µÛÍõ»áËù

Last week, µÛÍõ»áËù leadership convened to discuss the institution’s budget process and answer questions from faculty and staff about revenues, costs and future plans. Vice President for Finance and Administration Deb Shaffer, Interim Executive Vice President and Provost Elizabeth Sayrs and Associate Provost for Academic Budget and Planning John Day each presented, then President M. Duane Nellis joined them to answer questions from attendees.

The three open forum sessions, held on February 26, 27 and March 1, provided faculty and staff an opportunity to learn about the University’s broader financial picture and respective internal budget processes, while asking questions and clearing misconceptions.

The presentation provided an overview of the sources of institutional revenues and expenses, and the underlying factors that are creating flat or declining resources to support institutional activities. Topics in this overview included the following:

State appropriations:

State support of higher education has increased very little over the last 15 years, even as µÛÍõ»áËù has seen significant gains in enrollment. This has led to declining state subsidy per student, and a higher reliance on student tuition to support institutional activities. During a difficult State of µÛÍõ»áËù Budget for FY18-19, in which the majority of state agencies saw reduced funding, higher education was prioritized by receiving a flat funding allocation.

Tuition

The declining number of high school graduates in µÛÍõ»áËù, as well as enrollment numbers that are now normalizing from record highs, have let to reductions in our Athens undergraduate freshmen class enrollments over the last two years. Our total Athens undergraduate enrollments will be declining in future years as the smaller class cohorts progress towards graduation. Additionally, our Regional Campus enrollments have declined as the economy has improved, leading to eight straight years of credit hour declines.  

Our overall tuition revenue is also influenced by tuition caps enforced within the State of µÛÍõ»áËù Budget. FY19 will be the fourth year in a row of a flat tuition cap. Over the last five years, annual tuition increases at µÛÍõ»áËù are both well below the national average of 2.9 percent and well below 6 to 8 percent annual increases at µÛÍõ»áËù from the 1990s into the mid 2000s.

During this same period OHIO has seen significant growth in our e-learning, graduate, and medical enrollments which has helped grow our tuition revenues and provide an avenue to grow our institutional resources.

 Compensation & Benefits

Competitive salaries, wages and benefits are a priority to OHIO, Shaffer said, because it’s how the institution attracts and retains its talented faculty and staff – but with these costs comprising 65-70 percent of the Universities operating budget, we have to carefully consider the impacts of increases as we discuss budget planning. In addition, healthcare costs for the University have been projected to grow seven percent over the next three years, requiring the continued reevaluation of our benefit packages and plan design to limit institutional cost growth and the respective pressures this puts on our academic colleges.

Capital Plan

Shaffer said that the University has made significant investments to address deferred maintenance of our building systems and infrastructure. Debt has strategically been used to address these needs, and the portion of OHIO’s Board-approved operating budget dedicated to supporting our capital plan has increased from 3 to 7 percent over the past six years. According to Shaffer, it would cost approximately $550 million to address today’s deferred maintenance needs at OHIO, with $70 million of deferred maintenance in the budget to be addressed this fiscal year.

After Shaffer’s presentation, Sayrs discussed OHIO’s shared governance and decision-making structure, which provided insight into the kind of budget decisions made centrally versus at the planning unit or department/division level. Different types of decisions are made at each level, and each of these decisions have different impacts on the University budget.

The ongoing tension between investment needs and available resources is a challenge that requires all areas of the University to be a part of the solution, Sayrs said.

To conclude, Day led the discussion regarding the overall budget planning process and how it’s conducted and forecasted at the college/unit level, noting that several rounds of financial reviews that take into account assumptions regarding revenues and expenses are required to arrive at a budget for the next fiscal year.

After the initial fall financial review indicated an imbalance of $23 million, University leadership published revised budget planning assumptions and asked the colleges to develop a hypothetical planning exercise of reducing their budget by 7 percent. Day stressed that this number was part of a hypothetical exercise and that college budget targets have not yet been set.

Day also addressed the misconception that colleges were being asked to cut budgets over a shorter period of time compared to administrative units, which he said was not the case. Administrative units will continue to plan for a 7 percent reduction in funding over the years FY18-FY20.

After an opportunity for faculty and staff attendees to ask questions relating to the budget process and topics addressed in the presentation, President Nellis acknowledged the importance in providing each college and unit the data and information it needs to address its budget challenges. He said that while the current budget situation is not unique to µÛÍõ»áËù, our institution is full of smart people who are committed to working collectively and putting OHIO on the path to an exciting future.

Click here to view the full presentation from the Budget Open Forums.