantal studenten die collegegeld betalen
Tabel 5.6 Total number of persons at EUR, excl. Erasmus MC (as of 31 December 2019)
|Full Professor (HL)||Associate Professor (UHD)||Assistant Professor (UD)||Other Academic Staff||PhD Staff||Student Assistants||Support and Management Stadd||Total|
|Support and management staff||Male||-||-||-||-||-||5||251||256|
Basic principles of the multi-year budget
EUR’s long-term figures are based on the following principles:
- The budget was drawn up on the basis of a stable salary and price level in 2019.
- Public funding has been included in the calculations based on the anticipated development of the Macro Budgetary Framework as presented by the Ministry of Education, Culture and Science and on EUR’s anticipated share in the various sections. This share is based on the anticipated trends in education and research performances.
- It has, moreover, been assumed that the capping of the doctorate premiums will have a budget-neutral effect.
- Specific education and research funds were taken into account: budget for research at Erasmus School of Philosophy, financial compensation for students who pursue a second degree programme and compensation for reinforcement of regional collaboration.
- The tuition fees are based on the projected rise in the total student population and the projected level of tuition fees in 2019. The amount of the tuition fees can vary according to the following factors: the differences between statutory rates and institutional rates, the differences between bachelor’s degree programmes and master’s degree programmes, and the differences between the rates for students from inside the European Economic Area (EEA) and those from outside the EEA. We anticipate an increase in tuition fees due to increasing student numbers, as well as more students paying the institutional rates (non-EEA).
- The depreciation on accommodation shows a reasonably stable trend.
- EUR has only recognised corporation tax for the subsidiaries, based on the assumption that the EUR is eligible for the subject exemption.
Risk management and control system
The concepts of risk management, governance and control are inextricably linked. They all focus on attaining objectives, seizing opportunities, and preventing losses. EUR regards risk management as a process of identifying risks and making conscious choices about how to respond. Effective risk management entails a well-considered balance between the impact of the risks identified and the measures taken in response.
EUR does not have a dedicated risk management function. Standard risk management is included in management responsibilities. Thus, faculty deans and directors manage the risks associated with the normal operation of their respective areas of responsibility. In addition, the administrative and support departments play a major role in identifying risks and implementing risk control measures. Since 2017, risk management has been organised in a more structured manner, but without compromising the decentralized responsibilities. The aim is to ensure a better alignment between risk management and strategy, and thus improve the degree of control. This allows risk management to better contribute to the achievement of the goals as formulated in the strategy. Risk management is thus not a goal in and of itself.
In addition, work is being done to improve the embedding of risk management in the planning and control cycle. Consultations have been held at various levels within the organisation to discuss how risk management can be improved. Risk management is a fixed item on the agenda of the administrative consultations between the executive board and the faculty deans. It is also a fixed item in the budget, and further steps will be taken to make risk management an integral part of EUR’s planning and control cycle.
In connection with this commitment, EUR carried out a fraud risk analysis. When risks were identified, EUR looked at how the internal control measures could be used to mitigate them. A probability and impact analysis was then carried out to determine whether any additional internal control measures were necessary. This analysis not only looked at financial risks, but also risks relating to academic and scientific integrity. The Executive Board shared and discussed the findings of the fraud risk analysis with the Supervisory Board.
Apart from reinforcing the risk management within EUR, the audit and review function is a fixed part of EUR’s control system. Carrying out reviews and audits of the preconditions for high-quality teaching and research should enhance the learning capacity of the organisation. An audit and review agenda has been drawn up on the basis of risk management. The audit and review activities are organised in a structural way within the organisation. The audit and review agenda is set by the EB and discussed in the Audit Committee. The audits and reviews will assess and evaluate the way the processes are organised and embedded, and identify the strengths and areas for improvement. External expertise will be employed whenever necessary.
Despite the continuous attention devoted to this matter, EUR is aware that no risk management and control system can fully guarantee the prevention of errors or losses or that its objectives will be realised in full. Furthermore, the system has to be reviewed and evaluated at regular intervals. EUR believes that its current management structure and mechanisms provide sufficient safeguards to ensure that the risks to which it is exposed are recognised and managed.
EUR subscribes to the VSNU Code of Good Governance, the Netherlands Code of Conduct for Scientific Practice, the VSNU Code of Conduct on the Use of Personal Data in Scientific Research, and the Code for Transparency in Animal Testing. In the year under review, the roles played by the Executive Board and the Supervisory Board in internal governance complied with the statutory frameworks provided for under the Higher Education and Research Act (WHOO).
