9 public universities in financial crisis

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After performing the institutional savings forced by the Mexico Secretariat of Public Education (SEP) , nine public universities of the country will face by the end of the year the accrued liability of MXN $16,677 million , which will prevent them from paying payroll and operating , warned the National Association of Universities and Higher Education Institutions (ANUIES) .

The main external cause of the deficit is the insufficient funding and the reduction of special funds that were eliminated from the budget for this year.

The San Nicolás de Hidalgo University of Michoacán , the Benito Juárez Autonomous University of Oaxaca , the Juarez Autonomous University of Tabasco , the autonomous universities of the State of Mexico , Morelos , Nayarit , Sinaloa , Zacatecas , and Chiapas are the ones “experimenting critical financial issues that compromise their operation.”

These nine public institutions of higher education concentrate a payroll of around 60,000 employees and 212,582 students .

These universities are in debt of 7 out of each 10 Mexican pesos given by the government as public subsidy . A structural solution to the problem is needed, warned the association that gathers the 193 biggest and most important universities of our country.

“As in previous years, independently from the plans of financial austerity and rationality , the calculated deficit for the end of 2019 will be reflected in a problem of cash-flow which, if not addressed structurally, will hinder the payment of payroll, benefits, pensions , and retirements , as well as operating expenses .”

This is one of the conclusions the ANUIES reached as part of the document “ Results of the Integral Diagnosis of Nine Public State Universities in Critical Financial Situation ,” which was drafted in June 2019 , and that was presented to the Federation and the SEP in a meeting with the General Board of College Higher Education , a document to which EL UNIVERSAL had access.

In 2018 , the Mexican Ministry of Finance (SHCP) delivered extra resources for MXN $2,309 million so that 8 of the 9 universities, with exception of the one in Chiapas, could face the payment of payroll and bonuses of the last months of 2018.

In exchange for the resource, they committed to performing programs of financial discipline : to optimize their teaching and workers force, to ensure the fulfillment of hourly charges , to suspend new hiring, to freeze vacant posts , and to reduce the fee-paid staff , as well as to reduce the financial burden of the contractual benefits not recognized by the SEP and its system of retirement and pensions.

Nonetheless, according to the analysis of the ANUIES , even after implementing austerity measures , the universities could only achieve savings of 14% of the total operating deficit of the aggregate of these institutions, that is, MXN $722 million .

Bankrupt universities

The impact of the austerity measures was very different for each institution: for two of them, the savings were less than MXN $10 million , with an impact of less than 2% of their debt. Only the State of Mexico could beat 47% of its deficit; Zacatecas and Michoacán reduced it by 19% and 16% , correspondingly, and the other four reduced their debt between 10-15%.

The amount owed by the universities exceeds the projections that were given in April 2018 , which were of MXN $15,000 million , which shows that “the lossmaking situation of the universities is increasing and requires a structural solution.”

“The magnitude of the accumulated surplus is equivalent to 71% of its ordinary public subsidy, of MXN $23,461 million , with a range going from 29% to 190% , says the institution.

There are some institutions of higher education, as the Autonomous of Zacatecas, whose accumulated deficit equals 130% of its federal and local subsidy; while for the autonomous universities of Chiapas and Nayarit, the debt is almost twice of the budget they receive.

The ANUIES found out that the main external cause of the deficit is budgetary shortfall , since the number of students and the infrastructure of institutions increased, but not the federal and local funding; from 2013 to 2018, the special funds delivered to the universities for paying payroll and bonuses were also reduced by 80%, on average.

“In current prices, the resources delivered to the nine universities went from MXN $665 million in 2013 to MXN $169 million in 2018 . This means an actual reduction of 80% . The cancellation of funds for financial clean-up , whose resources were labeled each year for seven of the nine universities in crisis, had repercussions in the worsening of the problem.”

To the shrinking of the budget adds the breach of state governments and internal factors like the staff and the benefits not recognized or that exceed what is authorized by the SEP-SHCP ; pension systems, tax, and social security liabilities.

In view of the scale of the problem, the ANUIES considered necessary “to design strategies for taking care of the deficit in the short term, by the end of 2019 , and in the medium term, 2024 , under the consideration that the financial problem is not limited to these universities and that the courses of action should be directed to the group of public institutions of higher education.”

The agency also issued the suggestion of the restitution of the program U081 Support for the Addressing of Structural Problems of Public State Universities from the second semester of 2019, with an amount of MXN $5,000 million , which was eliminated from the 2019 budget , “so that there is a fund with new operating rules, for the group of universities, that addresses the different causes of the deficit.”