Education Secretary announces £40 million for crisis-hit Dundee University
She said the Scottish Government had used a special power to order the Scottish Funding Council (SFC), which usually issues cash independently, to give the award directly to Dundee, due to the 'exceptional circumstances' surrounding the university.
'This is a unique and unprecedented set of circumstances which require a unique and unprecedented response,' she said in a statement to Holyrood.
The minister said the cash would come with conditions and that it would only be released once a sustainable, long-term recovery plan is put in place by the university.
It comes after a scathing report into the university's handling of its financial crisis led to the resignations of three senior members of the institution, including its interim principal.
The report by the SFC found that university bosses, and its governing body, repeatedly failed to identify the crisis and take action, describing problems facing it as 'self-inflicted'.
The Scottish Government had already funded a £22 million bailout of the institution, which is struggling to deal with a £35 million financial black hole.
Speaking to MSPs on Tuesday, Ms Gilruth said she would focus on ensuring the university 'emerges from this crisis stronger than ever'.
She said: 'I can confirm that the Scottish Government will provide funding in principle of up to £40 million over two academic years or three financial years via the Scottish Funding Council to support the University of Dundee.'
The Education Secretary said that while funding decisions on universities are usually a matter for the SFC, the Scottish Government had to directly step in, given the scale of the crisis at Dundee.
She said: 'This is a unique and unprecedented set of circumstances which require a unique and unprecedented response.
'Where there has been the appearance of financial mismanagement at an institution, Scottish ministers are obliged to consider whether it is necessary or expedient to issue a direction to the SFC about the provision of financial support.
'Subject to the public value tests I have set out today, Scottish ministers consider it is both necessary and expedient for a direction to be issued to the SFC under Section 25 of the Further and Higher Education Scotland Act 2005.
'The use of this power is unprecedented and has been made necessary by the exceptional circumstances at the university.'
Ms Gilruth told MSPs the £40 million fund was 'not about rewarding failure'.
She said: 'This is about responding to an unprecedented and unique situation which threatens much of what we hold dear in our university sector.'
She added: 'The Scottish Government is determined to do everything that we can to secure a positive future for Dundee University that must be achieved through delivery of a sustainable long-term recovery plan, which will see public financial support work alongside commercial and private investment to ultimately see reliance on extraordinary public funding ending.'
Miles Briggs, education spokesman for the Scottish Tories, said: 'While the priority must be ensuring Dundee University gets on the road to recovery, it is hard to accept that we should just draw a line under the financial vandalism that went on for far too long.
'Those responsible for that gross mismanagement have rightly fallen on their sword but we must now see SNP ministers robustly scrutinise how the university will bring their finances into a sustainable position going forward.
'Staff and students remain deeply concerned about the precarious position the university finds itself in and will be worried that there appears to be no sign of a Plan B currently.
'There was clearly something rotten with the culture that was allowed to fester within Dundee University and that came from the very top.
'Too many of Scotland's universities are in an unsustainable position currently, yet we are still to see SNP ministers or university bosses address this crisis with the leadership that is required.'
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