Photo: Guido van Nispen

Over the past few weeks, the University of Amsterdam has faced the protests of many students, teachers and staff members. Their core demand is a more democratic university. The protesters are dissatisfied with the current executive board (CvB) of the university which, as they argue, makes decisions about study programs and facilities based on financial considerations and takes too little account of the academic consequences. Examples include the reorganisation at the humanities faculty, where several so-called “small languages” are to be combined in a broad bachelor program, and the real estate strategy of the UvA. All will agree with the notion that the university’s primary goal should be to deliver the highest possible quality of education and research. The broad discussion within the university therefore raises this pressing question: Does the financialisation of the university contradict with these academic goals?

The process of financialisation

In their recent paper, Engelen, Fernandez & Hendrikse (2014) provide an extensive overview of the changes in the political landscape and within the university that have led to the current situation. We will start with their analysis. The story begins in 1995, when the ownership of the real estate assets was transferred from the government to the universities. For the UvA, this was substantial. Many of the buildings owned by the UvA are located in the centre of Amsterdam; this means high asset values, but also high maintenance costs. For this reason, real estate was suddenly not just a secondary consideration to the main intention of facilitating education and research. Rather, it became a core part of the daily management of the university. The UvA therefore developed a strategy around 4 locations: Binnengasthuis, Roeterseiland, Science Park and the AMC. Other locations, such as the Bungehuis or the P.C. Hoofthuis, were not part of those plans. This explains the recent sale of the Bungehuis, which will become Soho House Amsterdam.

“Finance runs the show at the University of Amsterdam” – Engelen et al. (2014)

Engelen et al. argue that the property shift led to a stronger involvement with financial products, which is not without risk. As the UvA’s interest rate swaps are to expire, the university could face serious losses in the long term. The transfer of real estate to the university had consequences for the organisation of the UvA too. In order to become more aware of the financial flows, the UvA decided to introduce accounting metrics. Funds were to be allocated based on KPIs (key performance indicators), often focused on output of, for instance, student numbers. The number of faculties was reduced to seven, decision-making power was centralised at the board level and both the university and faculties were controlled by professional managers. The increased complexity of the university’s financial obligations also called for more staff members with a background in real estate, finance and accounting. A point raised by Engelen et al. is that these financial professionals receive salaries more in line with the private sector than with the academic staff, which they see as a strong indicator that finance now “runs the show” at the UvA. (see also Ewald Engelen’s speech in the Maagdenhuis on March 2nd, 2015)

Of course, real estate is not the only financial issue that the university faces. Over the years, the government has imposed several budget cuts on higher education in the Netherlands. Students have noticed this – and have loudly protested – but universities have faced similar difficulties. This serves as further evidence that the many issues currently at play at the University of Amsterdam are part of a much broader national discussion. The characteristics of the UvA real estate portfolio and the risks and financial complexity associated with that make this case unique, even within the Netherlands. But it is in no way the only university or institution in the Netherlands that has been increasingly financialised and has to operate more efficiently.

Focussing on quality

Many of the organisational and strategic changes within the UvA are quite understandable, given the political landscape in the Netherlands. If the UvA is to be responsible for maintaining and planning its real estate, then it is only sensible that the various management layers are adjusted likewise. It is a pure necessity to create a real estate strategy and subsequently, the staff should include people with adequate knowledge and experience in those fields. To obtain this human capital, the compensation should be competitive. It would be unfair to criticise the executive board on this aspect. Consider the alternative, where the UvA would fail to acquire knowledge of the financial aspect. This would lead to less informed financial decisions and a worse negotiation position in talks with banks and real estate companies planning to acquire UvA buildings. Paying for financial expertise can lead to less financial risk and a decrease in (opportunity) costs on financial transactions.

“Many of the small languages programs are financially not sustainable”

That is not to say that the financialisation of the UvA is without risk. Indeed, there are several consequences for what we could describe as the main goals of the university: education and research; or creating and spreading knowledge. Those are currently most visible at the humanities faculty. Many of the small languages programs are – from a financial point of view – simply not sustainable (Folia answered key questions on this issue in a recent article, in Dutch). Other universities in the Netherlands have already decided to combine these programs, or have stopped providing them at all. Even now, when competition within the Netherlands is at an all-time low, the numbers of students applying for these programs are low and not increasing. This is where financialisation and academic values clash. The university should care first and foremost about the quality of the program. The decision on whether to offer it should be based on academic principles: the contribution to knowledge and society, the availability of adequate teachers, etc. It seems wrong to include financial arguments into the equation. Finance should be a facilitator and secondary to academia. Or should it? Is the argument maybe too naive and simplistic?

