Cuts again largely spare higher education Officials: Decision reaffirms key role in economic recovery Dec 23, 2008 ByKatie Quaranta
Gov. Ted Strickland's decision to spare core education funding in the third round of state budget reductions this biennium demonstrates his continuing belief that colleges and universities play a key role in Ohio’s economic recovery, state and university officials say.
Strickland announced Friday that the state will address a $640 million general revenue shortfall through a 5.75 percent across-the-board reduction for state agencies, saving about $180 million, and $460 million in Medicaid spending adjustments and cash management strategies. Overall, the state has slashed $1.9 billion of its $52.9 billion budget for the biennium ending June 30, 2009.
As he did in previous rounds of cuts, Strickland exempted core K-12 and higher education funding, health insurance and child care for the poor, state income tax reforms passed by previous legislatures and property tax relief for senior citizens.
The recent cuts protect Ohio University and other higher education institutions by exempting Board of Regents line items for the State Share of Instruction (including State Tuition Replacement), the Ohio College Opportunity Grant, the Ohio Instructional Grant and funds provided in lieu of capital appropriations. State Share of Instruction alone represents 25 percent of the university’s $550 million general fund budget for fiscal 2009.
Several Ohio University programs supported by line items are subject to cuts -- totaling $944,569 -- as a result of Friday’s announcement. The largest reductions affect the university’s College of Osteopathic Medicine, the Voinovich School of Leadership and Public Affairs, and Success Challenge, Access Challenge and Economic Growth/Research Challenge funds. The state reduced these same line items by $845,358 in September.
The Success Challenge program rewards the university for strong graduation rates, and funds support the university’s general program budget. Access Challenge and Economic Growth/Research Challenge funding promote regional campus enrollment and support research that leads to economic development, respectively.
Higher ed is part of the solution
“While we do have some programs that are affected, we are grateful that the governor has again largely spared higher education in these very difficult economic times,” said Rebecca Watts, chief of staff to Ohio University President Roderick J. McDavis. “We are very cognizant of the severity of the economic downturn and its effect on state agencies and the services they provide.
“The fact that Gov. Strickland has held higher education mostly harmless underscores his belief that it is an important part of the solution in strengthening Ohio’s economy,” she added.
Eric Fingerhut, chancellor of the Board of Regents, concurred.
“Never in Ohio’s history has a governor shown the commitment to higher education that we are seeing today,” Fingerhut said in a news release. “The Board of Regents and the University System of Ohio (USO) are more determined than ever to grow our economy.”
In addition to finding more efficient ways of doing business, the USO will focus on workforce development and collaborations with the Ohio Department of Development, Fingerhut said.
Affected programs weigh options
At Ohio University, the College of Osteopathic Medicine (OU-COM) must absorb an additional $311,000 in cuts, which follows a $269,000 reduction in September. In addition to adhering to the university hiring freeze announced this fall, OU-COM Dean Jack Brose said the college has instituted a soft travel freeze and limited memberships in professional organizations.
A budget committee will meet daily through the beginning of January to identify additional fiscal 2009 cuts. Brose does not yet know what will be impacted, but he anticipates the need for some reductions in community health programs offered in the region.
“We have to look at areas that have a minimal impact on our central mission,” he said.
The Voinovich School will sustain nearly $136,000 in cuts following Friday’s news. These result from line-item reductions to the Rural University Projects program, which provides technical and planning assistance for local governments and non-profit organizations; the Appalachian New Economy Partnership, which supports business development in the region; and general Voinovich School funding. The cuts are in addition to $118,000 in reductions sustained in September.
Director Mark Weinberg said it is too early to know exactly how these cuts will affect programming or services. However, the school is investigating possible collaborations with other university departments or regional businesses and a range of cost-saving measures, he said. Weinberg said the school also is looking at how university-wide initiatives, including the hiring freeze and greater use of shared services, will impact the school’s bottom line.
“They’re significant reductions, but we understand that the state is faced with a difficult situation,” Weinberg said.
Belt-tightening must continue
While university officials were generally relieved by Friday’s news, state budget cuts still are possible this fiscal year, particularly if Ohio and other states facing budget shortfalls don’t receive economic assistance from the federal government, said Director of Budget Planning and Analysis Rebecca Vazquez-Skillings.
“I was surprised, to be honest, by the limited impact (the cuts had) on higher education,” she said. “I think it’s an indication of priorities, but I don’t think it’s an indication of what the impact will be on higher education in the next fiscal year.”
In addition to implementing the hiring freeze, the university has given planning units savings targets to meet for the current fiscal year. The targets were designed to help the university cover investment losses of about $8 million and state funding cuts of up to a $5 million. Even if the university does not see such drastic state cuts this year, Vazquez-Skillings said reduction targets would remain as is.
"Six months remain in the current fiscal year, during which time we will continue to monitor both the state’s and the university’s key revenue drivers, particularly enrollment-driven tuition revenues. With two academic quarters remaining in this fiscal year, a reduction in the savings targets would be premature,” she said.
Watts, too, cautioned against any inclination to feel overly relieved by Friday’s news.
“The fact that we were spared in this round doesn’t rule out the possibility that we still could see cuts in fiscal 2009, and the later a cut comes, the more difficult it is to absorb,” she said. “That makes the efforts of units across the university to slow or postpone spending all the more important.”
Examples of such measures include halting or delaying job searches, dropping nonessential travel, postponing equipment purchases and reducing other expenditures, she said.
Groups address options for fiscal 2010
Ohio’s economic outlook for next fiscal year is even more dire, with state budget analysts forecasting a $7.3 billion deficit. To prepare for what that may mean to higher education, the university has undertaken a range of long-term planning efforts.
The Budget Planning Council (BPC) is looking at major expenditure and revenue categories to develop recommendations for the coming biennium. Even before the state announced such a large projected shortfall for 2010, planning units were instructed to plan for three scenarios that anticipate university deficits of $20 million, $30 million and $40 million.
In addition, working groups composed of executive staff members and academic deans are examining functions university-wide for potential savings and revenue generation. Topics range from administrative and academic restructuring -- including how programs are organized into departments and colleges -- to business, finance and human resources processes. Also being examined are any savings that could be realized through efficiencies in facilities’ use; changes to employee and dependent benefits; centralization of such functions as information technology, marketing, communications and event planning; and other measures.
The groups’ recommendations are due to McDavis by the end of January, which will coincide with the release of Strickland's proposed state budget. In a Dec. 12 memo to faculty and staff, the president said the recommendations would be compiled and shared with the university community for feedback before any decisions are made.
To view a copy of the governor's news release, click here.