Dear Faculty, Staff and Students,

My message today details recent activity at the Statehouse and outlines the next steps of the process to develop the University's fiscal year (FY) 2011 budget.

For the last few months, the state budget picture for this year and the following academic year has been filled with uncertainty. This apprehension was caused by an $851 million shortfall of projected state revenues due to a Supreme Court ruling denying the Governor's authority to introduce video lottery terminals (VLT) at Ohio racetracks without voter approval. While it is anticipated the proposal will appear on the ballot in fall 2010, the State's current biennial budget was built on $851 million in anticipated revenues from VLTs.

Following the Court's ruling, Governor Strickland proposed a plan to close the resulting $851 million budget gap by delaying the implementation of the final year of a five year planned reduction in the Ohio personal income tax. The Governor's plan initially received strong opposition in the Ohio Senate, but after much debate, House Bill 318, a compromise version of the Governor's plan passed the Senate Finance Committee late yesterday, and was subsequently passed in the Ohio Senate and the Ohio House of Representatives late last night.

The passage of this bill is very good news for us. Had our state leaders failed to reach a compromise, Governor Strickland would have been forced to make reductions to elementary and secondary education on January 1, 2010. You might ask why that is important to Ohio University. In short, these cuts would have dropped the State of Ohio below the K-12 funding threshold required for eligibility to receive federal stimulus funds through the American Recovery and Reinvestment Act (ARRA). The State Share of Instruction (SSI) for higher education is supported in the current biennium by these federal stimulus dollars. Without the ARRA funds, the state would have been forced to cut SSI to universities, resulting in a cut of more than $18 million to Ohio University's Athens campus both this year and next year and cuts of more than $3 million to our regional campuses this year and next. These cuts would have forced us to make mid-year expenditure reductions immediately and would have deepened the cuts in SSI next year to $29 million at the Athens campus instead of the $11 million reductions we are already planning for. These would have been the most difficult cuts in the history of our institution.

I share these numbers with you to demonstrate how important it is to all of us that Governor Strickland and the Ohio General Assembly reached a compromise, continuing the momentum to position higher education as a solution to the current economic situation our state and nation face.

So, it seems we have avoided a crisis that would have had a devastating effect on our University. At the same time, we must remember that it is certain that Ohio University will have a reduction of $11 million reduction in State Share of Instruction to the Athens Campus and $1.75 million to our regional campuses in 2010-11. We have known of the upcoming cuts since late summer, and many people at the University have been hard at work for months to thoughtfully plan and prepare.

Your representatives on the University Budget Planning Council (BPC) have submitted to me their recommended budget planning assumptions for Fiscal Year (FY) 2011. Their recommended revenue assumptions include SSI projections, enrollment estimates, and tuition and fee rates. Their recommended expenditure assumptions include Vision OHIO investments in key strategic priorities and strategic salary adjustments.

I am reviewing and evaluating these recommendations and will reach a decision during the 2010 Winter Quarter. My decision process will take into account the implications of the State of Ohio budget situation, the anticipated timeline for the end of federal stimulus funds coming to the state in two years, and the importance of strategically funding priorities that will move Ohio University to higher national prominence. I will share my decisions on the planning assumptions that will guide our budget development process with the entire University community at the same time I provide those decisions to BPC.

I will continue to provide updated information on the state and federal budget situations as developments occur and information becomes available.

In closing, I thank you for all you do for Ohio University. Your dedication and talent are what makes Ohio University a place of distinction. We are blessed to follow in the path of thousands of people who created and sustained this remarkable institution for more than 200 years. They faced daunting challenges and responded by transforming the University time and time again as the world changed around them. Following their lead, we must build on that legacy, continuing to transform Ohio University for a bright future. Working together we will continue to fulfill The Promise of Ohio University for generations to come.

Happy holidays to you and your families.

Cordially,
Roderick J. McDavis
President