17
May
2021
|
08:50 AM
America/New_York

Ohio State’s long-term growth in good shape even amid pandemic

Despite COVID-19 impact, university will restore merit increases for faculty and staff

As vaccinations increase and The Ohio State University prepares for more-normal operations, leaders say the institution’s financial outlook is strong and, while challenges remain, Ohio State is well positioned to invest in the future while continuing to manage the COVID-19 pandemic.

“The strength of our fiscal position is due to the prudent management of our resources during this challenging time, strong financial market performance as well as our successful investment strategy,” said Chief Financial Officer & Senior Vice President for Business and Finance Michael Papadakis. “These factors led to an increase of nearly $1.4 billion of investment income for the university over the prior fiscal year.”

“The endowments and restricted funds, which represent the vast majority of this increase in value, support scholarships, research, faculty and other core functions that allow Ohio State to put forth bold new ideas to shape the university and Ohio for years to come.”

Ohio State’s long-term financial prospects remain strong despite spending tens of millions of dollars to combat the spread of COVID-19 and facing revenue losses in multiple areas: a 13% decline in net tuition and fee revenue of $109 million coupled with a decline in auxiliary revenues of $159 million due to lower student housing and dining occupancy and limited revenues from athletics programs.

This week, the Board of Trustees will review an interim financial report covering July 1, 2020, to March 31, 2021. Pending approval from the board, the university plans to resume its Annual Merit Compensation Process for faculty and staff. In the merit process, eligible employees can receive an increase of up to 2% of their base salary.

“Nobody could have predicted the severity and length of the pandemic, yet the university acted swiftly to dampen its impact,” said Ohio State President Kristina M. Johnson. “Though difficult, the university’s quick response has given us the ability to now reward university employees who have persevered through a challenging year.”

Last spring, at the start of the COVID-19 pandemic, university leadership paused most compensation increases for the fiscal year ending June 30, 2021, to proactively address expected financial challenges.

Ohio State instituted several additional savings measures in response to the global pandemic, including tamping down travel and non-essential spending, and freezing hiring.

Despite increased spending on COVID-related areas and certain growth initiatives, the university’s other savings measures led to expenses totaling $12 million less than the prior year for the first nine months of the fiscal year.

“While there is still a lot of work to do to ensure our present and future is financially sound, I’m pleased with how the entire university has responded during this time,” Papadakis said. “We’ve had to make tough decisions within all of our operations, but I’m confident our solid stewardship today will ensure our continued success.”

Papadakis added: “It’s important to remember our goals for fiscal year 2021 are to preserve and protect the university for the long term, but also to continue to invest in initiatives, which will drive our success in the future.”

Though there are still headwinds, Ohio State is well-positioned for the future because of the decisions being made now, Papadakis said.

Ohio State continues to operate under a state of emergency because of the global pandemic, which continues to present major challenges across every part of the university. Major changes compared to the same time last year include:

  • A $109 million reduction in net tuition and fee revenue for the 2020/2021 academic year spurred by many students moving to an all-online schedule.
  • A $159 million decrease in auxiliary revenues, reflecting lower occupancy for student housing and dining due to an intentional de-densification for safety; the cancellation of event rentals; and a postponed and shortened football season with no ticket sales and the related reduction in ticket, media, conference and game guarantee revenues.
  • A total of $61 million in direct COVID-19-related expenses that did not exist the previous year, including changes and additions in cleaning and personal protective equipment for students, faculty and staff, and an expansive testing, tracing, quarantine and isolation program.
  • The availability of approximately $84 million in CARES Act funding covered all COVID-19-related fall expenditures and also allowed the university to provide significant emergency financial aid grants to students in need.
  • The Wexner Medical Center returned to pre-COVID operational levels in many service lines, resulting in a $180 million increase in revenue compared to the prior year while playing a leadership role in the university and community response to COVID-19.

Share this

Share on: Twitter
Share on: Facebook
Share on: LinkedIn