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Karachi university fails Accounting 101 despite billions from students

An indefinite boycott began Friday over unpaid teacher salaries
Updated 03 Dec, 2022 12:32pm
<p>Nearly half of revenue for Karachi University comes from students Artwork Obair Khan/Aaj Digital</p>

Nearly half of revenue for Karachi University comes from students Artwork Obair Khan/Aaj Digital

Story highlights

  • Out of Rs8 billion in income, only Rs2.5 billion goes to education, including teacher salaries
  • Money is being spent without budget approvals for the last three years
  • With rising non-salary expenses, the future looks bleak

There will be no classes for 45,000 students at the University of Karachi say teachers until they are paid, bringing life to one of Pakistan’s biggest universities to a grinding halt.

Around 1,000 teachers — including 650 permanent faculty and 400 visiting teachers — started the boycott on Friday to protest for their salaries. They were joined by over 2,000 non-teaching staff facing the same predicament. A union leader said that the boycott will continue until salaries land in their bank accounts, and this may take several days.

The University of Karachi, which generates Rs8 billion in revenue yearly, has not paid Rs350 million in monthly salaries, which includes a mere Rs150 million for teachers. But this is not the only failure that has angered the teachers. The university has also run up a Rs100 million backlog on payments to teachers for the evening program over the past one and a half years.

Part of the problem is linked to the economic crunch faced by the federal and provincial governments. The crisis has been exacerbated by a Sindh government delay in transferring grant money as well.

But prior to this crisis the university’s financial director enjoyed three years of freedom. It was only from 2020 onwards that the downward spiral ensued. Crucially, its Financial and Planning Committee last met two years ago and never since. And thus, the university’s budget has not been approved since. What is worse, the at least three budgets have not even made it to the the university senate, its top decision-making body, say representatives of teaching and non-teaching employees.

Was it a lack of oversight that precipitated the financial woes for teachers and non-teaching workers? Only auditors could give a verdict, but this Aaj News report examines how and where the money is being spent. We ask the question that many of the teachers and students at the university asked us: Does it financially prioritize education or not?

How long may the boycott last?

Students are asking a basic question: How long will the teachers’ strike last?

Karachi university teachers and staff observed a black day on Thursday and announced that they will start a boycott of academic activities Friday.

Their union, the Karachi University Teachers Society (KUTS), is leading the protest. Its secretary Faizanul Hassan Naqvi told Aaj News that the newly elected KUTS body did not want to see academic activities disrupted but the decision had to be taken because salaries were delayed in November too.

Artwork Obair Khan/Aaj Digital
Artwork Obair Khan/Aaj Digital

He said mismanagement had already interrupted academic and research work. For example, half of the university did not have a gas supply after a line ruptured. “You cannot do the lab training with students,” he said.

The deadlock over salaries continued as of Friday evening

Naqvi said the boycott would continue until the salaries were paid. “Even if the university received a cheque from the government today, it would take until December 6 or 7 for the salaries to land in the bank accounts of teachers,” he said.

The KUTS secretary said the crisis was the result of the ill-conceived notion that money given to the university was an expenditure incurred by the government. “You need to understand that this is not a mere kharcha (cost),” he said.

Naqvi and many others at the university said it authorities had failed to prioritize academics, the primary function of a university.

How much money does KU get annually

Karachi university has three primary sources of income: grants from the federal government via the Higher the Education Commission of Pakistan, the Sindh government grant, and the money coming from students.

Documents seen by Aaj News indicate that KU estimated it will get Rs8.4 billion from these sources in the ongoing fiscal year 2022-23.

The grants from the government are paid every three months. The Sindh government installment never arrived this month and so the university could not pay salaries. It should never have been living by the skin of its teeth, at the mercy of each grant because KU makes at least Rs3.7 billion — nearly half of its income — directly from students. (This is Rs3.2 billion collected in tuition fees, other fees, and hostel charges. The remaining income from students includes fees collected from external or private candidates and affiliated colleges.)

Only a fraction of total income goes to teacher salaries. Artwork Obair Khan/Aaj Digital
Only a fraction of total income goes to teacher salaries. Artwork Obair Khan/Aaj Digital

Unlike with federal and provincial budgets, a university budget cannot be run on a deficit or surplus. Universities need to balance their earnings and expenses. KU’s budget document shows expenses worth Rs8.4 billion, which matches its revenue estimates. But it has received far less money than what it estimated and it spends most of what it receives on areas not directly related to education.

