Hebrew University Delays Fall Semester Over Finance Crunch

The university's debt is expected to continue growing until 2019, making it impossible to balance the budget or properly invest in research and teaching.

Students at Hebrew University in Jerusalem, March 31, 2015.
Olivier Fitoussi

The Hebrew University of Jerusalem has delayed the start of the academic year citing its financial crisis. It said that classes for its student body of 25,000 will begin in mid-November instead of October 30 as scheduled.

“We hope that in the brief time until the academic year begins and in the additional two weeks given for discussions, the proper solutions will be found that will allow regular studies to begin,” the universty administration said.

The university has an actuarial debt of 12.6 billion shekels ($3.3 billion) for employees’ budgetary pensions, funded directly by the university rather than through an outside pension savings plan. The pension obligation is ballooning and Hebrew University is already spending nearly 700 million shekels a year to cover the expense. The debt is expected to continue growing until 2019, making it impossible to balance the budget or properly invest in research and teaching.

Hebrew University has been negotiating unsuccessfully for the past year with the Finance Ministry and the Planning and Budgeting Committee of the Council for Higher Education in Israel, for greater financial assistance from the government, which funds only half of pension costs or 350 million shekels. The government is pressing the university to implement an economic recovery plan to cover the debt.

According to the university, the government pledged back in the early 1980s to fund employee pension payments when it asked the university to maintain the Mount Scopus campus at its own expense.

In July, Hebrew University President Menahem Ben-Sasson said that the school was in such severe economic straits it could not afford a promised 1.5% pay raise to its lecturers.

According to a 2013 report by the Council for Higher Education’s Planning and Budgeting Committee, the university has a cumulative deficit of about 1.3 billion shekels and a negative cash flow of hundreds of millions of shekels a year. The report showed that the university had used money from donor funds earmarked for specific purposes to cover its deficits, and demanded that the practice be stopped. The university’s finances then took a turn for the worse.

The university administration said the treasury and the budgeting committee have proposed that it open the academic year with a six-month deficit budget and have raised the possibility of once again using sustaining funds and research donations to cover ongoing deficits, contrary to the committee’s directives.

In its statement, the university said the delay in the school year was due to the extended negotiations with the government “and the extent of the university’s commitment to participate in bearing the burden of the pension funding deficit. Under these circumstances, there is no way to prepare a realistic budget plan. It should be stressed that without the burden of the budgetary pension, the ongoing financial administration of the university is balanced and allows it to meet the challenges of the competitive local and global environment.”

The university blamed the government for the delay in starting classes.

“We are certain the students, lecturers and researchersagree that the future of the university must not be mortgaged to debts of the past, and thus harming the future resources of all of us,” the university said.

The Council for Higher Education’s budget committee and the Finance Ministry said they “regretted the decision of the Hebrew University administration to postpone the opening of the school year – a decision that hurts the student body. The university administration has been offered a number of alternatives for a long-term resolution of the problem of the ongoing budgetary pension deficit, which could lead the university to economic recovery and growth. An outside consultant was also agreed on, and the university has been given every possibility for a short-term solution that will allow the opening of the academic year.”

They added that they were “open at any time to continue talks with the university administration to solve the problem and allow the school year to open on time.”