Board of Scrutiny
Noon, Thursday 20 May 2004
Present: Stephen Cowley (Acting Secretary), Christopher Forsyth (Chairman), Nicholas Holmes, Elisabeth Leedham-Green, Timothy Milner, Saskia Murk-Jansen, David Phillipson, Jennifer Rigby, Roger Salmon, John Spencer.
1. Apologies. Helen Thompson (on leave).
2. Minutes of the meeting of 6 May 2004. These were approved.
3. Matters Arising.
3.1. Administrative support: Appointment of the Board of Scrutiny Support Officer. It was reported that the three candidates had been interviewed. The appointment has been offered and accepted. A letter of appointment is in draft. Jennifer Rigby and the Chairman were thanked for their efforts.
3.2. Assistant Staff Pension Scheme (ASPS). The last two actuarial valuations of the ASPS (2000 and 2003) were reported. A surplus of £68m in 2000 had turned into a shortfall of £17.6m in 2003 (although the stock market has recovered somewhat since that date). The fund stood at £204m in 2003. The University was to make an extra contribution of £9.5m in 2003/4, as was UCLES. The Board discussed whether the University should have anticipated the shortfall. In its 9th Report the Board agreed to note the failure to spot the problems with the ASPS at the time of the Finance Working Party Report, and to comment on personnel’s handling of the associated staff relations issues.
3.3. Acting Secretary. The Registrary has been informed that Dr Cowley is Acting Secretary.
3.4. Legal Advice. Copies of the legal advice received by the University concerning the distribution of trust capital as income had been received. It was noted that the Amalgamated Fund can declare a dividend that is not related to income received. Up to 2000 income had been under distributed, but that position had been reversed in 2001. The income surplus accumulated prior to 2000/011 will have been fully distributed by the end of 2003/04. Once this has happened, University trust funds with permanent capital will need a change of University Statute in order to continue to spend a dividend in excess of income (e.g. in order to adopt a total return policy). There is the separate issue of whether the University would be wise, even if it is legal, to continue dividends at the current level.
3.5. Draft risk Register. The Secretary apologised for not having acted on the request for the draft risk register.
3.6. RAM and the Financial Model. The Secretary apologised for not having acted on the request for a statement of the relationship between the RAM and the financial model. In a discussion of the RAM it was reported Schools will be expected to submit plans detailing expenditure reductions during Michaelmas 2004. These will be scrutinised by the Planning and Resources Committee to confirm that they are consistent with the best interests of the University as a whole (e.g. as regards student numbers and HEFCE QR income). It was reported that the Allocations Report should be published on Wednesday 26 May.
The University’s finances were discussed. The University clearly needs more income or to spend less. The Finance Working Party identified possible extra sources of income and reductions in expenditure. However, there had been somewhat of a hiatus in implementing the more difficult proposals while the RAM was developed. In addition the problems with the ASPS had made matters worse. At some point the University was going to have to grasp the nettle in order to reduce its deficit. It was noted that, inter alia, the equipment budget had been reduced as an incentive for institutions and departments to use reserves. As an example it was noted that the UCS reserves would last one for year; the question then arose as to whether an increase in its equipment budget had been allowed for in forward planning.
3.7. Audit Committee: HEFCE Documents. The requested documents were tabled. It was decided to discuss them at the next meeting. The Chairman noted that he had yet to receive any documents on the consolidation of accounts.
3.8. Investment policy. Discussion of this item was deferred to item 5.
3.9. HERA. The Director of Personnel had informed the Chairman that the Council and the General Board were considering a draft Report on the introduction of a single salary spine based on HERA. No papers had been forwarded. The Board noted that the introduction of HERA and a single salary spine had been an ongoing project for 2-3 years. Such a long development time might be appropriate for such an important and far-reaching measure; however, there must also be adequate time for consultation with the Regent House. Depending on developments the Board agreed that it might be appropriate to make this point in the 9th Report.
4. Visit to Management Information Services Division (MISD). A delegation from the Board had had a productive meeting with the Director of the MISD, John Milner, on 14 May 2004. Topics discussed included: CUFS, CamSIS, the Shattock proposals for a merger with the UCS, and the purchase of computer equipment. The Board was told that, although it had been necessary to modify initial plans, CamSIS was expected to come in both on budget and on time; the Director was happy with the procedures followed in the procurement process. Plans for the introduction of a new human resources system had been extended over an extra year because of budget limitations, however despite an antiquated system matters were in hand. There was good liaison with the UCS, but there was no perceived need to merge the MISD and the UCS. The Director of MISD was confident that good value for money was being obtained in the purchase of computer equipment.