The financial dilemma at KU begins when it wrongly estimated how much money it would get and how much it would need to spend.

This financial year 2022-23, KU thought it would get Rs3.14 billion in grants from Islamabad. But the HEC approved only Rs1.899 billion in total annual grants, a July 2022 letter says. This includes Rs88 million for need-based scholarships, which students claim they are not being paid.

So, from the federal government, the university gets Rs1.14 billion less than what it expected to get originally.

Then the Sindh government grant is Rs1.42 billion but it will be paying only Rs1.4 billion. Another gap emerges.

How much is spent directly on education?

The University of Karachi spends only one-fourth of its revenue, or Rs2.5 billion, directly on education. Only a small proportion of around Rs540 million will be paid for research and library this year out of over Rs4 billion. This includes money placed at the disposal of deans to use for search activities.

KU is paying teachers Rs1.809 billion. The salaries for non-teaching staff comes to Rs1.84 billion.

KU’s biggest expense is Rs4.079 billion for utility bills, legal fees, consultancy fees, stationery, computers, publications, repairs. Pensions comes to Rs1.5 billion from this too.

The largest chunk of money goes to non-salary expenses such as a hefty electricity bill. Artwork Obair Khan/Aaj Digital
The largest chunk of money goes to non-salary expenses such as a hefty electricity bill. Artwork Obair Khan/Aaj Digital

For example, KU estimates that it will be paying Rs350 million in electricity bills for the year or Rs29 million a month.

Sources told us that during the Covid-19 lockdown the average electricity bill was Rs25 million a month and when classes resumed after lockdown, the bill rose to Rs35 million. You can infer from this that electricity worth around Rs10 million a month was being used at buildings for academics. The remaining Rs25 million was paid for electricity at residential buildings on campus.

While the university has allocated Rs29 million for electricity, it received a Rs60 million electricity bill in November because the tariff went up.

The University of Karachi spends only one-fourth of its revenue, or Rs2.5 billion, directly on education

Careful planning and stringent control on spending – especially non-salary expenses – may improve the university’s financial health.

Who is responsible for financial decisions?

One of the biggest problems that everyone touched upon was the lack of oversight.

The Director Finance (DF) is responsible for the financial affairs of Karachi university and if you go by the account of KUTS Secretary Faizanul Hassan Naqvi, the vice chancellor has told teachers that the DF has autonomy under the rules.

But the university code lays down a mechanism for financial control and oversight.

The current Director of Finance Tariq Kaleem joined in October 2019, his LinkedIn profile says. He held the same position from 2015 to 2017 as well.

At least two representatives of the non-teaching staff Hassaan Auj and Iftikhar Ahmed and Naqvi from KUTS said Kaleem has not convened the Finance and Planning Committee budget meeting in three years.

The last meeting of FPC, the primary body for financial oversight, was held in September 2020

The committee’s job is oversee finances and advise on planning, development, finance, investment, and accounts. The last meeting of FPC was held in September 2020. The DF never presented the budget to either the committee, the Syndicate or the senate since 2020, says Naqvi.

Iftikhar Ahmed, who is the president of Insaf Passand Group, claims that the DF was responsible for securing funds and should campaign for the transfer of grant money to university accounts. “The VC cannot carry begging bowl to everywhere,” he said.

Tariq Kaleem has not responded to questions. This story will be updated if and when he does.

Bleak future

While allocation directly related to education forms only one-fourth of the total budget and the university already faces a financial crunch, the future holds no promises. It may be bleaker.

Around 300 employees will retire in the next two years

Around 300 employees are expected to retire in the next couple of years. This will increase the pension bill from Rs1.5 billion to Rs2 billion. The university was supposed to set up an endowment fund, but no progress has been reported on that front.

With the recent hike in electricity tariff, you can expect the electricity bill to hover around Rs50 million a month. If the situation remains unchanged, the annual electricity expense of Rs700 million will outrun the Rs350 million allocation.

The cost per student has already been estimated at Rs179,000 per annum, but almost of half of it (Rs89,000) goes to the so-called ‘non-salary’ expenses.

Rs179,000 is the cost per student

With federal and provincial governments in short supply of cash, one cannot expect funding to increase. The University of Karachi is home to youth from middle-income families. An increase in fees may prove devastating for students from families already approaching the poverty line.

Not paying the teachers is not a solution. The evening program has run into problems already. KUTS Secretary Naqvi says after the university developed a backlog of Rs100 million over one and a half years, many permanent teachers have stopped taking classes for the evening program.

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