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Enrollment, retention fuel OSU budget growth
Increases help university in light of state cuts
COLUMBUS -- Higher-than-expected summer and autumn enrollment provided good news in a difficult budget environment at The Ohio State University, officials reported Thursday (12/6) to the Board of Trustees. Enrollments exceeded last spring’s projections by almost 1 percent, said William J. Shkurti, senior vice president for business and finance.
“It is encouraging to see enrollment increases at a time like this,” Shkurti said. “Our students, who could choose to go anywhere, instead voted with their feet to come here. It shows we’re still able to meet their needs, despite a difficult budget. It also means additional tuition and state support of instruction at a time when we need it most.”
Taking into account summer and autumn quarters, Ohio State enrolled a total of 67,802 students, or 621 (.9 percent) more than projected last May as the Fiscal Year 2002 budget was being prepared. Of those, 47,319 were undergraduates, 16,469 were graduate students and 4,014 were students in the professional schools.
James Mager, associate vice president for enrollment services, noted that part of Ohio State’s increased enrollment relates to retention — the percentage of students returning for their second year has reached a record high of 86 percent. Mager attributed increased enrollment to the confluence of a number of initiatives designed to enhance the quality of the incoming class and provide services that lead to better retention of students once they’re here. He said improved retention relates to the upward trend in the quality of students choosing to attend Ohio State as well as to heightened attention paid to undergraduates, and especially to freshmen and sophomores. Initiatives in academic departments and the Office of Student Affairs range from restructured advising and programming offered in the Younkin Success Center to Welcome Week expansions, increased Honors and Scholars and living-learning opportunities, and programming related to the First Year Experience.
The higher-than-expected enrollment also assists in the short run with the university’s approach to the state’s 6 percent cut to the current fiscal year budget. The now-official enrollment figures indicate that Ohio State received $4.4 million more in state subsidy and tuition than previously expected when the university budget was approved in August. Of that, $2 million in one-time funds will be used to offset the shortfall and $2.4 million will be held centrally pending possible additional state budget cuts.
In all, trustees authorized the university to combine that $2 million with $5 million from the Rainy Day fund, $8.5 million in college and support unit one-time cash reallocations, and $4 million in central cash balance reallocations to adjust the Columbus campus budget. The shortfall in state funding will have to be addressed on a permanent basis for the Fiscal Year 2003 budget.
As part of the first-quarter budget report, Shkurti also noted that the Health System continues to significantly improve its financial status, and last fiscal year demonstrated a $24 million improvement over the previous year. The system is making consistent progress; its current deficit stands at $223,000, compared to $1 million a year ago, Shkurti said. And the Department of Athletics and the Schottenstein Center have reversed their deficits of a year ago and are on target financially, he added.
Shkurti also presented an annual report to trustees on internal units recording operating debts owed to the university. Currently, nine units report deficits totaling $17 million, which is less than 1 percent of the annual operating budget. All units are being monitored for progress toward financial stability in the year ahead, Shkurti said.
The Board of Trustees also heard an annual development report as required by the trustees when they approved the funding mechanism for the Affirm Thy Friendship Campaign in 1995.
Shkurti told trustees that the revised funding model for the Office of Development has proved successful and that, starting in Fiscal Year 2001, general funds support was replaced by interest earned from the investment of endowment funds. In FY 2001, the development office spent $1.4 million less than budgeted due to personnel vacancies and unspent funds allocated for systems support. In FY 2002, a reserve of $703,000 was created to protect the office’s future funding levels in light of continued uncertainty in financial markets.
In other business, the Department of Athletics briefed trustees on a lease and option to purchase 40,000 square feet in the building located at 1160 Steelwood Road, intended to house intercollegiate gymnastics, wrestling and fencing teams. Those team sports must be relocated by October 2002 to make way for the Larkins Hall renovation project.
The property is owned by High Street Investment Co., and is located south of Kinnear Road and west of Kenny Road. A 10-year lease includes a purchase option that could be exercised in years six through 10 of the contract. All costs — lease payments, purchase price, improvements and any other expenses related to the property — will be paid by Athletics and are funded within its current financial plan. The moratorium applied to new Athletics projects does not apply because the lease is directly related to the Larkins project.
Trustees approved the release of an additional $600,000 for Campus Partners for Community Urban Redevelopment, Inc.’s initiatives. The funds will come from a previously identified set-aside of $25 million for real estate and related investments in support of Campus Partners’ revitalization efforts.
Trustees hear annual audit report
Trustees heard an annual report on university financial statements for Fiscal Year 2001 based on an audit conducted by Deloitte and Touche LLP. The accounting firm examined the university's accounts and records for the fiscal year ending in June 2001, found them to be in satisfactory condition and issued an unqualified audit opinion.
University Controller Greta Russell led a presentation outlining financial highlights from the audit report. The report indicated that at year's end, the university had revenues of $2.24 billion and expenditures of $2.25 billion. The university had assets worth $5.2 billion, an equity balance of $4.4 billion and long-term debt of $413 million, and reported capital spending of $299 million. Russell said the university saw a decline in total revenues of $122 million, attributable primarily to a $222 million net decrease in the market value of university investments.
Total state revenues - in the form of instructional subsidies, capital appropriations, grants and contracts - increased 6.6 percent over the previous year, to $562 million, and private support - gifts to the university and commercially sponsored research - increased by $101 million, to $371 million. Those figures indicate state revenues account for approximately 25 percent of overall revenues, and private support accounts for 16.6 percent of overall revenues, up from 11 percent the previous year.
Of the $1.39 billion for education and general expenses for the year - an 11 percent increase over the previous year - 38 percent was spent on instruction, 19 percent on research, 8 percent on public service, 8 percent on academic support, 7 percent on scholarships and fellowships and 5 percent on student services. The remaining 14 percent was spent on other support costs and mandatory transfers.
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