EUR policy is developed collectively on the basis of the EUR-wide strategy. The strategy is formulated through a process of interaction between the Executive Board, the faculty deans, the directors of the support services, and the education and research directors. In this strategy, we all assume collective responsibility for the substantive focus based on our shared EUR interests and the advancement of mutual collaboration with our external partners.
EUR’s interactive management philosophy is expressed in a decentralised governance culture and in the integrated management practice of decentralised managers. Integrated management means that within the prescribed boundaries, an organisational unit is responsible for, and has control over, its own activities, objectives, work processes, staff and resources, which it must report on and account for. Each organisational unit is also responsible for the interfaces with the other organisational units. The Executive Board monitors the overall –integrated – result, and sets the boundaries within which freedom can be exercised. The Executive Board has various governance tools at its disposal for this purpose. In addition to the strategic framework development, the internal control system also includes regulations and procedures aimed at providing a reasonable level of oversight. In this way the major risks of the organisation can be identified and the objectives in the Strategic Plan achieved within the framework of the applicable laws and regulations.
The most important components of internal control are:
- The Strategic Plan 2014-2018, in which the long-term strategic goals and objectives have been formulated, and the translation of such into underlying covenants with the management units. This also applies for the continuation strategy.
- The Administration and Management Regulations, which regulate the powers of the managers appointed by the Executive Board.
- A Digital Security and Privacy Master Plan, in which the major challenges in the field of information management due to the rapid pace of digitisation are translated into activities to enhance both innovation and management.
- EUR’s regulation on alleged malpractice, known as the “whistleblower regulation”.
- The regulation on ancillary activities, which contains rules for the disclosure of potential conflicts of interest for researchers and other staff.
- The Integrity Code, which focuses on three concepts, namely professionalism, teamwork and fair play. Additional administrative measures have been taken to safeguard the scientific integrity of academic staff.
- A budget cycle comprising a reference framework, budget plans and an institutional budget. The Executive Board approves the faculties’ budget plans and those of the other organisational units if they fit in with EUR’s financial framework. These plans form the basis for the institutional budget approved by the Supervisory Board.
- Multi-year cash flow forecasts, based on result forecasts and a multi-year investment agenda; these forecasts are adjusted several times a year in line with the latest financial developments.
- A bottom-up system of bimonthly reporting to the Executive Board on financial and non-financial matters, with a copy sent to the Supervisory Board and the participatory bodies. These reports both look at the progress achieved and provide a year-end forecast.
- A system of periodical bilateral consultation meetings between the Executive Board and the organisational units, as well as periodic governance meetings between the Executive Board and the faculty deans. Structured spending analyses and the adoption of a procurement and tendering calendar to ensure legitimate procurement.
- A Finance Legal Administrative Tax (FLAT) assessment for large and/or long-term projects/ contracts that exceed certain limits (more than € 250K or longer than four years).
- A Treasury Statute that complies with the Investment and Pledge Regulations; liquidity surpluses are mainly deposited with Dutch banks that have at least an A rating, and are spread across several financial institutions wherever possible.
- The annual tiered Letter of Representation, in which managers and deputy managers warrant the completeness and accuracy of information relating to relevant financial management events within their mandate.
- The Audit Committee, which, as a subcommittee of the Supervisory Board, meets four times a year and pays special attention to the university’s financial and economic affairs in the broadest sense, which it reports on to the Supervisory Board.
Significant risks and control measures
The world of higher education is changing rapidly. Both the quality and the reputation of our teaching and research and the solidity of our financial position are crucial to our survival in this increasingly complex environment. EUR’s strategic risk policy focuses closely on the adoption of measures to position EUR as a leading educational and research institution. Achieving this objective demands that various risks be actively addressed and managed. The following are the six most significant strategic risks identified, and the control measures associated with them.
1. Coronacrisis’ effects on EUR
The main emerging risk is the coronavirus pandemic of early 2020. The effects of this crisis on long-term developments at global and national levels are not clear yet, at this time. As a result, it is currently not possible to estimate the impact and consequences to EUR. It should be taken into account that this could potentially have long-term negative effects on EUR.
Given the rapidness and ambiguity of developments surrounding this crisis, it is not possible to quantify it, at this time. EUR does not expect any short-term effects of the crisis on the organisation’s continuity. The cash at bank and in hand is sufficient, given the size of the total turnover’s first cash flow. In the medium term and long term, it is not clear yet what effects the coronacrisis will have on the admission, drop-out and transfer rates of students. This may affect developments concerning government grants and tuition fees. For research, too, this may eventually lead to lower turnover for work for third parties, as a result of delays in research projects. This crisis may also have an impact on our partners’ financial positions.
