Hong Kong has asked public universities to return some of their reserves in a cost-cutting budget aimed at shrinking the island¡¯s fiscal deficit.?

Paul Chan, Hong Kong¡¯s financial secretary, announced that the government would provide funding of HK$68.1 billion (?6.9 billion) to public universities over the next three years, a cut of 2 per cent against planned spending.

However, the minister stressed in his budget speech, ¡°this funding level is still higher than the?HK$63.2 billion in the last triennium¡±.?

The move is expected to generate around HK$2.8 billion in savings as part of the city¡¯s 2025-26 budget.?

ÁñÁ«ÊÓƵ

In an unusual move, the island¡¯s eight public universities have also been asked to collectively return HK$4 billion from their reserve funds to the government over the next year on a one-off basis. The policy was announced separately to the budget in a statement from the University Grants Commission (UGC).

According to the UGC, Hong Kong¡¯s universities held HK$11.1 billion in reserves as of June 2024, meaning the HK$4 billion return will account for more than one-third of these total funds.?

ÁñÁ«ÊÓƵ

It was unclear how much each university will be expected to contribute.?

¡°Over the past years, the government had allocated abundant resources to propel the vibrant development of our higher education sector, including various new UGC initiatives for universities to step up their roles in nurturing talent and advancing scientific research,¡± said Tim Lui, chair of the UGC.

¡°With such support, we have garnered [an] international reputation for our higher education sector that we take pride in. At this critical juncture, the higher education sector is demonstrating their solidarity with the wider community.¡±

Experts previously told?Times Higher Education?that, as long as they were proportionate,?funding cuts were unlikely to have a significant impact?on Hong Kong¡¯s relatively well-funded higher education sector.

However, the decision to cut into university reserves may draw criticism from university leaders, some of whom previously spoke out against the finance secretary¡¯s comments on the size of university reserves, saying they had been?.

ÁñÁ«ÊÓƵ

Nancy Ip, president of the Hong Kong University of Science and Technology (HKUST), said in a statement that she ¡°understood the economic challenges¡± facing society and would support the government¡¯s strategy.?

¡°As in the past, HKUST will adhere to the principle of fiscal prudence and strive to increase revenue and reduce expenditure without compromising the quality of teaching and research, including promoting cross-regional and cross-institutional research collaborations to secure more research funding at home and abroad, and facilitating income from knowledge transfer.¡±

Xiang Zhang, president of the University of Hong Kong, said the institution ¡°will persist in managing the finances prudently and strategically, further bolstering the university¡¯s international standing amidst challenging times¡±.

ÁñÁ«ÊÓƵ

Both leaders were yet to comment directly on the reserves policy.?

The government also said it will set aside resources to support the development of a?new medical school. A committee has already been set up to determine which of Hong Kong universities will be granted permission to spearhead the new institution, with three, including HKUST, currently in the running.

A new round of the Research Matching Grant Scheme will also be launched, with a total fund of HK$1.5 billion.?

Responding to the budget, Victor Kwok, deputy research director of the Our Hong Kong Foundation, said the government should ¡°consider how to help universities bring their research into the market and align with market demands¡±.

ÁñÁ«ÊÓƵ

¡°In the long run, this would enable university research not to rely solely on government funding but also establish a more sustainable funding model,¡± he said.?

helen.packer@timeshighereducation.com