The Hong Kong Institute of Education 2003-2004 Annual Report

Income - Despite the decrease of $4 million in Government subventions, a 3.1% increase in income to $1,267 million from $1,229 million in 2002/03 was recorded this year and it was mainly attributed to the increase in tuition fee of $32 million, donations of $9 million, and other income of $4 million.

Expenditure - Productivity enhancement initiatives in 2002/03 to rationalise expenditure had almost fully realised in the year 2003/04. Expenditure for the year had decreased by $93 million from $1,172 million in 2002/03 to $1,079 million. About $45 million of the $93 million represented a decrease in staffing expenditure, and about $31 million came from the savings in premises related operating costs.

Donations and Benefactions
Endowment, donations, scholarships, bursaries, and other sponsorships received during the year amounted to $32 million.

Last year, the Government introduced a Matching Grant Scheme to assist the UGC-funded institutions in fund raising and to encourage the emergence of a philanthropic culture in Hong Kong. The Scheme closed on 30 June 2004 and the Institute had successfully sought donations totalling $21 million, which were matched on a dollar-for-dollar from the Matching Grant Scheme.

Self-Financing Activities
Another area of achievement was our self-financing activities, which took one step forward from $69 million to $88 million in the year. The achievement was mainly attributed to the increase of income from the Institute's Continuing Professional Education activities from $44 million to $62 million in the year.

Capital Commitments and Fixed Assets
As reported last year, there was an arbitration between the Institute and its contractor, Aoki Corporation, and an appropriate provision for contingent liabilities was made in the 2002/03 accounts. We are pleased to report that the arbitration was over and a settlement, in favour of the Institute, with Aoki Corporation was reached in July 2004. As a result, the provision for contingent liabilities in relation to the arbitration had been removed.

Investment
Market return in the local money market was extremely low throughout the reporting year, at an average of only 1.4% even for a two-year fixed-rate-time-deposit. Interest and investment income of more than $12 million had been achieved, which represented an average return of 1.5% over the year. In order to enhance yields from its idle cash, the Institute had adopted a more aggressive approach by introducing new risk-controlled investment instruments starting from April 2004.

Expenditure:

-2003/04:$1,079.1 Million

2002/03:$1,172.4 Million


	Instruction and Research

	Library

	Central Computing Facilities

	Other Academic Services

	Management and General

	Premises and Related Expenses

	Student and General Education Services

Superannuation Scheme
As at 30 June 2004, there were 290 participants in The Hong Kong Institute of Education Superannuation Scheme ("Superannuation Scheme"), which had a total net asset value of $210 million. The latest independent actuarial valuation of the Superannuation Scheme was conducted in June 2004 and the Superannuation Scheme was confirmed to be solvent. For more details of the Superannuation Scheme, please refer to its financial statements for year 2003/04.

As at 30 June 2004, there was a total of 1,227 participants in the Mandatory Provident Fund scheme with an approximate total net asset value of $44 million.

Outlook
Change is a continual process. 2004/05 will be another year when the need to secure and optimise the utilisation of financial resources will take centre stage on the non-academic front. A 15% cut in the UGC's recurrent grant for the Institute has been confirmed for the roll-over year 2004/05, resulting largely from the cut in the unit cost for student and the partial withdrawal of front-end loading. We anticipate that there will be further funding cut in the 2005/08 triennium, in parallel with the decreasing number of student places due to demographic changes.

The de-linking from Civil Services salary scales for staff of the Institute is underway and the salary review exercise is being conducted by an external consultancy firm with both internal and external benchmarks. A report will be presented to the Council for consideration in 2004/05.

Income generation activities will be one of the focus in 2004/05. Strategic collaborations with other institutions, a Master of Education, a full-time Bachelor of Education in Early Childhood Education, and various self-funded professional development programmes will be rolled out.

Although we are facing an environment of funding cut, with all the hard work of expenditure control achieved in the last two years, the building up of a comfortable level of reserve, and some cost savings measures in planning, the Institute is well prepared to meet the financial challenges in the coming year and the anticipation of a further but hopefully smaller cut in the 2005/08 triennium.

Anthony WU Ting-yuk
Treasurer
The Council of The Hong Kong Institute of Education
25 November 2004