Risk management effect of coronacrisis
Currently, there is a lot of uncertainty surrounding the impact and duration of the coronavirus pandemic, and its effects on EUR. The most important issue right now, is that all possible measures are taken to protect staff and students, and to limit or mitigate risks as much as possible. It is our aim to secure EUR’s continuity as much as possible. Several measures have been taken to prevent the spread of the virus. Education is provided digitally and all staff members work from home as much as possible. The CTO meets daily, and discusses and decides on necessary measures, and communicates about them. The CTO works in line with the recommendations imposed by RIVM.
2. Future developments in public funding
Government grant is an essential source of income for EUR. The government has linked the allocation of the education budget to each university’s performance. The implementation of the Student Loans (Higher Education) Act has released funding for investment in academic education and research. This funding is linked to quality agreements at institutional level. Institutions have the freedom to work with their partners to draw up their own objectives and indicators within the goals of the Strategic Agenda for Higher Education. Please refer to the ‘HOKA’ section for more information.
In the spring of 2019, the Van Rijn Committee presented its ‘Wissels om’ report. This report contains a large number of recommendations regarding (the funding of) higher education. A number of these have concrete consequences for the EUR. For example, the committee proposes to allocate more budget to science and technology studies. EUR has relatively few of these programs. The budget that is extra allocated to the beta and technology studies comes from the alpha and gamma studies. Studies of which the EUR has relatively many. The minister followed these recommendations. In the implementation she has chosen to moderate the financial effect. Nevertheless, from 2022 onwards, EUR will receive €6.4m less in government grants.
Following the report, an investigation has also been launched into the funding system used for higher education. The outcome of this study is expected to be released at the end of 2020. This may have consequences for EUR’s funding. The subject is therefore monitored closely.
3. Educational quality and a qualityreinforcing culture
Educational accreditation focuses on establishing whether the relevant institutions and programmes comply with the requisite academic qualifications and criteria. Consequently, achieving accreditation is crucial and is an indication that EUR’s qualifications are in order. Quality assurance at EUR is enshrined in decentralised governance based on the principles of innovation, connection and the freedom to take initiative. In 2017, EUR successfully completed the Institutional Quality Assurance Assessment (ITK). The assessors established that the university’s quality assurance system functioned properly, and that a culture of sustainable quality exists within the organisation.
In recent years, EUR has seen a growth in student numbers despite the introduction of the Student Loans (Higher Education) Act. The expectation was that this would lead to a drop in student numbers, but this did not happen in 2017 nor in 2018. The significant investment in quality improvements over the past few years has made EUR a more attractive place to study. EUR is growing in popularity amongst both Dutch and international students. The increase in student numbers could risk an imbalance between achieved growth and the quality of education EUR wants to provide. The key issues are educational quality, the provision of study facilities, and the affordability of smaller class sizes. The organisation has recognised this risk, and will be looking at this development in more detail to identify the possible implications for the new multi-year strategy.
The increase in student numbers also has implications for the staffing levels at EUR. Attracting enough highly-qualified academic and support staff to adequately absorb this growth is a major challenge. Labour shortages are rising and EUR must also compete with international universities, who are often able to offer better primary benefits. To attract new talent, EUR is primarily focusing on providing attractive secondary employment benefits and good research facilities.
4. Technological innovations and cyber crime
At an operational level, the importance of and dependency on information technology continues to rise. Not only are the secondary processes increasingly reliant on computerisation, but so are the primary processes of education and research. Recent developments, such as Online Education, Massive Open Online Courses (MOOCs), and Open Access, have had a major impact on our business model. Various projects have been launched to facilitate digitisation in education. Digitisation also forms the basis for the realisation of the various strategic objectives in the new strategy. The foundation for this will be the Digitisation Master Plan. Late 2019, a start has been made with translating this Master Plan into an Implementation Plan. In 2020, portfolio management plays a predominate role. It is essential that we ensure our IT infrastructure is equipped to support the implementation of the latest technological advances. This entails a high level of information security and data protection.
For the privacy organization, the focus was on target group-oriented instructions for the main tasks, participation in an IT security and privacy programme in the EUR-wide training of new employees, and proactive organisation of processes, involving privacy officers at an early stage, for example in writing teams of European tenders. A new privacy dashboard has been developed that gives faculties and services more control over privacy risks and actions to be taken, supported by their privacy officers. Under the functional supervision of the Chief Privacy Officer (CPO), all privacy officers of the faculties and services work together, knowledge is shared and policy is made and updated. An IT security policy has been drawn up by the CISO and continuous efforts are being made to improve technical security measures and increase security awareness within EUR. Various support services and faculties within EUR are working together on these projects.