Of course the university should focus on quality. Of course the university should be aware of its responsibility towards society and towards its (prospective) students. However, the budget is constrained. It would be most unfair to all the other programs and faculties at the university to (heavily) subsidise the humanities and specifically, the small languages. There is no need for the university to be stuck in a nostalgic view of what a broad university has to offer. If quality of education and research is the priority, then the university should allocate the funds to those areas where education and research are most intensive and extensive. Most students at the university will be sympathetic towards the students participating in the Humanities Rally. It is clear that the reorganisation will mean a less in-depth study of the small languages than is currently possible. But at the same time, students of the Humanities faculty should be aware that many of the programs at their faculty are not profitable. As a result, they eat up the budgets of the other programs and faculties, which lowers the quality inside the many other buildings of the UvA besides the Bungehuis.

The UvA implicitly expects the students of the Humanities faculty to be considerate towards the rest of the university. That is in itself a legitimate expectation. But we should add a critical note, that the university is not always that considerate towards their own staff. The increase in temporary contracts for employees has been a topic of discussion for over 10 years. It is a complex debate since there are many legal aspects and negotiations with unions involved. Temporary contracts are not necessarily bad, if they create functions that are by nature temporary; contracts for PhD students for instance. However, the growth in temporary contracts across the entire organisation points to something else. It seems that the UvA tries to have a flexible workforce that can easily be adjusted to changing student numbers or research funding, in order to improve cost efficiency. This comes at the cost of lower job security, which is especially dangerous in combination with the increased use of KPIs. The increased competition between researchers on those metrics creates an incentive for quantity over quality and could create a self-centered environment that is detrimental to academic quality.

The academic corporation

The executive board is blamed for leading the UvA as a corporation, instead of a cultural institute or the temple of knowledge that it is supposed to be. Even though financialisation is not without its downsides, this is still in many cases a wrong representation of the reality. Surely, the plans of the executive board have a strong financial context. We should expect no less from an organization that has a responsibility towards so many students and staff. Note that this article does not even talk about all the students and staff at the HvA (University of Applied Sciences of Amsterdam), for which the executive board is also responsible. The HvA is not deeply involved in the discussion yet, but that may change soon. The large responsibility of the executive board requires a financially sound and fair strategic plan. Only then can stakeholders – including students and staff – be provided with useful information necessary for the democratic university they so desire. Financial accountability is another step towards more transparency in the information flow.

“There are strong academic arguments for many of the plans the executive board has put forward”

We take a critical attitude towards the increased use of temporary contracts of staff members, or indeed various plans that do not involve financialisation per se (think of the 8-8-4 system). However, we should not overlook the strong academic arguments for many of the plans the executive board has put forward. The reorganisation of the Humanities faculty, as discussed, is presented as the destruction of academic values, while it could also serve as a prime example of the allocation of funds to where they create the most quality. A similar case is the increased cooperation – or even merger – of the science faculties of the UvA and the VU. While many UvA students protested against these plans, those protests seemed to originate mainly from the (perceived) cultural differences between the UvA and the VU. Although a cultural fit is undoubtedly important, the intentions of the increased cooperation were the highest possible quality of education and research within the available budget. Using the facilities and resources of both universities, these faculties could offer more to students and staff in terms of diversity, quantity and quality. Both the UvA and the VU are not technical universities, they could easily choose not to invest and develop the science faculties. Instead, the executive board, together with the VU, made plans in line with what you would expect from a serious university: use the available funds as wisely as possible. In that sense, it is a shame that the student council voted against the plans.

The financialisation of the UvA will remain a part of the discussion for some time to come. All the participants would do well to remember that the executive board of the UvA can not rightfully be blamed for the financialisation, nor can they truthfully claim that the board has thrown away their academic principles in the process. Further cost efficiency measures, reorganisations and reallocation of funds will no doubt take place. Some will agree with these changes, some will fight them. All those involved should actively defend their field of study, as the Humanities students are doing now. But at the same time, we require the executive board to make decisions that increase the overall quality for all the students at the UvA/HvA. We all care about small languages, but the university serves a bigger purpose.