5. Preparation of the Annual Report.
5.1. Executive summary. It was agreed to include an executive summary at the start of the Report.
5.2. Introduction. It was agreed to shorten the introduction (and not to use the word “watchdog”), to include a reference to what the Wass Report envisaged the Board’s role would be, and to move the section on the remit of the Board to the end of the Report. It was also agreed to include footnotes in sections referring to the relevant paragraphs in the Annual Reports of the Council and General Board and/or the Abstract of Accounts. It was agreed to refer the interested reader to the WWW for details of when and whom we met.
5.3. Financial matters. It was agreed that the start of this section would include an overview of the accounts. It was agreed to note that, in the light of probable cuts, the University should concentrate on the excellent, and should cut the non-excellent. The Board was aware that some in the central bodies are aware that the current annual deficit cannot continue, and that something has to be done. However, because of the hiatus resulting from the introduction of the RAM, while the issues may have been identified (e.g. in the FWP Report), many of the issues do not seem to have been directly addressed.
5.4. Statutory Posts. There was a discussion of which administrative posts should appear in the Statutes. It was agreed that, if not in Statutes, senior posts should appear in Ordinances. The need for a role of Treasurer was discussed. The question arose as to whether the Director of Finance should report to the Registrary, or directly to the VC.
5.5. Investments. There was a discussion of the draft section on investments. It was agreed that detailed quotes should be placed in Annexes. A need to clarify the definition of trust and restricted funds was identified. It was agreed to determine what view the Finance Committee had come to as regards a policy of maximising total return (the Chairman will ask for the relevant papers). A question arose as to the approximately £100 m of University funds that is not in the Amalgamated Fund; this was thought to be principally cash balances.
5.6. Maintenance. The draft was welcomed. A question arose as to why the estates plan was not on the WWW. The Board has discovered that behind the scenes there is strategic thinking and planning going on; however, this is not necessarily evident to the casual observer (or member of the RH). It was agreed that the Board should highlight issues rather than suggest courses of action. However, it was suggested that the recommendations at the end of this section need to be more positive
5.7. Strategy. The point was again made that while there may well be strategic thinking going on in the University, the average member of the RH was unlikely to be aware of this and, unlike at some Universities, the views of the University at large are not being solicited. It was thought that it was unrealistic to expect Chairmen of Schools to be responsible for soliciting the views of RH members in their School or for informing them of strategic thinking.
5.8. RAM. It was again observed (a) that the RAM does not distribute income as earned, and (b) that the top slicing of the College fee in the RAM could lead to distorted incentives. There was a discussion of whether the College fee should be subject to a reduction similar to that sought from the Schools and other Institutions in the University. It was noted that the top slicing of the College fee highlights the role of Colleges. The view was expressed that the cost drivers in the RAM must also be the same cost drivers felt by Colleges, otherwise this might be a recipe for disaster. There was a discussion of student numbers in this context. It was also noted that many Colleges are in deficit, and that undergraduates can often cost Colleges twice what the undergraduates pay in fees, rents, etc. It was suggested that after the new-form statutory accounts of the Colleges have been published for the first time in Michaelmas 2004, it might be appropriate for the Board to publish an interim Report.
5.9. Governance. It was agreed to refer to the re-organisation of the Finance Committee and the PRC. It was agreed to prune the Board’s draft comments on the working of Council. There was a discussion of the need for a General Counsel, or similar. The recent advertisement for a Director of Public Affairs was noted. It was agreed to note the poor information flow between Council and the Regent House, and to welcome greater consultation and open debate (see also 5.7 above). It was noted that renegotiation of the College fee, including the capping of student numbers, was a sensible decision; however it was not clear that the negotiations were handled optimally. It is clear that the University and Colleges should be thinking about their relationship. There was a discussion as to whether the existing formal routes of communication via the Colleges’ Committee and the 3+3 Committee were adequate.
6. Any other business. There was no other business.
7. Date of next meeting. It was agree to hold an extra meeting at noon on 27 May 2004 in Robinson College.