King¡¯s College London?has reported a ?154 million deficit in its 2018-19 accounts, as UK universities begin publishing financial results showing the impact of ¡°one-off large accounting charges¡± for institutions in the sector¡¯s biggest pension scheme.

Other institutions to have reported huge deficits this year as a result of Universities Superannuation Scheme liabilities include the University of Leeds (?98 million), the University of Warwick (?75 million), the University of Southampton (?71 million), the University of York (?57 million), the University of Liverpool (?54 million), Newcastle University (?44 million), the University of Hull (?31 million), the University of Salford (?29 million) and the University of Bradford (?22 million).

The University of Cambridge recorded a total comprehensive expense of ?91 million because of its USS charge ¨C but was still able to record a ?117 million surplus overall.

The deficits have arisen because the 2018-19 accounts show the impact of the increased contributions required from institutions in a recovery plan for the USS, following its March 2017 valuation.

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But that plan was superseded by a second recovery plan agreed following the scheme¡¯s March 2018 valuation, finalised too late to be included in the 2018-19 accounts. However, the 2019-20 accounts will?reflect this second recovery plan, which has a much less negative impact on institutional finances ¨C so next year¡¯s financial results are expected to reverse much of the negative?consequences seen this year.

The USS is mainly used by staff in pre-92 universities. The publication of accounts showing large deficits caused by the impact of a USS recovery plan comes in the midst of University and College Union industrial action over the USS and pay.

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The ?154.3 million deficit at King¡¯s appeared to be the largest to emerge yet. A note in the?King¡¯s accounts says:?¡°Given our size, King¡¯s will have one of the largest such provisions in the sector this year. In our 2019-20 accounts we expect to reflect the new collective agreement on the updated 2018 valuation and associated recovery plan agreed after the balance sheet date. At current rates this should lead to a c.?108 million reversal of this year¡¯s charge.¡±

Guidance circulated within the sector by the British Universities Finance Directors Group says that the USS liability will cause ¡°many universities to post exceptionally large deficits for the year¡±.?

It adds: ¡°These large university deficits are not a reflection of the cash or day-to-day spending position of universities, nor do they mean that spending has been significantly higher than income. They are a reflection of accounting for the increase in USS pension liabilities. These liabilities are future commitments to pay down the deficit, not current expenditure.¡±

The BUFDG guidance continues: ¡°Without these one-off large accounting charges the vast majority of universities would report a surplus for the year as well as positive cash inflows from their operating activities.¡±

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BUFDG says that the second recovery plan ¡°will lead to a partial reversal of the increase in the significant deficit figures reported this year, in next year¡¯s 2019-20 financial statements¡±.

One key question will be whether the deficits have any impact on universities¡¯ borrowing prospects. Finance experts in the sector suggested that banks would have been expecting the USS charges, highlighting that they were ¡°non-cash charges¡± that will be reversed in 2019-20.

A UCU spokesman said the USS figures ¡°are so variable depending upon what date is chosen and what methodology [for valuation] is used¡±. He added: ¡°One of the reasons UCU members are currently taking strike over USS is to deliver a better system so we have a more stable methodology going forward which will benefit universities as well as members.¡±

john.morgan@timeshighereducation.com