Trustees' committee also hears finance, IT updates
June 5, 2007
By Joe Brennan
Ohio University officials Monday presented a committee of the Board of Trustees with drafts of plans to renovate residence halls, strengthen the university's financial condition and improve information technology.
At a special meeting on the Lancaster Campus, the Audit, Finance, Facilities and Investment Committee reviewed plans to renovate all East Green residence halls over the next decade.
"The university has had no systematic plan for renovation and replacement of housing stock. This has put us at a competitive disadvantage," said Vice President for Finance and Administration Bill Decatur. "Some institutions have constructed new facilities in the 1990s and 2000s that provide much more modern living spaces. Others have been consistently renovating buildings over time."
Savings that result from greater efficiencies and reorganizations within Housing and Dining Services along with increases in room-and-board rates averaging 6 percent per year from 2007-08 through 2011-12 would fund the plan.
"We have held fees down in the past, so this will not hurt our competitive position," Decatur said. "We are working to keep expenses down and do as much renovation as possible without incurring long-term debt."
During the next five years, the university would remodel seven residence halls and two dining halls at a cost of $76 million. This fall's opening of a 350-bed residence hall on South Green will allow the university to renovate one building per year without losing capacity.
The plan targets East Green because its 1940s-era buildings are most in need of renovation, Decatur said. The improvements will modernize student living space and make it easier to establish living and learning communities, in which freshmen who share common interests take classes together and live near one another.
"We are tying our capital strategies and facilities strategies to our academic strategies," said President Roderick J. McDavis.
The plan will be shared with the full Board of Trustees at its June 29 meeting.
Decatur also discussed various measures of financial strength with the trustees. One of the most critical, he said, is the primary reserve ratio, which compares the amount of unallocated reserve funds to the total annual operating expenses.
Ohio University's expendable reserves represented 22.6 percent of its total expenses last year, while a comparison group of 12 other schools averaged 40.3 percent.
This ratio indicates how long the institution could operate using only its expendable reserves. At present levels, Ohio University could operate for about 83 days, while Miami University could operate for 164 days and Kent State University could operate for 231 days.
Calling the institution's fund balances "woefully inadequate," Decatur said he would recommend several strategies to grow expendable net assets over the next decade. These include improving the rate of return on the university's unrestricted investments and placing a greater portion of those earnings in a reserve fund while working to carefully control the growth of expenses.
"We have a weak balance sheet, and we face income statement pressures due to information technology, rising health-care costs and pressures to keep tuition increases down," said Trustee Robert Kidder. "The question is how to move us from this financial position."
The committee also heard from Chief Information Officer Brice Bible, who presented a draft proposal for strengthening the central information technology function. Top priorities include improving computer systems and network infrastructure, strengthening security and disaster recovery capabilities, enhancing customer service and support, and improving academic and administrative applications. The newly formed Information Technology Advisory Council will help guide the process.
"Our systems are not just aging, they are antiquated," Bible said. "We just don't have the staff to address hardware and software configuration needs."
A recent study from the IT research and advisory firm Gartner Group found that Ohio's IT budget and staffing levels are 40 to 60 percent below comparable organizations. Bible said he would ask for a $3 million increase to the annual IT budget in the next fiscal year and an additional $2 million the following year to allow a rapid ramp-up. After five years, the budget will have grown by $8 million. Nearly all of the new money in the next two years would go toward 24 new staff positions, Bible said.
Trustees Kidder, Daniel DeLawder and Lydia Gerthoffer attended the meeting, at which no official action was taken.