Ohio State outlines $73 million funding package

COLUMBUS – Emphasizing the essential and strategic role that The Ohio State University must play in educating students and helping build Ohio’s economic future, and the fiscal challenges faced by the university and the State, Ohio State President William E. Kirwan today proposed a $73 million funding package that includes budget reductions and reallocations as well as revenue-generating actions that include increased tuition for new students.

“The choice is clear,” Kirwan told the University’s Board of Trustees. “We must make the difficult decisions to advance this university along its path toward excellence. We must strive to provide our students with an education second to none. We must demonstrate to our faculty and staff that this is a university that intends to compete with the best. Any other choice would seriously undermine our impressive progress and ultimately be harmful to our state. Excellence at a university in this era of the knowledge economy is a precious thing. But it is also a fragile thing. If our momentum is lost, it could take years – perhaps even a decade – to restore.”

To provide sufficient funds to maintain and enhance the educational opportunity for students, continue to recruit and retain the most talented faculty and staff, and compensate for the adverse effects of state budget cuts, Kirwan said, the university is reducing centrally funded initiatives by 10 percent, reducing and reprogramming academic support unit budgets by up to 7 percent, and reducing and reprogramming college budgets by up to 5 percent. Additional targeted cost-reduction initiatives include increased health care co-pays, energy savings through competitive bidding, and conservation and reviews of purchasing practices and computer systems.

Kirwan also indicated that the university would continue its aggressive and highly successful efforts to increase external funding for research, create business and government partnerships to bring quality products and services to market, and build upon donor support for students and academic programs.

Under the proposal announced today, tuition for current students would increase by
9 percent, to a total of $5,217. This maintains the university’s commitment made a year ago to increase tuition by 9 percent for each of the following four or five years. “Even though circumstances have changed significantly since last spring,” Kirwan said, “we remain conscious of the implied commitment we made to our current students.”

Tuition for new students would rise by an additional $1,200 to $6,417, effective with the Summer Quarter. “We propose to place the responsibility for tuition increases beyond those already planned on incoming students, who have a greater opportunity to make choices and to plan ahead,” Kirwan said. He noted that such a “one-time adjustment” is working well at Illinois and has been proposed at Purdue.

Referencing Governor Bob Taft’s recent comments on tuition, the president said that, “We agree with the governor that affordability and access are extremely important principles, and we have reflected those principles in the recommendation we are making today. As we did so successfully last year, we will make the necessary adjustments to our need-based aid so that no admitted students will be turned away for financial reasons.” Kirwan also noted that, “the equivalent of 30 to 40 percent of the differential tuition money from new students would be placed into financial aid,” on which Ohio State is spending $32 million this year.

“In addition, we will continue to reduce costs and reprogram existing resources – reallocating funds to high-enrollment areas, for example, as a way to help strengthen the quality of our undergraduate experience,” Kirwan said.
The proposal was presented to the Board of Trustees by Kirwan, Executive Vice President and Provost Ed Ray, and Senior Vice President for Business and Finance Bill Shkurti. The board is expected to vote on the plan at its March 1 meeting.

Kirwan noted that even with these tuition adjustments, Ohio State would remain highly competitive inside and outside Ohio for new and current students. For example, tuition levels for entering students next fall will place Ohio State third or fourth from the top among Ohio’s public universities. He also noted that undergraduate tuition increases would represent less than 40 percent of the solution to a $73 million problem.

“Quality comes at a cost,” Kirwan said. “It is essential that we take the actions outlined today . . . . To do otherwise will do enormous harm to the quality of the university and, thereby, enormous harm to the future of Ohio.”

Kirwan reminded the trustees that Ohio State suffers from a growing competitive disadvantage with respect to overall funding. Top universities in other states receive about 20 percent more in revenue from all sources for each full-time-equivalent (FTE) student than does Ohio State. Relatively low state support combined with relatively low undergraduate tuition have created an annual support gap of almost $1,000 in tuition and state support per undergraduate student when comparing Ohio State with average support at its benchmark universities and the Big Ten. Within the state, Ohio State undergraduate students at the Columbus campus pay an average of $1,250 less per year than students at Miami University, Ohio University and the state’s other competitive admissions universities.

Kirwan also reminded the board of the university’s decision last spring to hold back on faculty and staff pay raises to protect student and instructional programs. He also noted that compensation for faculty and staff lags benchmark institutions, adding that retaining the best faculty and staff is essential to provide students with the highest quality education and to support research programs.

As a result of these circumstances, the university today faces critical needs totaling approximately $73 million. These needs include:
·$30 to $34 million to attract and retain high-quality faculty who will enhance classroom learning and make research discoveries;
·$11 to $12 million in student scholarships and financial aid;
·$8 to $11 million for other programs such as Selective Investment and enhanced recruiting and to meet legal and other mandates; and
·$20 million to absorb state budget cuts.
Budget savings and reprogramming will provide a total of $36 million, Kirwan added. When combined with $24 million in previously planned undergraduate, graduate and professional tuition increases, they total $60 million – still $13 million short of the $73 million need.

“We have searched for other means to generate the $13 million. In our view, further cuts in budgets beyond the $35 million I have already described are not possible without compromising the quality of essential programs and the academic core of the university. Thus, we have reluctantly concluded that most of the $13 million will have to come from additional tuition funds,” Kirwan said. (Recommendations on regional campus tuition will be determined later.) The additional charge for new students will raise $11 million of the $13 million needed, and the remaining $2 million will be identified through a combination of additional spending reductions, reallocations, and income increases.

Kirwan noted that in a global knowledge economy in which states are engaged in intense competition for people, ideas and technologies, “universities make an especially vital contribution to economic growth by educating undergraduates, graduate, and professional students for productive lives in a knowledge economy; attracting and retaining faculty who add to society’s knowledge and spark new ideas; and helping translate innovations and discoveries into useful products and services.”