Ohio State University reducing reliance on state funding

COLUMBUS – The Ohio State University will continue to explore ways to diversify its financial resources and behave more entrepreneurially in order to reduce the reliance on state funds, which are becoming less predictable and less stable, according to William J. Shkurti, senior vice president for business and finance.

Shkurti presented a first-quarter budget report— the first in a series of quarterly financial reports for fiscal year 2004 – to the board’s Fiscal Affairs Committee at its Friday (11/7) meeting.

Shkurti told trustees that summer and fall quarter enrollment figures are strong, with total enrollment up .4 percent. At the same time, the state budget picture continues to be somewhat uncertain. The University Health System had a good year financially in fiscal year 2003, Shkurti said, and first quarter results for fiscal year 2004 are positive, but below budget targets. During FY03, patient revenues grew by $120 million or 16.6 percent due to increased patient volume and rate increases for selected services. For FY03, the Health System improved its net operations by $3.7 million over fiscal year 2002 to $8.1 million.

Other areas of Columbus Campus finances are meeting expectations, including research and private giving, Shkurti said. After one quarter, new research awards are up 6.1 percent compared to the first quarter of fiscal year 2003. Private giving increased by $15.8 million or 8.8 percent over fiscal year 2002. Athletics achieved a net operating surplus of $41,000 on income of $88 million after increasing general and capital reserves by $4.5 million. Transportation and Parking Services had a cash deficit at the end of fiscal year 2003 of less than $100,000 compared to $2.4 million a year ago.

Shkurti said major auxiliaries did well last year and expect to do well this year, with the demand for university housing exceeding the supply.
Regional campus finances are stable, but showing decreased enrollments compared to projections for fiscal year 2004 at all but the Mansfield campus.
No board action was requested at this time.

Deficit report

Trustees also received an annual deficit report from Shkurti, a practice initiated in 1993. The cumulative total of internal operating deficits of $21.3million is within the university's target of no more than 1% of annual revenues, Shkurti said.

The two largest deficits from prior years (enrollment services and human cancer genetics) are being addressed according to plan. The largest new deficits, health science administration and the office of technology partnership/technology licensing, have submitted reduction plans.

All areas with existing deficits have submitted or will shortly submit deficit reduction plans and are being monitored.