Transcript Document

The Financial State of the University
Geoff Chatas, Chief Financial Officer | The Ohio State University
THURSDAY, NOVEMBER 15, 2012 | UNIVERSITY SENATE
University Core Goals
Teaching and Learning
Research and Innovation
Outreach and Engagement
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The Financial State of the University
Our Focus: The Academic Core
Our Financial Strategy:
Supports the Academic Core
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The Financial State of the University
Look before you leap.
To achieve our
ambitious academic
goals, we need to take
a strategic approach:
Where are
we going?
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The Financial State of the University
Otherwise, just where
will you land?
Strategy is
paramount.
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The Financial State of the University
“Even before the recession struck, it was
evident that expanding our funding
streams would protect our academic
core as nothing else possible could.”
President Gee, Address to Faculty, October 18, 2012
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The Financial State of the University
“We cannot carry out our historic
purposes and focus on teaching and
knowledge without a firm financial
foundation.”
President Gee, Address to Faculty, October 18, 2012
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The Financial State of the University
Progress
Challenge
Uncertainty
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Ambitious Academic Goals
From Excellence to Eminence
So, just how do
we fund our
ambitions?
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What We Know
Government support is permanently shrinking.
Financial burdens cannot be shouldered by students and families alone.
Federal budget sequestration looms.
We need to identify new revenue sources.
We need to use existing resources responsibly.
We need to understand and manage our risk.
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Examples of Recent Funding Efforts
Asset
Monetization
Parking Lease
$483 million
Faculty Initiatives and
Research Discovery
Endowment Fund:
$200 million
Century Bonds
Funding
expansion
of Wexner
Medical
Center
Partnerships
Huntington
Bank Affinity
Agreement
$25 million from
Huntington, which the
university will use for
academic scholarships
and educational
programming
Tech
Commercialization
Pathway for
faculty to
bring their
innovations
to market
Cost-Savings
Efforts
Strategic
procurement
saves nearly
$22 million
Additional revenue
will be available for
other needs over the
years
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Striving for Simplicity

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


Improve quality
Reduce wasteful efforts
Maximize our existing resources
Minimize costs
Reduce time
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The Financial State of the University
Our bold financing strategies are attracting attention.
• September 2012: Columbus Business First awarded
“Transaction of the Year” honors for the sale of $500 million
worth of 100-year bonds – making Ohio State the first public
university to issue century bonds.
• November 2012: Ohio State earns The Bond Buyer “Deal of
the Year” in the non-traditional financing category for our
50-year lease and concession agreement of parking facilities
and operations in exchange for a $483 million up-front
payment.
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The Financial State of the University
Moody’s Investors Service
has assigned a Aa1 rating
to the university. The
outlook is stable.
Standard & Poor's Ratings
Services: Long-term Rating
AA/Stable
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The Financial State of the University
What the Future Holds
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Fourth University Core Goal
Primary
Focus:
Resource
Stewardship
• To become the model of an affordable public
university recognized for:
• Financial sustainability
• Unsurpassed management of human and
physical resources
• Operational efficiency and effectiveness
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B&F Goals and Vision: 2012-2013
Operating With Financial Soundness and Simplicity
Growing New Revenue
Reviewing Assets
Building the Endowment
Unlocking the Financial Potential of Our Inventions
Operating With Efficiency and Effectiveness
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B&F Goals: Generation of New Resources
Generate new resources through:
• Identification of savings
• Redirections of existing funds
• Innovative development of new funding sources
Estimated Resource Generation Over Ten Years:
More Than $2 billion
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Resource Generation Scorecard – Fiscal 2013 Targets
Resource Generation Scorecard
Year to Date September 30, 2012
Metric (in millions)
A. Revenue Enhancement
1. Affinity Arrangements
2. Commercialization
3. Tuition Management net of academic salary increases
4. Auxiliaries
5. Net New Cash Development
6. President/Provosts Reserve
B. One-Time Revenue Options
1. Asset Monetization
C. Expense Management (Streamlining & Procurement)
1. Strategic Procurement Savings
2. Strategic Streamlining Savings
D. Capital
1. Capital Sources Available
2. Capital Uses Requested or Approved
E. Reallocation of Base Funding to Colleges/Support Units
Current
Year
Current
Progress
Year Against Current
Target
Year Target
2020
Goal
$25
$5
$7
$12*
$10
$34
$25
$5
$7
$12*
$10
$34
$190
$91
$180
$84
$385
$440
$200*
$200*
$400
$30
$20
$30
$20
$390
$425
$748
$748
$3
$748
$748
$3
$4,727
$3,627
$24
* = 2 year goal
Meets or Exceeds Goal
Performance Up
Caution or Data Pending
No Change in Performance
Below Goal - Action Needed
Performance Down
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University Financial Scorecard: Fiscal Year-to-Date September 30,
2012
University Financial Scorecard
Fiscal Year-to-Date: September 30, 2012
Metric
Actual
A. Revenue Drivers (in millions)
1. Tuition and Fees
2. Federal, State, Local and Private Grants & Contracts
3. Advancement Cash Receipts
4. State Support
5. Increase in Net Contribution from Auxiliary Enterprises
B. Financial Snapshot (in millions)
1. Total Revenue excluding endowment performance
2. Total Expenses
3. Change in Net Assets
4. Change in Net Assets excluding endowment performance
5. Change in Net Financial Assets
C. Performance Metrics
1. Enrollment - Summer & Autumn
2. Liquidity – Primary Reserve Ratio (Days Cash on Hand)
3. Actual Debt Service to Operations (measured semi-annually)
4. Short Term Investment Pool Return
5. Intermediate Investment Pool Return
6. YTD Long Term Investment Pool Return >4.25%
7. Long Term Investment Pool Average 3 Year Return >4.25%
8. Credit Rating
Meets or exceeds goal
Budget
$208
$190
$26
$108
$4
$220
$186
$1,207
$1,138
$144
$69
$652
$1,203
$1,125
$96
$78
$589
79,062
179
NA
0.24%
2.13%
2.63%
7.89%
AA
79,419
150
< 4.0%
0.07%
1.52%
4.25%
4.25%
AA
Actual vs
Budget
$107
$1
Performance up
Below goal
No change in performance
Far below goal
Performance down
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Challenges For the Future
Aligning resources with academic priorities
Managing reductions in government support
Reducing student debt
Minimizing tuition increases
Diversifying revenue streams
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Challenges For the Future
Reducing expenditures
Meeting capital and infrastructure needs
Measuring performance
Managing risk in a complex world
Driving accountability
Understanding the implications of globalization in higher ed
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The Financial State of the University
Optimistic View for the Future
 Reinvestment in Our Academic Core
 Ambitious Goals to Achieve
 Positive Financial State and Outlook
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The Financial State of the University
Questions and Answers
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