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There was a controversy in recent past about the financial crisis in the universities in Sri Lanka in media. The authorities of universities complained that the treasury is not releasing sufficient funds for the maintenance of universities.

The government authority stated that sufficient fund allocation was released for the universities. In the meantime some students of some universities demonstrated demanding funds for the welfare facilities. This news reveals that there is a financial crisis in the universities. The purpose of this triumph is to find out the real situation related to the financial management of universities and true of these controversial statements in the country.

The universities in this country are government-funded organisations but having some sort of autonomy in administration rather than state department or corporation. In Sri Lanka there are 13 universities and 13 postgraduate and general institutes educating about 60,000 students. The universities' major revenue is from government grant, which make up more than 94% of their income.

The government spends Rs. 5,000 million per year, which is around 0.4% of GDP 15% of the total allocation for the educational sector. The universities expended Rs. 1,420.1 million for capital expenditure and Rs. 4,685.3 million for recurrent expenditure in the year 2001. Out of total recurrent expenditure 62.9% for academic services, 18.05% for administration, 7.55% for welfare services, 7.24% maintenance services and 4.19% for other activities allocated. The total expenditure on university education in the year 2001 is about Rs. 6,105 million.

The universities are basically spending funds for the payment wages and salaries for the staff of the universities, maintenance, obtaining utility services, purchase of equipments, chemicals, books and periodicals and other services. The minimum turnover of a university per year is more than Rs. 300 million.

An efficient financial management is required to maintain such amount of turnover. According to the economics theory since the resources are scared, maximum usage must be taken. The responsibility of financial officers in the university service is to maintain the funds and obtain the maximum usage of resources in efficient manner.

The objectives of the university are providing higher education to the students, acquiring and delivering knowledge among the students and staff, holding examinations and evaluating, finally providing graduates to the country, doing research activities and providing consulting service to the community. To achieve these objectives and goals, some resources are needed and they are transformed into the output process.

The following resources are utilised in a university for teaching and research activities.

1. Physical Resources

2. Human Resources

3. Monetary Resources

1. Physical Resources

The Lecture Halls, Classrooms, Laboratories, Library, Books and Journals, Equipment, Machines, Vehicles and other things can be considered as physical resources. The physical resources are utilised for the teaching and research purposes. The management of the university must plan to use the physical resources in maximum capacity.

The problem is that the most universities do not take maximum usage from the physical resources. Idled and unused resources are available in the universities. A university has few faculties and a faculty has its own lecture halls and classrooms. Other faculty in the same university is lack of sufficient lecture halls, and classrooms but does not provide facilities of classrooms to the needy faculty when they are not used times.

2. Human Resources

The human resource is the valuable asset in a university. Human resources can be classified into two major categories of academic and non-academic staff. The staff of the university is consisted with academic staff, non-academic staff and administrative staff.

Since the university is autonomous body, academic staff has a certain freedom but they have to attend academic and research activities during the working time. There are some allegations that some academics are attending only lectures and not in full time in the university. The university is paying large amount of money for the visiting lecturers.

In addition, university also spends large amount of money for overtime payments for the non-academic staff. The authorities of universities must have taken action maximum utilisation of the human resources. For this purpose the universities must prepare the work norms for the staff.

3. Monetary Resources

The monetary resource is the most important asset in university. Any organisation cannot run without funds. The funds are needed to run the organisation. Similarly the funds are required to run the university effectively but there should be a good financial management to achieve the maximum usage unless there may be wastages and pilferages.

The effective and efficient financial management is required for the universities to achieve the expected goals and good output. The universities of this country are funded by the government grant, which is about 94%. Therefore the universities are bounded by the financial regulations and treasury circulars while these funds are spending.

Problems

The problem is that spending funds in universities are not in a correct manner and not obtaining maximum utilisation. It is found that sometimes, unnecessary or less useful equipment are purchased and kept idle or less utilised. It is revealed that some physical resources are fully not utilised or less used.

The universities are spending millions of rupees for photocopiers, computers, and other official equipment and after two, three years these equipment are removed from the usage. The goods are purchased in higher prices rather than low prices available in the market. The universities also have to spend large amount of funds for servicing these equipment to the companies.

The some universities are spending millions of funds for private cleaning services and private security services. Although there are efficient, and skilled human resource teams in various capacities; the universities are compelled to obtain the service of above private sector. They are not fully utilised or less used.

The payment of wages and salaries to them is wastage. If they are utilised for the above services universities can save unnecessary payments of private companies.

University spending millions of rupees for electricity and water, telephone bills. Sometimes it is found that electric lights, fans, air conditions are switched on unnecessarily but none is compelled to switch off when they are not used.

The wastages and pilferages may happen in obtaining external services. Thus there is much wastage and pilferages can be found and example can be showed in the university system. Not only the management but everybody including staff from top to bottom must be responsible for this situation and no one concerns to prevent this situation.

The financial management is involved with formulation of planning and forecasting, budgeting, controlling and auditing for effective in transforming activities. The duty and responsibility of financial management to follow strict rules and regulations when funds are spending and achieving maximum usages.

The budgeting, forecasting, controlling, costing, analysing are most important features of financial management process. When any services are obtaining for the university service, strictly considered its necessity and must be taken decisions by the relevant authorities. There should be experienced and fluent team of management to utilise the resources for the university administration.

Accountability is a most important term to measure the activities of the university system. All the officers should be responsible for the accountability in administration process. The strict control system is necessary to implement in financial management process to minimise the cost, reduce the wastages and obtain the maximum usage. Auditing is a part of financial adminstration. However they were not appointed even internal auditors for some universities for a long period.

Some universities have already taken steps to restructure their activities and follow the cost cutting process. New policies and plans are prepared to generate revenues for income increasing activities. Some universities are compelled to find income from external sources by introducing and implementing various types of courses for general public. The government authorities influenced the universities to restructure their activities to suit the present environment.

In a certain extent, lack of proper financial management in the university there may be financial crisis due to reducing revenue and cash flowing in the university system. Since the government authorities have taken action to curtail the releasing funds to the universities, the university management has to make some limitations in spending manner.

Then there may be some financial problems due to non-payment for some activities. Therefore the financial discipline is required in fund management process in the university system. It is the duty and responsibility of all concerned in the university system to utilise the resources in maximum capacity to achieve desired goals. Good Corporate Governance is caused to minimise the wastages and piferages, and cost cutting enables to avoid unnecessary payments and make accountability and spend funds effectively for the effective output in the university system.

- K. D. Dumindusena, University of Ruhuna.

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