2020 Financial Analysis

Overview

This page introduces and summarizes some of the important findings in the financial analysis of Ohio University conducted by Rudy Fichtenbaum, Professor Emeritus of Economics at Wright State University.

You can download the full report here.

(Study commissioned by OU-AAUP with support from AAUP National.)

An Analysis of the Financial Position of Ohio University

Fichtenbaum’s analysis is the latest in a series of data-informed research conducted, promoted, or sponsored by Ohio University AAUP (see also our research page and our November 2019 white paper). This study introduces the methods and practices of accounting at public universities as well as measures for determining the state of their financial health. Rather than relying on university budget books, which are only plans for how to allocate resources, this analysis is based on audited data from Financial Statements of Ohio University as well as the Integrated Post-Secondary Educational Data System (IPEDS). It examines the balance sheets, income statements, and statements of cash flow for the years 2014 through 2020 (where available). It also calls attention to indices and independent assessments of the University’s financial health, especially SB-6 ratings and Moody’s Public University Scorecard.

This analysis shows that Ohio University is in a strong financial position—one measure gives Ohio University the second-strongest financial ratings of the public universities in the state. It calls into question the dire narratives that faculty are hearing from upper-level administrators. It calls into question the justifications for the reduction of faculty and staff, the restructuring of the academic units, and the dramatic and uncompensated expansion of faculty workloads.

Important highlights:

  • Every year between 2014 and 2020 the University’s revenues exceeded its expenses, resulting in a positive change in net position.

  • The proportion of expenses going to institutional support and auxiliaries combined has been increasing while the proportion going to instruction has been declining. (See Figure 28)

  • The University increased its reserves from $459.7 million in 2019 to $473.2 million in 2020 (an increase of $13.5 million).

  • Reserves relative to debt decreased but reserves relative to expenses increased. The University has enough reserves to cover its expenses for nearly 8 months. This is a very high level of reserves.

  • In 2019 Ohio University’s SB-6 score was second-highest in the state, with OSU and Miami University tied for first. How the University will compare with other institutions in 2020 will not be known until SB-6 scores for other institutions are released later this year.

  • An area of concern: Although enrollment is declining, capital spending in 2020 was higher than in any year since 2015. To support this capital spending the University increased its debt. According to its cash flow statement it received $222.5 million in proceeds from capital debt and purchased $118.1 million in capital assets. It also made an unusually large principal payment on its debt of $179.3 million. Thus, a substantial part of the funds borrowed in 2020 were to refinance existing debt presumably at lower interest rates. Nevertheless, the University’s debt increased by about $43 million. While the administration is laying off staff and faculty.

  • Ultimately, the declining revenue beyond what might be expected because of demographics and the temporary declines due to the pandemic is likely due to poor decision making and misplaced priorities of the administration and should not be used to justify shifting resources from instruction to administration.