“Savings through focusing on our core business”
The federal government is threatening to make a two percent cut in its 2024 contribution to the ETH Domain. In this interview, ETH President Jo?l Mesot explains what this means for ETH Zurich and what countermeasures the ETH Executive Board is taking.
Jo?l Mesot, the federal government needs to find savings and is therefore considering a two percent cut in the contribution it makes to the ETH Domain. What exactly does that mean for ETH Zurich?
It was foreseeable that the government would have to rein in its spending, given the current economic situation in the wake of several major crises and in order to comply with debt brake requirements. This only applies to non-committed expenditure (“nicht gebundene Ausgaben”), which only makes up a third of all federal government spending. Funding for the ETH Domain also belongs to this category of expenditure. It therefore goes without saying that ETH Zurich has to face up to its responsibility as well, and play its part in helping to balance the federal budget. Unfortunately, this presents us with several major financial challenges all at once.
In what respect?
Four factors have a negative impact on our financial planning. First, it looks as though we will receive two percent less budget for 2024 budget, equivalent to a shortfall of some 30 million Swiss francs – that is, unless parliament steps in during the autumn to make an adjustment when it comes to approving the budget. Second, no allowances are made for inflation in the institutions of the ETH Domain, unlike funding for the Federal Administration and the cantonal universities. If we add together an inflation of two to three percent and the budget cut, it leaves us with five percent less funding in real terms for 2024 – about 70 million Swiss francs less than originally planned. Such a substantial sum cannot simply be “sweated out” of the budget unnoticed. Third point: for some years now, the contribution we receive from the federal government has not kept pace with our rapidly growing student numbers. And, finally, point four, we have to deal with the consequences of Switzerland’s status as a non-associated third country in Horizon Europe.
“The savings cannot simply be ‘sweated out’ of the budget unnoticed.”Jo?l Mesot
But hand on heart, with a total budget of around 1.8 billion Swiss francs, surely ETH Zurich can find savings of 70 million?
That would certainly be the case if the savings only applied to the coming year. But in 2024 the government will also issue the new ERI Dispatch, which sets the federal education, research and innovation policy for the period 2025 to 2028. And all the signs indicate that we will have to contend with less funding than originally planned in the future as well. Since our financial planning is long term and a large portion of our funding – for new professorships, for example – is committed for many years, we have to respond in good time. Otherwise we risk an operational deficit for several years.
Is it no longer possible to avoid these government cuts?
Although nothing definite has been decided yet, the political process for the 2024 budget and the next ERI Dispatch is heading in this direction. In the run-up to the parliamentary decisions, we will obviously fight to ensure that the savings do not fall exclusively on the shoulders of education and research. The university assemblies of ETH Zurich and EPFL, the joint participatory body of the two universities, have just sent an appeal to the Federal Council calling on it not to make the cuts. Such initiatives help enormously. We need to make it clearer that Switzerland's prosperity is essentially based on its excellent education and research system and that the success of this system is being put at risk with short-term austerity measures. Switzerland gets a six-fold return on every Swiss franc that it invests in ETH Zurich. Where else do taxpayers enjoy such a high rate of return?
“We will fight to ensure that the savings do not fall exclusively on the shoulders of education and research.”Jo?l Mesot
ETH Zurich’s budget planning for next year is currently under way. What does that mean in concrete terms for those in charge of the budget?
We need to prepare for financial cuts. In response, the ETH Executive Board has decided to cut the 2024 budgets of all Executive board domains by five percent compared with 2023, providing a total saving of 40 million Swiss francs. The domains themselves can each take their own measures to reach this target. On top of that, the academic departments will also be asked to further reduce their allocated budgets for 2024 by almost three percent – a saving of 20 million Swiss francs compared to 2023 – in addition to the annual solidarity contribution of 15 million francs decided previously and already budgeted for. Back then, the Executive Board domains also played their part in contributing to the savings. Of course, we fully realise just how challenging and painful this is. At the same time, I am confident these savings will actually make ETH more competitive. Let’s take this as a wake-up call to become more efficient and to focus on our core business: teaching, research and knowledge transfer should emerge from this process even stronger.
Are such big savings possible without cutting staff?
Before taking this decision, we on the Executive Board analysed different scenarios and their consequences. This led us to the conclusion that we should be able to achieve savings of this magnitude by reducing external costs, deferring projects and investments, and not rushing to fill vacant posts immediately. All these measures should be geared towards our strategic focus areas and objectives. There will be individual reductions in services, but no redundancies due to cost-cutting measures. However, we have decided that from now on all appointments to the central administrative units must be reviewed by the responsible Executive Board member before being advertised.
Are other measures planned apart from the budget savings announced for 2024?
Implementing short-term cost savings for 2024 does not resolve all our financial concerns. Depending on how the overall conditions look for government policy for the period 2025 to 2028, for example, there are still several financial challenges we need to address in depth over the long term. To this end we will set up working groups with a broad selection of representatives from the Conference of the Heads of Department and the respective Executive Board domains. The purpose of this work is to improve our efficiency, partly through greater digitalisation, in order to release more funds for our core areas of teaching, research and technology transfer.
“Teaching, research and knowledge transfer should emerge from this process even stronger.”Jo?l Mesot
Savings were the order of the day last year, and now this year too. At the same time, student numbers are growing, along with the number of tasks the university has to take on. What do you plan to do to prevent even more pressure on ETH employees?
We Executive Board members are fully aware that university staff have done a truly excellent job in recent years and have pulled together to meet new challenges, such as the sharp rise in student numbers and the pandemic. I am incredibly grateful for all they have done. That’s why it’s even more painful for me that we are facing additional financial constraints, some of which were impossible to foresee. In the past few years, however, we have made an enormous effort – in the shape of the rETHink project – to improve cooperation within ETH and thus ease some of the pressure on our staff. Digitalisation should also help us achieve more with the same funding. For example, Academic Services, working with the Institute for Operations Research in the Department of Mathematics, have used modern algorithms to optimise room occupancy to the point where we are able to rent one large hall less for the examinations, thereby saving extra effort and money. Such initiatives should set a precedent for our university. Another factor that makes me confident about the future is how extremely successful the ETH Foundation is in attracting donations. No other university in Switzerland has such potential in this area. And our researchers are also world class when it comes to winning third-party funding and grants. That gives us some room for manoeuvre and lets us take the weight off our employees’ shoulders.
Town Hall Meeting on 11 May 20223
At the town hall meeting on 11 May, the Executive Board presented the effects of the cost-cutting plans and the measures taken by ETH Zurich. The Executive Board also answered questions from the audience in a question and answer session. If you missed the Townhall, you can watch it here:
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