The University of Cumbria ended the past financial year with a deficit of more than £13 million and expects to incur a large deficit again this year.
Cumbria admitted that its financial performance was "unacceptable" after its 2008-09 accounts showed that its deficit had climbed to 17 per cent of income. The deficit rose from £8.5 million to £13.2 million, on an income of £79 million.
The financial statements, published this month, say: "The board acknowledges that this result is unacceptable". A "turnaround programme" designed to address "deeply structural" financial problems will mean the university "expects to incur a further large deficit in 2009-10", the statements add.
A university spokeswoman confirmed that this further deficit could reach £9 million.
The accounts also reveal that last year the university breached the conditions of an £8.7 million loan with NatWest bank, which stipulated that "net operating cash flow during each financial year shall not be less than total borrowing costs for (that) financial year". The loan has become technically repayable on demand.
Cumbria also spent £985,000 on consultancy fees in connection with planned new headquarters at Caldew Carlisle, which have now been postponed until after 2020.
Other factors identified in the statements as contributing to the university's financial problems include excess staff. Salary costs rose by £5 million last year (9.3 per cent) and now represent 74 per cent of turnover, an unusually high proportion for the sector.
Cumbria also has too many campuses, "too much estate of poor quality with high levels of backlog maintenance", further education courses that are "fundamentally uneconomic" and flawed growth assumptions, the accounts add.
The executive and board are confident that a restructuring programme will see the university restored to financial health in 2010-11, the statements say.
However, the university may see its teaching grant reduced by more than £1 million in 2010-11 as a result of over-recruitment of students this academic year.