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Thursday, Oct 30, 2014

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Pam Benoit

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Multi-year budget strategy update


On Wednesday, Executive Vice President and Provost Pam Benoit and Vice President for Finance and Administration Stephen Golding sent an e-mail to the OHIO community about the University's budget.

Dear Ohio University Faculty, Staff and Students:

In our Feb. 7 message, we introduced a multi-year budget planning strategy.  In our message today, we will discuss that strategy in more detail referring to two documents on the Executive Vice President and Provost (EVPP) website (link provided below, OAK ID and password required for the documents): 

Nature of the Anticipated Shortfall

We should begin with a brief reminder of the problem that our planning is designed to address.   

  • We are confronted with a possible 10 percent cut to our State Share of Instruction (SSI). 
  • Added to that 10 percent is the loss of federal stimulus funding in the amount of $11,355,107 and the potential loss of the June 2011 lapsed SSI payment of $7,640,709. 
  • We anticipate that the regional campuses and the College of Osteopathic Medicine, both of which have budgets separate from the Athens campus, will see similar SSI, stimulus, and lapsed payment deficits.

For the Athens campus the potential budget shortfall, depending on the variables outlined above, is $20 to $27 million (see, pp. 16-17, "Budget Presentation").  

To avoid underestimating the problem, we have used $27 million in our calculations. 

In addition to the loss in SSI, we are preparing for approximately $5.6 million in combined increases in health care and utilities costs. 

In sum, the shortfall that we are anticipating on the Athens campus is $32.6 million. However, there may be additional items such as increased scholarship assistance to students with financial need that widen the gap further.

It cannot be mentioned often enough that the financial projections listed above are assumptions. We do not have definitive information on any piece of them. Until March 15 when Governor Kasich announces his budget, we will not know if we are on target with what we have projected.

Nature of Our Plan


The plan relies on elements such as centralized procurement, an employee-parking fee, cost sharing for increased health care expenses, and the creation of a smaller payroll that inevitably will change work environments and expectations about effort. 

We put these elements into the plan for two reasons. First, the magnitude of the potential reduction that we are facing can only be met by actions of a commensurate scale. Second, if we can achieve savings through these means we may be able to reduce the number of layoffs. 

Without participation and cooperation from every employee, our plan will fall short. However, we will be successful if we commit ourselves to think institutionally at every turn and acknowledge that over the last few years we have learned lessons about making significant changes in institutional practices and operations. 

There is no escaping the fact that the economic circumstances we face require actions of a profound scope and scale. As a result, in one way or another all of us will have to make changes in workplace expectations and the way in which we go about doing our jobs.

We are dismayed at the prospect of undertaking such significant reductions and will do all that we can to strengthen the commitment of the state to higher education. Nevertheless, we cannot ignore what confronts us. Our ability to educate our students well depends on our capacity to rise to this challenge.

Budget Matrix


Our main approach is to address the budget shortfall via a set of University-wide strategic activities. On page 26 of the "Budget Presentation" document, you will find descriptions of these activities. 

In the categories of revenue generation, cost sharing, non-personnel savings, and personnel savings, particular approaches have been selected and information about their potential has been provided in a set of tables found on pages 2-5 of the "Reduction Plan" document. 

For example, in the grouping of non-personnel actions it is suggested that we "orient purchasing practices to centralized procurement efforts." The University spends $78.9 million annually on goods and services. With universal participation in BobcatBUY, a savings of $7 million could be realized within two years. 

Under the cost-sharing category are two potential approaches. One would involve finding a balanced means of sharing the anticipated growth in health care expenses, and the other could return $400,000 to the general fund, which is now being spent on parking lot maintenance.

Please review the tables in the "Reduction Plan" document. Many of the strategies selected came directly from comments submitted to the budget suggestion website during the AY 2009-2010 budget process, including the Classified Senate proposal that the University make a determination as to whether it could save funding by closing Dec. 26 through 31 each year. 

As work on refining our approach continues, we will meet with planning unit heads to discuss their role in helping the University to meet the targets outlined in the "Reduction Plan" document. 

Strength in Adversity

This week Ohio University will celebrate Founder's Day, which officially recognizes the passage by the Ohio General Assembly on Feb. 18, 1804 of the University's charter-a document that formally united an idea and a place.  By any measure it was an audacious idea. Before there was even a means of providing elementary education, the foundations of an institution of higher education were laid in a territory of a new nation that possessed, at best, a tenuous sovereignty. The founders of the Ohio Company passionately believed that their experiment would falter without a university and so they set one in motion. 

But a university is not a machine that goes by itself. Fortunately, the individuals who guided Ohio University through its first four-score years possessed what Barry Lopez once called "the intelligence to grasp what is happening and the composure not to be intimidated by its complexities."   

In 1843, circumstances looked particularly bleak and calls were made for the closing of the University. The Board of Trustees refused to give up. Instead the University instituted a "strictly economical course of policy" by redistributing duties and seeking new revenue streams to combat "unforeseen circumstances and occurrences [which] have operated unfavorably upon the interests and prosperity of this rising institution." 

While we scarcely find ourselves in the same plight as 1843, we are forced to respond to the effects of "unforeseen circumstances and occurrences." At the heart of our plan to protect the "interests and prosperity" of Ohio University is a 21st century version of a "strictly economical course of policy."

One hundred and sixty eight years ago, Ohio University faced difficult circumstances and emerged as a stronger institution. Working together, we have the ability to do the same.

Sincerely,
 
Pam Benoit
Executive Vice President and Provost
 
Stephen Golding
Vice President for Finance and Administration