Board of Trustees discussing likely loss in state funding.
Ohio University’s Board of Trustees looked to the future — up to a hundred years, in fact — last week hearing unfavorable predictions for state funding, approving guidelines for a century bond to pay for deferred maintenance and classifying land on E. State St. as surplus.
State subsidized funding:
If the proposed change to the state funding model, which would mainly affect OU by giving less weight to students who transfer in with more than 30 credit hours or an associate degree, is passed, OU is expected to lose an estimated $9 million.
However, Vice President for Finance and Administration Stephen Golding said that figure is based on last year’s funding, thus is not a completely accurate measure. Plus, proposed changes are not set in stone yet.
The change in funding structure “would primarily be felt (as a result of) our distance education programs,” like the RN-to-BSN program, Golding said. That program educates students online who already have an associate degree in nursing.
OU President Roderick McDavis and the other public university presidents will vote on the proposed changes in November. Then, the results of their vote will go to the state of Ohio for approval.
“I have to listen to the rest of the conversation before I determine how to vote,” McDavis said.
The board approved amended guidelines for the century bond, which will put the university $250 million in debt that will be paid back in 100 years.
The debt will go to pay for deferred maintenance on campus, starting with utility infrastructure, which will include the overhaul of the Lausche Heating Plant.
OU is putting aside $7 million from university reserve funds to generate interest that, in 2114, will pay off the entire debt — $264 million.
Under changes approved at the board meeting, after trustees expressed worry about tapping the funds too early, none of the interest from the $7 million, which is expected to generate much more than $264 million over a century, will be able to taken out until the university has obtained the total debt payment.
“What this essentially does, it puts us in a position to be able to renovate buildings on our campus for the next 100 years,” McDavis said.
By the end of this year, century bond monies could be flowing to campus construction projects, Golding said.
Before the century bond, OU had the highest Senate Bill 6 ratio — 4.7 out of 5 — for the third year in a row, placing it at the top of the state. The ratio is used by the state to determine the financial health of Ohio’s public universities, with 5 being the best rating.
However, after implementation of the century bond, that number is expected to drop, said Sandra Anderson, chair of the university resource committee.
East State Street property:
About 70 acres of university land on E. State St. has been deemed surplus by the board.
No immediate plans have been made for the land, but the parcels might be sold for more than $12 million.
“It will take us probably somewhere within the nature of a year to get this transaction done,” Golding said.
Last year, OU made $759,480.28 in base rent. The businesses on the land include Lowes, Wal-Mart, Kroger, Staples and the Athens Mall.
The sale of the land was discussed privately because the trustees needed to hear about “another possible side of (the) transaction” the university did not want discussed publicly, Golding said.
McDavis added that any discussion about selling the land will happen publicly.
The board also heard updates on the Ridges Master Plan, which is looking at ways to repurpose the buildings and land.