In response to a report alleging that CityU has misused public funding, published in the Oriental Daily News on 29 April, the University released a statement refuting the allegation that CityU has a deficit of $220 million as a result of overspending. The major points of the statement are:

1.      CityU is in a sound and healthy financial position, with an accumulated reserve of over $700 million rather than a deficit of $220 million, as reported. Funding for post-secondary institutions is allocated by the University Grants Committee on a triennial basis, usually with a higher amount in the first year and less in the remaining two years. The deficit of $220 million in 2001 represents only an accounting entry in one particular year of the triennium. A consolidated triennial accounting report will properly show that CityU does not have a deficit but an accumulated reserve of $747 million, as at the end of 30 June 2001 .

2.      Expenses for the purpose of quality education only. Cost for academic matters and academic support services increased by $325 million, which was mainly used for the enhancement of learning, staff development and equipment. The increased expense for campus maintenance and renovation was primarily a result of prolonged usage due to the current shortfall of space (35,400 square metres, 27% less than the standard set by the University Grants Committee).

3.      The Voluntary Retirement Scheme is designed in the best interests of CityU and its staff. To be fair and impartial, all CityU employees, regardless of their age, can apply for the scheme. However, the scheme specifies that applicants reaching retirement age will not receive payment in excess of the amount due upon their normal retirement age.

4.      Appointment awarded to the most appropriate candidate only. Mr David Smith, former Associate Dean of the Law School of Harvard University, has solid experience in university administration. In the past three years, he has made a significant contribution to the smooth running of CityU's School of Law. He is therefore an appropriate appointee to the interim post of Pro-Director of the School of Creative Media. Recruitment for the permanent position of Director of the School of Creative Media is currently underway.