ATHENS, Ohio (Oct. 18, 2006) -- The Ohio University fiscal year 2007 budget prevented a forecasted deficit and freed up an additional $6.3 million to support the university's Vision OHIO priority initiatives.
This year's total budget is $557.7 million, an increase of $15.2 million or 2.8 percent more than last year. Total expenditures are expected to increase by $6.8 million. The university expects health care costs to rise 7.7 percent and has experienced significant spikes in utilities costs that are expected to continue through fiscal year 2007. The budget includes a 3 percent salary raise pool.
During the budget planning process, total university revenue was projected to grow by nearly 3 percent, mostly as a result of the 6 percent increase in undergraduate tuition and fees. Unrestricted state support was also expected to decrease by $2.5 million or 2 percent during fiscal year 2007.
The budget has $14.4 million in reductions that will erase the projected $9 million gap in funding that the university would have faced this fiscal year. The university is now developing a plan to use the additional resources in several areas that have been identified as top priorities. The three top priorities are investing in undergraduate education, graduate education and research, and faculty development.
Every planning unit identified Tier 1, Tier 2 and Tier 3 reductions as part of the budget planning process. Tier 1 reductions are those that have minimal or no impact on the university's delivery of services and offerings, while Tier 2 reductions are those that will have some level of impact on the university's delivery of services. Tier 3 reductions are cuts that have a direct effect on academic units. Ohio University President Roderick J. McDavis decided to only make Tier 1 and Tier 2 cuts in order to limit negative effects on academic units. Faculty salaries were exempted from the base department reductions and only 14 Group 2 faculty positions were eliminated out of the 121 jobs that were cut as a result of the budget reduction process.
"We wanted to protect our academic mission and preserve the core of what we're here to do -- educate students," said Bill Decatur, vice president for finance and administration. "Through the strategic planning process, we identified academic priorities. Through reallocation we have found a way to invest in those priorities."
The university's voluntary Early Retirement Incentive Program also is playing an important role in this year's budget because it has provided planning units with an additional tool to meet their realignment targets. The ERIP, also known as a buyout, allows Ohio University to purchase one additional year of service credit for eligible administrative and classified employees. Participating employees must be members of the Ohio Public Education Retirement System to retire early and/or retire with a larger retirement benefit than they may have otherwise.
The enrollment period is April 1, 2006 through August 31, 2007. To date nearly 80 of 316 eligible employees have enrolled in the ERIP. The budget assumes that 150 retirees will enroll before the deadline and half of their jobs would be abolished.
After the budget plan was unveiled in June, the university did not achieve its targeted enrollment numbers for continuing and new transfer students this fall. The shortfall led university officials to forecast a $1.9 million loss in tuition revenue this fiscal year.
To offset the projected loss in revenue, the university will use a portion of the additional $2.1 million it received this year when the Ohio Controlling Board voted in June to distribute an additional $30 million to public universities from the State Share of Instruction. About $200,000 of the $2.1 million is designated for regional campuses.
The budget was developed collaboratively with the Budget Planning Council. The mission of the BPC is to help the university establish a long-term strategy for undergraduate and graduate tuition and fees and comprehensive salary and benefits compensation plans for all employee groups. Other groups that were crucial to the budget planning process were budget unit managers, vice presidents and academic leadership.
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