University plunges into €11m deficit, as payroll skyrockets

The University of Malta is facing a deepening financial crisis, recording a massive €11.17 million deficit in its latest financial report as payroll costs have skyrocketed.

Its unpublished 2023 audited accounts, the latest available data on its finances, a copy of which has been seen by Times of Malta, reveals a precarious situation, with current liabilities exceeding assets by nearly €19 million.

Even worse, independent auditors highlighted a “material uncertainty” regarding the university’s ability to continue operating if its financial position does not improve.

The institution has been facing financial struggles for years but it appears it dipped deeper into trouble in 2023. By comparison, it had recorded a deficit of €5.1 million the year before (2022) and just a €620,000 deficit the previous year. It even posted an accumulated surplus of €2.3 million in 2021.

The report shows that, although total income in 2023 saw a marginal increase of €1.8 million, this was completely overwhelmed by an €8.7 million surge in expenditure. The crisis was fuelled by a “marked decrease” in the government’s budgetary allocation halfway through the year, just as a new collective agreement for academic staff and COLA adjustments pushed the university’s wage bill up by €4.4 million.

While the university managed to substantially raise revenue from student fees by targeting non-EU students, the 2023 increase in total income was insufficient to cover rising costs. The financial squeeze is also impacting critical capital projects, including a new sports complex on the main campus, the refurbishment of the Junior College and the completion of the Gozo Campus.

The report says all “have fallen behind” schedule due to a lack of funding.

Independent auditors from RSM Malta issued a “material uncertainty” warning in the 2023 report, questioning the university’s ability to continue operating as a going concern.

While previous audits flagged concerns over the institution’s sustainability, warnings escalated in the 2023 report.

The auditors said prevailing conditions “indicate the existence of a material uncertainty that may cast significant doubt” on the university and the group’s future.

Butting heads

The university authorities and the government have frequently been at odds over the institution’s finances in recent years.

Rector Alfred Vella had warned in 2022 that a planned €1.1 million budget cut would freeze recruitment; however, official figures show the cuts never materialised.

In a blunt critique at a Times of Malta event in late 2024, Finance Minister Clyde Caruana dismissed the university’s financial approach, insisting the institution must “pull up their socks”, “roll up their sleeves” and start generating its own income.

Under the Education Act, the university is an autonomous body rather than a standard government department, a distinction that forces it to operate a hybrid financial model.

While the government provides a subvention for core operations, this funding is often insufficient to cover the institution’s growing payroll or its ambitious capital projects.

Liabilities exceed assets by nearly €19 million

By generating its own income, the university creates a vital fiscal buffer that protects academic research and student services and allows it to hire specialised staff and invest in infrastructure that the taxpayer-funded budget does not cover.

But costs are only growing. The 2023 report shows that, despite the fiscal shortfall, the university has continued to expand its staff and student body. Approximately 12,500 students are now enrolled and 2,267 people are employed, with over 100 additional research support officers recruited temporarily to handle externally funded projects.

The academics’ union UMASA is currently negotiating a new pay package with the government and the university that would further bump up payroll costs. Times of Malta reported last month that the union had initially demanded a yearly pay packet of €130,000 for full professors.

Questions have been sent to the university.