By Casey S. Elliott
Stressing the challenges presented by troubled economic times, Senior Vice President for Finance and Administration Bill Decatur said Monday that planning groups are building best- and worst-case scenarios of university finances over the next two years.
In a presentation to Faculty Senate, Decatur noted that Ohio University is addressing concerns on both the revenue and expense side of operations. This year, for example, he said the stock market's poor performance could shave $5 million to $8 million from investment income that already has been budgeted as a central revenue source.
Fiscal 2010 could prove even more challenging, he said. Ohio University could be looking at a deficit of $15 million to $38 million, based on what happens with state aid, enrollment and tuition caps, the stock market and the cost of health care, utilities and compensation.
Concrete answers won't be arrived at any time soon, he said, noting a first draft of the state's two-year budget won't be available until January and the budget likely won't be finalized until summer. But planning now will better prepare the university to act if the need arises, he said.
"It is incumbent upon us to hope for the best and plan for the worst," Decatur said. Deficits of this magnitude, he noted, cannot be addressed by simply distributing reduction targets to all planning units as the university has done in the past.
Decatur's comments echoed a memo sent earlier Monday by members of the executive staff and academic deans, who noted that ripples from the global financial crisis have reached Ohio University.
These financial difficulties are not unique to Ohio University, the memo stated, noting that colleges and universities across the country are taking steps to address similar hardships.
To plan for next year, Decatur said the Budget Planning Council, Office of Budget Planning and Analysis and executive staff and deans are building models around projected changes in the state subsidy. The models include three assumptions of state subsidy: no change (or flat funding) in state subsidy, a reduction of 5 percent and a reduction of 10 percent. All models assume a 6 percent inflationary tuition increase, with 2.4 percent of that going to need-based scholarships.
With no change in the subsidy, flat student enrollment and no raises, Ohio University would face a $15 million deficit next year, Decatur said. The institution would face a $38 million deficit with a 10 percent cut in state funding and a 3 percent increase in compensation.
Questions posed Monday by faculty senators indicated worry over already tight departmental budgets and why a transition to semesters is being pursued.
"Why are we engaging in the quarters to semesters transition during this economic environment?" Senator Douglas Bolon asked Decatur, noting that the Academic Calendar and System Committee's 2007 report indicated the transition should not occur when budgets are tight.
Decatur said the decision to switch to semesters was based on a strong suggestion from the University System of Ohio, which wants all Ohio institutions on the same academic calendar.
"(The transition) would create a seamless transfer of credits between institutions," he said. "It is not mandated, but it is a goal of the University System of Ohio, which, to a large degree, is driving this decision."
Decatur added the actual transition is not slated until 2012, and the economic environment could be different by then.
In response to a question from Senator Glenn Matlack, Decatur said he recognized that many departments and planning units already have cut their budgets considerably in recent years and that it would be increasingly difficult to continue to do so.
A link to a PDF of Decatur's presentation is on the Board of Trustees' Web site in advance of a similar presentation Thursday to the trustees' Resources Committee.
In other news from Monday's senate meeting:
- Faculty Senate tabled a resolution creating the Ohio University Honor Code until February, the next meeting, citing a desire for more student input. Senator Scott Titsworth also introduced three resolutions changing wording in the Faculty Handbook related to academic integrity, which would bring it in line with the proposed Honor Code.
- A motion to rescind the Faculty Senate resolution on collective bargaining was not addressed. Senator Arthur Smith said he would not make the motion because "the issue is too big and too complex to debate and make progress with tonight."