27
August
2020
|
16:02 PM
America/New_York

Ohio State trustees approve Fiscal Year 2021 budget

University plans to implement over $250 million in targeted efficiency measures

A new budget for The Ohio State University provides a clearer picture of the impact of the COVID-19 pandemic on university operations.

The Board of Trustees voted today to approve a $7.5 billion budget for Fiscal Year 2021. University leadership presented a detailed overview of the budget to the board that showed how the pandemic continues to present significant budgetary challenges for Ohio State. No source of revenue is unaffected. Some of the impacts include:

  • A reduction in state operating subsidy of 4.38%, or $18 million, from original Fiscal Year 2021 state funding levels
  • Anticipated tuition loss of $54.9 million due to many students moving to an entirely virtual schedule and others deciding not to return to the university this fiscal year
  • Reduced athletic revenues by $130.3 million due to the cancellation of event rentals, a postponed fall season, and related ticket, media, conference and game guarantee revenues
  • Student Life housing and dining revenues down $3 million from Fiscal Year 2020 due to lower student occupancy on campus, which equates to a $38.3 million reduction compared to a normalized fiscal year

“We continue to focus on the university’s core academic, research and health care missions to keep Ohio State in the best possible position for a future in which the virus is contained,” said Senior Vice President for Business and Finance Michael Papadakis. “We have engaged in rigorous and responsible fiscal planning in response and are fully focused on making good long-term decisions for the institution.”

Due to the overall impact of COVID-19 for Fiscal Year 2021, the university is implementing $252.2 million in targeted savings across all colleges, support units and the Wexner Medical Center. Of those targeted savings, $175 million will come from university operations and $77.2 million from the Wexner Medical Center.

The university plans budgets on a unit-by-unit basis. The targeted savings will vary depending on the particular economic circumstances of each individual unit and the strategic decisions of the unit’s leadership. Earlier this year, all colleges and units were tasked with preparing budget scenario projections with 5%, 10% and 20% reductions in spending for Fiscal Year 2021 with a focus on maintaining core academic objectives. 

Papadakis said the university acted quickly to mitigate the financial impact of the pandemic earlier this year. Ohio State instituted a hiring pause on April 1, a move that saved the university an estimated $10 million through the end of Fiscal Year 2020.

The university also temporarily paused the annual merit compensation increase process and instituted pauses in off-cycle salary increases. Restrictions on university travel this spring and a review of all non-essential spending such as supplies, equipment purchases, conferences and membership expenses led to additional savings.

In total, these proactive measures saved Ohio State about $72 million through Fiscal Year 2020, which ended June 30.

In addition, all capital projects have been assessed to determine how existing projects can defer millions of dollars in spending to ensure adequate financial flexibility until the total impact of the pandemic on revenue sources becomes clear.

Resource stewardship is one of the pillars of the university’s strategic plan. Ohio State has achieved over $220 million in administrative efficiencies, over $450 million in strategic procurement savings and more than $1 billion in new resource generation over the last five years.

“Great institutions like Ohio State still make investments in the future during times like these. We continue to invest strategically to better position the university for success in the future,” said President-elect Kristina M. Johnson.

University leaders said the budget reductions would not prevent Ohio State from following through on current commitments or preparing for the future:

  • Ohio State is implementing a $15 an hour minimum wage in the new fiscal year.
  • The university has provided over $200 million in additional need-based aid to students and families since 2015, far exceeding its stated goal of reaching $100 million by 2020.
  • University trustees approved the construction of the 1.9 million-square-foot Ohio State University Wexner Medical Center Inpatient Hospital.
  • Ohio State continues investing in digital course delivery infrastructure to position the university as a national leader in digital higher education in the post-COVID-19 era.

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