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Clarifying the ‘Crisis’

February 3, 2022

Some say OU is not in a budget crisis, must continue to manage costs

By Abby Miller | Editor-in-Chief

Ohio University leadership has refuted claims of an ongoing budget crisis for years and continues to say the university’s financial position is strong despite contrary characterizations by some in the campus community.

Discussions of an alleged financial crisis reached a tipping point during November 2019. That month, a group of OU faculty members met to discuss the university’s financial state in addition to a possible walkout and faculty unionization efforts, according to a previous Post report.

Student discussion of the budget also flourished that month, with a student group called OU Fun Facts posting flyers around campus with “fun facts” about OU’s budget on them. The group also organized a protest against proposed budget cuts Nov. 25, 2019, which saw about 200 people in attendance.

That same day, former OU President Duane Nellis sent a university-wide email condemning the spread of budget misinformation and denying the existence of a “financial crisis” at OU.

“Ohio University has a strong financial position and significant monetary reserves, which provide us with the flexibility to invest strategically in our core academic mission and innovation,” Nellis said in the email.

Nellis acknowledged, however, that the university was in a “critical moment that requires action,” citing decreasing enrollment and students graduating quicker than the typical four-year track as reasons for decreasing revenue.

The “strong” financial position of the university was further affirmed by former Senior Vice President for Finance and Administration Deb Shaffer at a Jan. 16, 2020, Board of Trustees meeting. Shaffer said the university had over $1 billion at the time, but some was unspendable due to bonds and other financial restrictions.

While COVID-19 significantly impacted the university’s budget, OU was still projected to end Fiscal Year 2021 with a $42.6 million surplus, according to a previous Post report. Some of that money comes from the Coronavirus Aid, Relief, and Economic Security, or CARES, Act.

Carly Leatherwood, a university spokesperson, said OU President Hugh Sherman has emphasized the university’s comfortable financial position since entering office in June 2021.

“His message has been consistent: Ohio University’s financial position is strong, and we have one of the strongest balance sheets of any institution in the state,” Leatherwood said in an email. “He has also been clear that across the higher education landscape we’ve seen a flattening of revenues, increases in competition, the escalation of expenses, and shifts in programmatic interest. All of those realities require financial discipline so that we can invest in innovative programs, academic quality and student success.”

Richard Vedder, a distinguished professor of economics emeritus in the College of Arts and Sciences, said he believes the term “crisis” is overused. While he does think the university is in a challenging budget environment, he believes it can be solved without dramatic changes and warrants a response.

Vedder pointed to the projected surplus, an increase in the amount of students applying for university honors programs and a recent uptick in enrollment as reasons why OU’s position has seemed to improve over the past six months. When factors like those are on the up, cuts and crises tend to be decreased, Vedder said.

“We maybe ought to talk about long term structural change and use terms like that to describe what we're in,” Vedder said. “I think … universities are always in transformation. We're in a transformative period, but I don't think we're in a crisis.”

Similarly, Joseph McLaughlin, an English professor and vice president of the OU chapter of the American Association of University Professors, said some reports of the budget situation have been sensationalistic. While he does understand the severity of situations resulting from OU’s financial position — such as the laying off of 53 instruction faculty members — he worries about the impacts of overstating the case.

“I firmly believe that there were other things the university could have done other than firing 53 faculty — that that was not necessary,” McLaughlin said. “I worry sometimes that the kind of hyperbolic rhetoric one gets around ‘crisis’ and this feeling of anxiety creates this sort of climate that allows people to do things without a lot of shared governance, without a lot of consultation, (and) without a lot of careful thought.”

McLaughlin agrees that increasing enrollment and the budget surplus are signs of hope for OU. He said when it comes to finances, it’s always good to be conservative and have reserves. OU has built up its reserves and subsequently started to dip into them. Doing so shouldn’t be a sign of a crisis, McLaughlin said, because reserves are intended to be there to help as a rainy-day fund.

Vedder said Sherman is sound with money and is also getting direction from the Board of Trustees on financial matters. Both Vedder and McLaughlin believe the university is pursuing strategies to minimize spending, though McLaughlin believes strategies like reducing faculty are misguided. Pursuing the wrong solutions to financial struggles, McLaughlin said, could make difficulties worse or more long-lasting.

“It seems to be that the administration's plan for dealing with budget difficulties continues to be this idea that we have too many faculty, and that we need to cut faculty rather than addressing the buildup of serious administrative bloat that's happened over the course of the last 10 years,” McLaughlin said. “As you continue to fire faculty … you get into this situation where with fewer faculty, that means bigger classes for students, it means less curricular diversity, and that does not strike me as a recipe for improving our enrollment situation.”

AUTHOR: Abby Miller
EDITOR: Abby Miller
COPY EDITOR: Anna Garnai
ILLUSTRATION: Olivia Juenger