More $290 million will be needed for Ohio University to balance its budget over the next five years, the Board of Trustees learned during its October meeting.
The Board members learned several ways the deficit could be addressed, including using money from the university’s reserves. However, even the biggest pool of money in the OU reserves would be used entirely in three years in one scenario presented to the Board. Another scenario would result in further layoffs and furloughs across the University.
Currently, all options are on the table, according to the university administrators presenting options to close the structural deficit.
Just for the current fiscal year, projections show that $25 million of reserve funds will be needed to plug the shortfall. This is in large part due to a drop of about $48.4 million in the university’s revenue from Fiscal Year 2020.
That shortfall continues to grow in the projections presented to the Board: $60.2 million in shortfalls is projected in the FY22, and $68.7 million in FY23.
One major component of the falling revenue is a matching drop in enrollment. Universities nationwide are facing a drop in enrollment rates, but for OU, this is devastating to the budget.
Over the past six years, the ending spring enrollment headcount, according to data provided by the University, has dropped over 11 percent across all campuses, and down 6 percent for all campuses from Spring 2019 to Spring 2020. According to the data, there were 24,667 total undergraduates in Spring 2020, down from 26,683 the year before. This is a drastic change from the record enrollment numbers the University touted as recently as 2016.
Enrollment for Fall 2020 is projected at about 14,400 undergraduate students, down nearly 1,900 students from the year before.
Senior Vice President for Finance and Administration Deborah Shaffer said that “a new normal” will be necessary to help keep the university’s reserve funds intact. She called for “right-sizing” the institution. Earlier this year, Shaffer received a $100,000 retention bonus, and is set to receive a similar bonus in 2023.
In May, President M. Duane Nellis noted that several members of the university’s upper management had taken voluntary pay cuts in the face of the pandemic.
“In addition to the salary reduction of 15 percent that Provost Sayrs and I will take, I have asked members of President’s Council and Deans Council to take salary reductions of 10 percent or more for FY21,” Nellis wrote in a letter to the community issued in May. “I can share that many Vice Presidents and Deans as well as our Athletic Director have already committed to these reductions, and our head football coach and head men’s basketball coach will take voluntary salary reductions of 10 percent.”
Nellis earns over $489,000 annually, and Sayrs’ position pays $378,750 annually. In July 2018, Nellis was awarded a $72,000 bonus, alongside a $7,000 raise, despite concerns of the lower enrollment rates and lower high school graduation numbers from across the state.
As of October 2020, the University is seeing a total FY21 budget of $200.6 million, with $135.4 million of that counted as the net gain from tuition dollars. The rest is distributed as Financial Aid.
Room and Board revenue loss also provided some insight into the university’s decreasing budget size. Last year, about $22.5 million (almost a quarter) of the university’s expected revenue dropped as the university refunded students sent home due to COVID-19 pandemic precautions.
This year, as the residence halls remain largely empty and many students still access their classes in a virtual teaching space, the university is expecting to see another $27.4 million of revenue slip out of its grasp.
That makes an overall revenue loss of $64.7 million through the end of 2020. The university is also anticipating higher costs for cleaning and sanitizing of the campus, projecting that it will cost upwards of $14.5 million through the end of the year.
Plans for the spring semester are still being formed, as the pandemic continues to change and an increasing number of students on-campus have tested positive for COVID-19.