University remains healthy as state support continues to fall
ATHENS, Ohio (Dec. 8, 2006) -- Ohio University's chief financial officer gave trustees a close-up look at the institution's financial condition yesterday.
William R. Decatur discussed the audited financial statements for fiscal year 2006 at a meeting of the Board of Trustees Audit, Finance, Facilities and Investment Committee in Worthington, Ohio.
State support fell by $2.3 million last year, marking the sixth straight year of decline. As a result, Ohio University has become more dependent on tuition and fees. Students provided 39 percent of the university's total revenue of $517 million. The state contributed 27 percent through its appropriations for operations, and the rest came from state capital appropriations, auxiliary operations, grants and contracts, private gifts and other sources.
Although it raised tuition and fees by 6 percent last year, the university also increased the amount of aid it provides directly to students, and as a result, net tuition and fee revenue increased just 2.5 percent.
The institution's net worth increased last year, as unrestricted net assets grew nearly 15 percent to $71.8 million as of June 30, 2006.
"This is one of the most important indicators of the financial health," Decatur said. "It represents accumulated revenues in excess of expenditures. Unrestricted net assets provide us with the flexibility to meet emergencies and make strategic investments."
Decatur said that he was concerned, however, that the majority of the $71.8 million is in departmental "carry forward" funds, or balances which planning units have been allowed to accumulate over the years.
"This creates the right incentives, encourages long-term planning and the efficient and effective management of departmental funds. It is helpful to allow departments to build up funds, for example to make large equipment purchases that they would not otherwise be able to do with current year funds.
Decatur said he was surprised to learn of the more than $63 million in carry forward funds on the books. "If all the departments decided to spend these funds in the same year, we might have a hard time paying for it," he told the committee.
After reviewing the financial statements, Decatur provided a brief look ahead at campus master planning.
The Facilities Planning Advisory Committee is developing three "straw person" approaches for the Athens Campus, Decatur said. One would emphasize undergraduate education, another would place more emphasis on graduate education and research, and a third is a hybrid of the first two. These are very preliminary and would only be the starting point for extensive discussion.
Although planners have identified a need for renovations and new construction totaling some $500 million over the next decade, Decatur believes that the most the university can afford is $310 million.
He said these funds would need to come from a combination of sources, including the State of Ohio, private gifts, the university's auxiliary operations and borrowing that could be repaid with student fee revenue. Decatur said that student fees have helped to construct the Ping Recreation Center and the Baker University Center. He emphasized that this funding plan is only a starting point for the board to discuss over the next several months.
Trustees Daniel DeLawder and Robert Kidder attended the meeting, along with Board Secretary Alan Geiger and President Roderick J. McDavis.
The audited financial statements are online at www.finance.ohiou.edu/resource/audit.
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