5. Scientific Integrity
Confidence in scientific findings depends entirely on the correct observation of rigour in designing and performing scientific research. Everyone involved in teaching and research at EUR bears an individual responsibility for maintaining scientific integrity. In this regard, the general principles of professional conduct must be observed at all times. The core values of professionalism, fair play and teamwork apply to the entire EUR community. A number of principles have been drawn up in the Netherlands, which are endorsed by EUR and which serve as guidelines for the university. Moreover, EUR has taken additional administrative measures for the purpose of safeguarding scientific integrity. We have devised a dilemma game for new researchers and PhD students called Professionalism and Integrity in Research, which forms part of the standard scientific integrity training. A reference check (plagiarism scan) is also carried out on all dissertations.
EUR researchers with questions relating to scientific integrity, or who suspect violations of scientific integrity or other malpractices by an employee of EUR, can contact the confidential adviser for scientific integrity. An integrity committee may be established, if necessary. EUR has also appointed integrity coordinators for each faculty, who meet three times a year to discuss experiences and best practice
Efficient, lawful, and sustainable procurement is one of EUR’s priorities. EUR aims to ensure that its procurement activities are conducted lawfully, and with due observance of the necessary requirements for efficient operational management. We aim to ensure that procurement takes place in accordance with the frameworks agreed with the Ministry of Education, Culture and Science and the mandatory (European) regulations. This has to be carefully balanced with the demands of effective operational management. The scope for this at EUR is determined by the audit tolerance as defined in the Ministry of Education, Culture and Science’s audit protocol.
Legality is still an important focus point within the EUR. There are various instruments that ensure and increase the understanding of the legality of contracts. For example, a procurement plan has been made, and the development of legality during the year has been evaluated a number of times. Besides, discussions have been held within EUR on the importance of complying with procurement regulations. In 2018, a start was made on the implementation of Esize, a Purchase to Pay (P2P) system as a support system for the purchasing function. In 2020, a report can be made, based on this system, to gain even faster insight into the status of the contracts. Due to the greater insight that has emerged in recent years, a larger number of contracts has been identified that have not been put out to tender in accordance with the applicable regulations. Due to a more effective management of legality, this should decrease in the future. However, because contracts have a specific term, it takes time to solve this issue.
7. Real estate costs
Due to the investments in real estate in connection with CiO III, EUR expects Woudestein’s housing costs will vary within a bandwidth from €45m to € 47m per annum until 2026. The agreements about the maximum ratio of housing costs to income will be closely monitored and enforced. Investment decisions will be based on an assessment of the total costs, including maintenance costs, in terms of the implications for structural expenditure. Various “go/no go” decision-making milestones are built into all projects. A governance structure has also been implemented whereby a steering group chaired by a member of the Executive Board monitors operational and financial progress. A revised risk management evaluation for CiO III was carried out in the autumn of 2017 as part of the governance of the CiO programme. Generally speaking, EUR regards the combination of the strained construction market and the high demands of users with respect to sustainability as a cause for concern. EUR’s real estate strategy will be adjusted in 2020 to reflect the spike in student numbers. Besides the expenditure on immovable property, the value of the property is also important. The value of the university’s immovable property depends to a large extent on the way it is utilised in the execution of education and research.
8. Leniency scheme
At the request of the Minister of Education, Culture and Science, the Inspectorate of Education (hereinafter: the Inspectorate) started an investigation into the fees charged by EUR / RSM in mid-2018. The Inspectorate concluded in its March 2019 report that, in the opinion of the Inspectorate, charging additional fees would be contrary to the Higher Education and Research Act. In her letter of 29 March 2019 (with reference number: 752747) to the Parliament, the Minister of Education, Culture and Science indicated that she followed the Inspectorate’s opinion. EUR does not agree with the conclusions of the Inspectorate. Nevertheless, in response to the Minister’s letter, EUR / RSM offered a leniency scheme for current students and recent alumni of the part-time Business Administration master's degree. The leniency scheme was open until 1 January 2020 to (former) students who have signed up for the part-time master Business Administration for the first time from the academic year 2016-2017 onwards. The costs of the leniency scheme amount to €3.7m in 2019.
