As part of three budget summits held Feb 18-19, Senior Vice President for Finance and Administration Bill Decatur laid out fiscal challenges Ohio University will face in the next fiscal year -- and the strategies that officials are developing to address them.
He shared a best-case scenario, based on the funding levels put forward in Gov. Ted Strickland's budget, in which the university still would face a $15.5 million deficit. However, that number could grow depending on how lower-than-expected funding from the federal stimulus package influences state funding for higher education.
Director of Benefits Greg Fialko also outlined three possible health care scenarios that could save the university between $1 million and $5 million. The Budget Planning Council already has endorsed the $1 million scenario, and members currently are weighing the $3 million and $5 million reduction plans.
To view Decatur's and Fialko's presentations, click here.
Following is a selection of questions and answers that arose during the summits.
Would a salary freeze in the upcoming year affect pay raises associated with promotions, for example, if someone were promoted from assistant to associate professor?
No. All promotions will be funded in the fiscal 2010 budget.
Are the Early Retirement Incentive Programs off the table?
An ERIP for employees in the Ohio Public Employees Retirement System is mandatory under state law if 50 or more employees are dismissed, but otherwise optional. The university will institute the incentive plan in the event it becomes mandatory. Other possible incentive plans outlined at the Jan. 23 Board of Trustees meeting, including an ERIP for those enrolled in the alternative retirement plan and a voluntary separation incentive program, are no longer being considered because of upfront costs associated with those programs.
Is the hiring freeze still in effect?
Yes. The hiring freeze was put in place in September to help with the large budget cuts we were anticipating and that will occur for fiscal 2010 -- many of the resulting vacant positions are ripe for elimination and won't result in a layoff.
Have options for unpaid furloughs, three-quarter time positions or four-day workweeks been considered to address budget issues?
Furloughs might be one option to help address next year's budget. It is a short-term, temporary fix and a shared sacrifice across the university. There is no universal three-quarter time or four-day workweek policy at the university, however, individual units may consider this option.
What timeframe are you working under in regard to announcement of any layoffs?
On Feb. 23, deans and vice presidents work groups will present their cost saving estimates, and the Budget Planning Council will meet to review those and health care benefits options. These cost savings estimates will be applied toward the projected budget gap of $15.5 million. At the end of February, we will have individual planning unit budget reduction targets to further close the budget gap as well. If a recommendation comes forward from BPC to change health care benefits, that will have to go to Faculty Senate for its approval, which would be in March. Announcements of layoffs could begin by mid-March.
Do you have an estimate of the number of layoffs for classified and administrative employees?
The average salary and benefits per employee is $65,000. Once the ultimate reduction targets are known, after efficiency and health care savings are factored in, the number of impacted positions can be estimated. It is hoped that vacancies held from the hiring freeze will reduce layoff numbers
Is the university planning to contract out the work of Facilities Management?
No. Facilities Management was hit hard with budget cuts, but changes here likely will affect more administrative functions.
Are there going to be salary cuts?
We are not discussing salary cuts at this time.
How far in advance is capital planning done?
The university took a 10-year capital plan to the board at its June 2007 meeting. It will be updated every two years and includes auxiliary projects. The residence hall renovations have only resulted in four renovations to date and budget constraints could slow that further. Public/private partnerships may be the only way to accelerate these projects.
How will cost shifting to other departments be controlled in a budget-reduction environment?
A fee committee is being formed to inventory all intra-university charges and control and oversee increases. The philosophy of the leadership is that units can't solve their budget problems by charging more for their services to their internal customers.
What are we doing to generate revenue?
We are looking at dual-degree credit programs, partnerships with other schools and outreach efforts. Also, we are introducing a new four-year nursing program that will bring in students, and we anticipate increased growth in enrollment on the regional campuses.
What is the current state of fundraising?
Fundraising at the university is at a record high. The target goal this year is $20 million, our most ambitious goal outside of a capital campaign period. So far, we have received $16 million of that target.
Is Ohio University still committed to the switch from quarters to semesters?
Yes. Executive Vice President and Provost Kathy Krendl explained that all of the public universities in the state currently on quarters -- Ohio University, Ohio State University, University of Cincinnati and Wright State University -- are in the process of transitioning to semesters. The decision was based on guidance from the state level that strongly recommends moving toward a shared calendar across Ohio so that students can more easily transfer from one University System of Ohio institution to another. Costs associated with the transition will come from one-time funds, not from the base budget.
Will Intercollegiate Athletics be held harmless from budget cuts?
No. The ICA budget will be balanced in the next fiscal year. To do so, several strategies are being pursued, including revenue enhancements from sources such as private fundraising and the utilization of shared services in areas such as marketing and communications, development and budgeting. All initiatives will focus on reducing overhead and administrative costs while maintaining the department's core athletic mission and commitment to student athletes. Director of Athletics Jim Schaus has put together a five-year plan that addresses long-term financial stability.
Will the university offer scholarships to new students in the fall?
Yes. Scholarships supported by Ohio University's general fund, which make up nearly two-thirds of all scholarships awarded by Ohio University, will not be reduced.
Scholarships for new students funded by the university endowment likely will be reduced because the value of the endowment has dropped nearly 25 percent since the beginning of July -- a trend many other universities nationwide are experiencing. As a result, more than half of the university's endowed accounts are below their original values. That fact will greatly limit the amount of money available to fund endowment-based scholarships.
Nevertheless, the university is committed to fully funding all multi-year scholarships that have been awarded to current students.
While the governor's budget proposal called for continuing the tuition freeze, will the cost of student housing increase next year?
Housing is not subject to the tuition freeze, however the university is concerned about affordability. There will be a minimal increase to cover higher costs, but it will be less than the 6 percent increase this year. The housing budget also includes between $5 million to $7 million a year for minor renovations such as improving bathrooms, fixing HVAC units or replacing a roof.