COLUMBUS — Ohio University’s deferred maintenance levels could reach a dangerous “tipping point” in less than a decade if the university maintains its current investment levels.
During its quarterly meeting held last week, OU’s Board of Trustees discussed the university’s maintenance backlog, which has reached $355 million. By the board’s next meeting in November, the university will be better equipped to make a plan to offset the costs, OU President Roderick McDavis said.
“We haven’t heard anything yet (from the state),” McDavis said. “We hope that there will be conversations about a capital bill, but at this time, we have not been informed that the conversation has been initiated.”
Deferred maintenance refers to the cost of property repairs and projects the university has put on hold because of budgetary limitations.
In 2008, the Ohio Board of Regents appointed a consulting firm called Sightlines LLC to analyze the ability of universities in Ohio to manage their facilities. Sightlines compared OU to 13 other universities in Ohio with similarities in size, region, geographic location or setting, according to a memo Stephen Golding, vice president for Finance and Administration, presented to the board.
The firm’s report for OU, which includes six years of data through fiscal year 2010, places OU’s deferred maintenance backlog for the main campus at $355 million.
This amounts to about $71 of backlogged deferred maintenance backlog per every square foot of asset at the time of the report — Golding estimated that number now has reached $78 per gross square foot.
This deferred maintenance was exacerbated by OU’s “low historical investment” and cuts to the facilities operating budget, according to the report.
However, a low manager-to-staff ratio in Facilities, efforts in preventative maintenance and lowered energy consumption have reduced the effects of deferred maintenance, according to the report.
Universities that reach a deferred-maintenance backlog of $100 per square foot “experience a range of operational problems from costly emergency repairs to complete building shutdowns,” according to Golding’s memo.
At its current investment levels, OU will reach this tipping point by 2020, Trustee Sandra Anderson said.
DEBT POLICY
OU received a report from another company, the PFM Group, which estimated that OU could take on between $245 million to $350 million in debt during the next five years without a great risk to the university’s financial ratings.
“As with any issuance, the rating agencies would clearly be interested in ensuring that the debt were being used strategically and aligned with the University’s mission,” Golding stated in another memo to the trustees.
To better process and manage OU’s debt, the board passed a resolution to approve a new debt policy at Thursday’s meeting.
The policy addresses effective ways to use debt to fund capital projects.
“Debt, especially tax-exempt debt, provides a low-cost source of capital with which the University can fund capital investments to achieve its mission and strategic objectives,” the policy states.
CAPITAL PROJECTS
The trustees passed a resolution regarding three capital projects that would allow the university to move forward with developing construction plans, seeking bids and entering into construction contracts.
The first project would renovate the Athena Classroom with an approved budget of $930,000 from the university reserves, and the second would facilitate improvements to the Central Food Facility in fiscal year 2012 with a total budget of $5,100,000 from the Culinary Auxiliary reserves, according to the resolution.
The final project would create entry improvements for OU’s southern campus with a total budget of $780,000 — $580,000 from state appropriations and $200,000 from Ohio University Regional Higher Education Reserves, according to the resolution.
CAPITAL CAMPAIGN
McDavis updated the board on the Promise Lives fundraising campaign progress. The university has raised $345 million toward its goal of $450 million.
The campaign was boosted by the announcement of a $105 million gift from the Osteopathic Heritage Foundations. OU’s College of Osteopathic Medicine will use the gift, which will be portioned out to the college during the upcoming years, to fund a number of initiatives, including a regional extension campus in Columbus and diabetes and neuromusculoskeletal centers in Athens.
“We’re moving so nicely along in our campaign; we’re right at 75 percent of our goal, and we still have four years to go,” McDavis said.
He noted that OU might exceed its $450 million target.
Bryan Benchoff, OU’s new vice president for University Advancement, said in an interview with The Post last spring that he does not know whether OU will increase its $450 million goal.