Special elements 'Transparency Note'
The policy document 'Notitie helderheid' ("Transparency note") aims to convey clarity on the interpretation and practical application of the existing subsidy rules for the subsidy parameters' statistics. In the paragraphs below, accountability is provided for the different themes of the policy document.
No educational programmes have been outsourced to non-subsidized institutions.
2. Investment of public means in private activities
No public means have been used to fund private activities not related to the primary task. EUR allocates funds for several student facilities, including sport activities, but these funds come from other sources than public means.
3. Granting exemptions
EUR does not grant credit exemptions to students, solely for attracting students with the intent to increase the public funds, when there has not been any reasonable effort justifying the exemption (as determined by the Exam Board).
4. Funding of international students
Only students of whom name and address details are known to EUR are counted for the purpose of subsidisation.
5. Tuition fees not self-funded by student and Profile Fund
EUR does not fund students' tuition fees. The Profile Funds' schemes are meant for financial compensation in case of student delays due to personal circumstances, board grants and free waivers. Please refer to Chapter 2 Education > Quality and Student success > Profile Fund and Grants.
6. Students attend degree programmes' modules
It is possible that modules or parts of degree programmes are attended by non-students. This is called contract education. One or more seperate subjects may be attended, with the attendee not enrolling as a student.
7. The student attends another degree programme than the one he is enrolled in.
Students at EUR attend the degree programme they are enrolled in.
8. Funding of students in customised programmes
Concerning initial education, no customised programmes for companies or other organisations exist.
9. Funding of art education
EUR has a Double Degree Programme called RASL (Rotterdam Arts and Sciences Lab), in collaboration with Codarts Rotterdam. Students are enrolled at both insititutions. However, they are funded through Codarts, not EUR.
Report Supervisory authority
The Audit Committee, being a subcommittee within the Supervisory Board (SB), has held four meetings within the reporting year. Please refer to the message from the Supervisory Board, to learn more about the discussed topics. The most important topics that were discussed in the Audit Committee, and thereafter in the SB were:
Annual Report and Accountancy Report 2018
In May 2019, the report and the management letter of the external accountant were discussed. During this meeting, the external accounted, that was appointed by the board, elaborated on the report's content.
Financial progress report
The Audit Committee and the SB were periodically informed in writing, on the complete financial progress within the budget year and on the financial progress of large-scale investment programmes. This is discussed with EB in regular SB meetings.
Framework note 2020 (Erasmus Perspective)
The Framework Note sets out the financial frameworks for the 2020 budget. Based on the allocated budgets in the Framework Note, faculties and support services can draft their budget.
Campus in Development (CiO) III
In 2017, he second phase of CiO was completed and the third phase of CIO started. The Audit Committee discusses the (financial) progress of this program in their semi-annual reports. Furthermore, they have agreed to put the topic of strategic real estate policy on the agenda, apart from CiO II.
General IT control (GITC) was discussed with the Audit Committee in 2018. In line with GDPR compliance, IT security is a top-priority at EUR. The trusted audits on the IT controls are standardized by the Baseline Information Security for Higher Education (BIHO). Within the framework of IT, the organisational embedding of the various IT departments and the mandate of the CIO were also discussed. Furthermore, the incident report is also a top-priority.
In 2019, NVAO paid a site visit to assess the state of affairs regarding the implementation of the Quality Agreements between the Ministry of Education and EUR. The Quality Agreements have been elaborated in plans drawn up jointly by the Executive Board, the faculties and the participation bodies. The Ministry of Education has allocated funds for the implementation.
In 2019, the first risk analysis in 2018 was followed up: Discussions were held with the managers to discuss risk analyses beyond merely financial analyses. This topic is now periodically reflected in the Audit Committee.
The strategic plan Creating Positive Societal Impact 2020 – 2024 was launched in 2019.
In 2019, the Advisory Committee on Higher Education Financing presented its report 'Wissels om' (Changing tracks) to the Minister of Education. The Minister has adopted the reccomendations, which is disadvantageous to EUR. In the multi-year budget, we have accounted for this outcome.
The collaboration with Erasmus MC has been discussed within the Supervisory Board. The periodic meetings with the complete Supervisory Boards. Furthermore, agreements have been made regarding the funding of large-scale renovation projects of Erasmus MC, as described in the document EREAD.
EUR – Erasmus MC – TU Delft
In the reporting year 2019, discussions were initiated between the boards of EUR, Erasmus MC and TU Delft on a far-fetching form of collaboration. It is decided to investigate the feasibility of establishing three convergent insititutes. It is expected that definitive decisions can be made in 2020.