Apr 22, 2011
From staff reports
The Ohio University Board of Trustees focused on ensuring that strategic priorities drive the University’s long-term planning initiatives at meetings yesterday and today.
At Thursday’s Resources Committee meeting, Vice President for Finance and Administration Stephen Golding, Associate Vice President for Finance Mike Angelini and Associate Vice President for Facilities Harry Wyatt walked committee members through a draft Six-Year Capital Improvement Plan and reviewed the results of a debt affordability study.
The capital plan, with input from deans and vice presidents, outlines capital projects that are vital for the University over the next six years. Building and infrastructure needs, including deferred maintenance, are covered in the plan. Also included are the first two phases of the Residential Housing Master Plan, which outlines major upgrades to the University’s housing stock, and replacement of the Lausche central heating plant at an estimated cost of $100 million.
The debt study, conducted by PMF, Inc., concluded that the University could issue between $200 million and $300 million in debt within the next five years without adversely affecting the institution’s debt burden ratio -- a key measure of financial strength -- or its credit rating.
According to Golding, the study provides crucial information at a time when capital funding from the state for this year is uncertain and may diminish in the future. It also illustrates that the University needs to make difficult capital-improvement decisions, or in some cases find alternate funding sources, because the six-year plan indicates a reliance on debt issuance of approximately $377 million.
The board on Friday approved a resolution that authorizes the University to enter into contracts with design consultants to get detailed cost figures for the first two phases of the residential housing project. University officials will examine the full capital plan in the context of the debt study results and bring a revised version to the board in June.
Executive Vice President and Provost Pam Benoit and Golding also updated the Resources Committee on the University’s budgeting process.
Golding shared that the University faces a budget gap of more than $9.6 million. This figure is significantly better than previous estimates, which predicted a gap of between $20 million and $27 million. The improved number is a result of a proposed budget from Gov. John Kasich that was more favorable to higher education than expected coupled with the University’s conservative budgeting practices.
Golding pointed out that all planning units still face considerable challenges in meeting their reduction targets, particularly since these cuts come after eight years of budget reductions. Units are expected to achieve the needed savings through a combination of personnel buyouts, cost shifts to alternative revenue sources, increases in instructional and operational efficiencies, and administrative restructuring.
Benoit stressed that the University’s budget plan does not rely on increases in tuition and fees to bridge the funding gap, but instead is committed to building a sustainable budget in the face of reduced state funding and the transition to a Responsibility Centered Management (RCM) budget model.
Discussion took place about making investments in strategic priorities. Golding and Benoit indicated that if the budget approach presented at the April meeting met with approval then at the June meeting a proposal would be made about the alignment of tuition and fees with strategic needs and affordability. University officials will present the finalized budget for fiscal year 2012 to board members at their June meeting.
Golding and University Controller Julie Allison also provided the trustees with their first look at the University’s new Six-Year Sources and Uses model. The model is built on a number of multi-year assumptions, including both revenues and expenditures, that project the University’s operating performance through FY 2017.
The trustees had requested the development of this model so they could begin to understand the impact of University resource utilization decisions over time and how they might affect bottom line operating performance and future University budgets.
In other business, the Board of Trustees approved: