The Ohio State University August 28, 2015 Board of Trustees Michael J. Gasser

The Ohio State University August 28, 2015 Board of Trustees Michael J. Gasser
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
THURSDAY, AUGUST 27, 2015
FINANCE COMMITTEE MEETING
Michael J. Gasser
Brent R. Porteus
W. G. Jurgensen
Erin P. Hoeflinger
Alexander R. Fischer
Corbett A. Price
Steven M. Loborec
Jeffrey Wadsworth (ex officio)
Location:
Longaberger Alumni House
Mount Leadership Room
Time:
4:15-5:45pm
ITEMS FOR DISCUSSION
1.
Fiscal Year 2015 Interim Financial Report - Ms. Devine
2.
University Financial Scorecard - Ms. Devine
3.
Physical Environment Scorecard - Mr. Kasey
4:20-4:25pm
4.
Project Status Report - Ms. Readey
4:25-4:30pm
5.
The Office of Investments & Office of the Treasurer Annual Review: Fiscal Year 2015
- Mr. Chatas, Mr. Lane, Mr. Papadakis
4:30-4:40pm
6.
Internal Bank Annual Review - Mr. Papadakis
4:40-4:45pm
4:15-4:20pm
ITEMS FOR ACTION
7.
Fiscal Year 2016 Budget - Mr. Chatas
4:45-4:50pm
8.
Fiscal Year 2016 Capital Investment Plan - Mr. Chatas, Mr. Kasey
4:50-4:55pm
9.
Appointments to Self-Insurance Board - Mr. Chatas
4:55-5:00pm
10.
Approval to Enter Into/Increase Professional Services and Enter Into Construction
Contracts - Mr. Kasey, Ms. Readey
5:00-5:05pm
11.
Sale of Real Property: 506 Park Overlook Drive Disposition - Mr. Myers
5:05-5:10pm
12.
Sale of Real Property: 786 Griswold Street Disposition - Mr. Myers
Executive Session
5:10-5:45pm
1
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
THE OHIO STATE UNIVERSITY BOARD OF TRUSTEES
FINANCE COMMITTEE
TOPIC: Fiscal Year 2015 Interim Financial Report - May 31, 2015
CONTEXT: The purpose of this report is to provide an update of financial results
SUMMARY: The highlighted areas include:
∑
∑
∑
∑
∑
∑
∑
Review of comparative financial statements
State Support
OSU Wexner Medical Center
Enrollment
Research
Key Affiliates
Auxiliary Operations
REQUESTED OF THE FINANCE COMMITTEE: No vote required; for information only
2
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
I.
Summary
II.
Financial Statement Review - For the Eleven Months Ended May 31, 2015
A.
Interim Financial Statements
B.
Revenue
C.
Operating Expenses
D.
Revenues Less Operating Expenses
E.
Investments
F.
Cash Flows
G.
Cash and Investments
H.
Debt
III.
Financial Highlights - For the Eleven Months Ended May 31, 2015
A.
State Support Outlook
B.
OSU Wexner Medical Center
C.
Enrollment
D.
Research
E.
Key Affiliates
F.
Auxiliary Operations
3
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
I.
August 28, 2015
Summary
Consolidated revenues through the first 11 months of fiscal year 2015, excluding investment income,
were $5.1 billion, representing an increase of $329 million, or 6.9% over the same period of fiscal year
2014. The revenue increase is primarily in Healthcare revenues, which were up $237 million. Additional
details on revenue trends are provided below:
∑
University revenues through the first 11 months of fiscal year 2015 increased by $92 million to $2.6
billion compared to the same period in fiscal year 2014.
o
o
o
o
o
∑
Student tuition and fees increased $30.8 million, to $809 million. Tuition revenue increased
4% over the same period of fiscal year 2014 due to an increase in non-resident enrollment.
Total tuition revenues for autumn and spring terms is up by 4.2% as total enrollment is nearly
2% above budget and 1% up from fiscal year 2014. Non-resident enrollment is 7% above
fiscal year 2014 and is up 6% to budget while resident enrollments are down almost 1% from
fiscal year 2014 and relatively flat to budget.
Grant and contract revenues were up $54 million, or 8.5%, to $693 million, due primarily to
increases from the state of Ohio OhioLink, eTextbook, technology programs, and Office of
Sponsored Program awards.
State capital appropriation revenue decreased $18 million due to a reduction in capital project
activity for the first 11 months of fiscal year 2015 compared to 2014, primarily associated with
the Chemical and Biomedical Engineering Chemistry (CBEC) Building.
Auxiliary revenue increased by $16.4 million. Athletics revenues were up $15 million, to $111
million, due primarily to increases in football premium ticket pricing and participation in bowl
games. Student Life revenues increased slightly due to an increase in room and board rates.
Gifts increased $9 million, primarily reflecting the endowment receipt of a $10.6 million
planned gift in support of the College of Engineering.
Consolidated Healthcare revenues for the OSU Health System and OSU Physicians (OSUP)
increased $237 million, or 10.5%, to $2.5 billion. The Health System accounted for $187 million of the
increase. Total outpatient visits were 2.4% above budget and 4.5% above prior year. The total
number of patients treated in inpatient beds was above prior year by 3.2%. OSUP revenues
increased $50 million due to volume growth and payer mix. Payer mix is changing as a result of the
Affordable Care Act increasing Medicaid while decreasing Self Pay revenues.
Consolidated operating expenses for the first 11 months of fiscal year 2015 were $4.8 billion, up $234
million, or 5.1%, over the same period of fiscal year 2014. The growth is primarily a result of increases in
healthcare expenses.
∑
∑
University (excluding auxiliary) expenses increased $85 million to $2.5 billion for the first 11 months of
fiscal year 2015 compared to the same period of fiscal year 2014 primarily due to faculty and staff
salary guideline and benefit cost increases.
Healthcare expenses of $2.1 billion increased $139 million, or 7%, due to increases in healthcare
supplies and physician staffing levels.
Overall, revenues grew at a quicker pace than expenses driven primarily by the strong performance of
healthcare. As a result, the change in consolidated net position (excluding net investment income and
interest expense) increased by $210 million for the first 11 months of fiscal year 2015.
Total cash, restricted cash, and temporary investments increased $376 million, or 19.7%, from June 30,
2014 due primarily from the issuance of bonds in October of $300 million and increases in healthcare
margin. Gifted endowment and other long-term investments increased $50 million primarily due to
endowment gifts and market value increases offset by distributions. For the 11 months ended May 31,
2015 (FYTD), the Long-Term Investment Pool (LTIP) earned a net of investment fee return of 4.56%
versus a Policy Benchmark of 3.57%, resulting in underperformance of 0.99%. During that period, our
Real Assets returned 11.6%, followed by Global Equities at 4.8%, and Global Fixed Income at 2.3%.
4
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
II.
Financial Statement Review - For the Eleven Months Ended May 31, 2015
A.
Interim Financial Statements (in thousands)
5
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
CONSOLIDATED STATEMENTS OF REVENUES, EXPENSES,
AND OTHER CHANGES IN NET POSITION - UNAUDITED
Comparative Year-To-Date
May 31, 2015 and May 31, 2014
(in thousands)
May
2015
Operating Revenues:
Student tuition and fees, net of scholarship
allowances of $165,381 and $162,916, respectively
Federal grants and contracts
State grants and contracts
Local grants and contracts
Private grants and contracts
Sales and services of educational departments
Sales and services of auxiliary enterprises, net of scholarship
allowances of $23,564 and $21,212, respectively
Sales and services of the OSU Health System, net
Sales and services of OSU Physicians, Inc., net
Other operating revenues
Total Operating Revenues
Increase/Decrease
Dollars
Restated
$
Operating Expenses:
Educational and General:
Instruction and departmental research
Separately budgeted research
Public service
Academic support
Student services
Institutional support
Operation and maintenance of plant
Scholarships and fellowships
Auxiliary enterprises
OSU Health System
OSU Physicians, Inc.
Depreciation
Total Operating Expenses
Operating Loss
Non-operating Revenues (Expenses):
State share of instruction and line-item appropriations
Federal subsidies for Build America Bonds interest
Federal non-exchange grants
State non-exchange grants
Gifts
Net investment income (loss)
Interest expense on plant debt
Other non-operating revenues(expenses)
Net Non-operating Revenue (Expense)
Income (Loss) before Other Revenues,
Expenses, Gains or Losses
Other Changes in Net Position
State capital appropriations
Private capital gifts
Additions to permanent endowments
Total Other Changes in Net Position
Increase (Decrease) in Net Position
Net Position - Beginning of Year
Net Position - End of Period
May
2014
$
6
809,044
$
778,282
$
%
30,762
4.0%
308,828
79,441
14,440
224,288
140,599
262,237
312,021
60,650
15,105
189,570
132,837
245,797
(3,193)
18,791
(665)
34,718
7,762
16,440
-1.0%
31.0%
-4.4%
18.3%
5.8%
6.7%
2,135,132
368,094
31,901
4,374,004
1,948,526
317,676
36,220
4,036,684
186,606
50,418
(4,319)
337,320
9.6%
15.9%
-11.9%
8.4%
908,245
412,970
142,219
178,466
87,205
246,397
106,669
122,660
246,076
1,785,638
350,451
261,583
4,848,579
885,892
410,548
116,910
169,712
86,847
248,615
103,332
116,885
236,880
1,684,653
312,013
242,662
4,614,949
22,353
2,422
25,309
8,754
358
(2,218)
3,337
5,775
9,196
100,985
38,438
18,921
233,630
2.5%
0.6%
21.6%
5.2%
0.4%
-0.9%
3.2%
4.9%
3.9%
6.0%
12.3%
7.8%
5.1%
(474,575)
(578,265)
103,690
-17.9%
399,898
9,965
58,814
7,503
127,278
163,879
(67,971)
134
699,500
404,331
9,626
54,859
6,972
124,233
493,884
(50,023)
4,632
1,048,514
(4,433)
339
3,955
531
3,045
(330,005)
(17,948)
(4,498)
(349,014)
-1.1%
3.5%
7.2%
7.6%
2.5%
-66.8%
35.9%
-97.1%
-33.3%
224,925
470,249
(245,324)
-52.2%
21,056
5,789
53,891
80,736
34,480
7,529
46,447
88,456
(13,424)
(1,740)
7,444
(7,720)
-38.9%
-23.1%
16.0%
-8.7%
305,661
558,705
(253,044)
-45.3%
6,727,831
6,015,526
7,033,492 $
6,574,231
$
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
THE OHIO STATE UNIVERSITY
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Years Ended May 31, 2015 and May 31, 2014
(in thousands)
May
2015
May
2014
Restated
Cash Flows from Operating Activities:
Tuition and fee receipts
Grant and contract receipts
Receipts for sales and services
Payments to or on behalf of employees
University employee benefit payments
Payments to vendors for supplies and services
Payments to students and fellows
Student loans issued
Student loans collected
Student loan interest and fees collected
Other receipts (payments)
$
Incr/(Decr) to Cash
Dollars
%
753,742 $
638,096
2,858,730
(2,131,266)
(591,903)
(1,539,718)
(112,881)
(8,654)
10,706
2,817
11,716
723,795 $
603,757
2,618,008
(2,089,789)
(605,200)
(1,463,470)
(106,991)
(8,617)
9,349
1,789
39,329
29,947
34,339
240,722
(41,477)
13,297
(76,248)
(5,890)
(37)
1,357
1,028
(27,613)
4.1%
5.7%
9.2%
2.0%
-2.2%
5.2%
5.5%
0.4%
14.5%
57.5%
-70.2%
Net cash provided (used) by operating activities
(108,615)
(280,248)
169,425
-60.5%
Cash Flows from Noncapital Financing Activities:
State share of instruction and line-item appropriations
Non-exchange grant receipts
Gift receipts for current use
Additions to permanent endowments
Drawdowns of federal direct loan proceeds
Disbursements of federal direct loans to students
Disbursement of loan proceeds to related organization
Repayment of loans from related organization
Amounts received for annuity and life income funds
Amounts paid to annuitants and life beneficiaries
Agency funds receipts
399,898
66,317
127,278
53,891
325,500
(327,658)
718
3,418
(9,574)
4,267
404,331
61,831
124,233
46,447
328,854
(330,428)
(75)
6,947
4,853
(3,426)
3,488
Agency funds disbursements
(3,662)
-1.1%
7.3%
2.5%
16.0%
-1.0%
-0.8%
-100.0%
-89.7%
-29.6%
179.5%
22.3%
(320)
9.6%
(3,320)
-0.5%
42,311
7,529
(522,443)
(42,617)
(49,757)
8,923
300,819
(16,543)
(1,740)
6,828
(1,170)
480
(3,707)
100.0%
-39.1%
-23.1%
-1.3%
2.7%
-1.0%
-41.5%
(271,087)
(556,054)
284,967
-51.2%
(131,357)
797,069
86,283
(768,376)
(275,951)
885,465
96,422
(861,139)
144,594
(88,396)
(10,139)
92,763
-52.4%
-10.0%
-10.5%
-10.8%
Net cash provided (used) by investing activities
(16,381)
(155,203)
138,822
-89.4%
Net Increase (Decrease) in Cash
244,310
(347,792) $
589,894
-169.6%
Net cash provided by noncapital financing activities
(3,342)
(4,433)
4,486
3,045
7,444
(3,354)
2,770
75
(6,229)
(1,435)
(6,148)
779
640,393
643,713
Cash Flows from Capital Financing Activities:
Proceeds from capital debt
State capital appropriations
Gift receipts for capital projects
Payments for purchase or construction of capital assets
Principal payments on capital debt and leases
Interest payments on capital debt and leases
Federal subsidies for Build America Bonds interest
300,819
25,768
5,789
(515,615)
(43,787)
(49,277)
5,216
Net cash (used) by capital financing activities
Cash Flows from Investing Activities:
Net (purchases) sales of temporary investments
Proceeds from sales and maturities of long-term investments
Investment income
Purchases of long-term investments
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Period
818,063
$
1,062,373 $
7
1,043,630
695,838
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
B.
August 28, 2015
Revenue
Consolidated revenues through the first 11 months of fiscal year 2015, excluding investment income,
were $5.1 billion, representing an increase of $329 million, or 6.9% over the same period of fiscal year
2014. The breakdown of comparative year-to-date revenues between the university and Healthcare (the
OSU Health System hospitals and OSUP) follows.
University
University revenues for the first 11 months of fiscal year 2015 were $2.6 billion. Major components of
university revenues were as follows:
University Revenue YTD First Eleven Months Fiscal Year 2015 vs. Fiscal Year 2014
$900
$800
$700
Millions
$600
$500
$400
$300
$200
$100
$-
Tuition
Grants & Contracts
State Appropriations
Auxiliary
Gifts
Other
2015
$809
$693
$421
$262
$187
$183
2014
$778
$639
$439
$246
$178
$183
4%
8%
-4%
7%
5%
0%
% Change
Student tuition and fees increased $31 million, to $809 million, compared with the first 11 months of fiscal
year 2014. The increase in revenue is primarily due to an increase in non-resident enrollment. Tuition for
autumn and spring terms tuition is up by 4.2% as total enrollment is nearly 2% above budget and up 1%
from fiscal year 2014. Non-resident enrollment is 7% above fiscal year 2014 and is 6% above budget,
while resident enrollments are down almost 1% from fiscal year 2014 and relatively flat to budget.
Grant and contract revenues were up $54 million, or 8.5%, to $693 million, primarily due to increases
from the State of Ohio, OhioLink, eTextbook, technology programs, and Office of Sponsored Program
awards.
State appropriations decreased $18 million due to a reduction in capital project activity for the first 11
months of fiscal year 2015, primarily associated with the CBEC Building.
8
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
Auxiliary Operating Revenues YTD First Eleven Months Fiscal Year 2015 vs. Fiscal Year 2014
$125
Millions
$100
$75
$50
$25
$0
Student Life - Room and
Board
Athletics
The Blackwell
Schottenstein Center
2015
$121
$111
$11
$10
$9
2014
$119
$96
$11
$10
$10
2%
16%
0%
0%
-10%
% Change
Other (Airport, Fawcett Cnt,
Ohio Union)
Auxiliary revenues for the first 11 months of fiscal year 2015 of $262 million were up $16 million, or 7%,
compared to the first 11 months of fiscal year 2014. Athletics revenues were up $15 million due primarily
to increases in football premium ticket pricing and television rights. Student Life revenues increased
slightly due to an increase in room and board rates.
Healthcare
Total healthcare revenue for the first 11 months of fiscal year 2015 increased $237 million, or 10.5%, to
$2.5 billion, compared to the first 11 months of fiscal year 2014.
Millions
Healthcare Revenues YTD First Eleven Months Fiscal Year 2015 vs. Fiscal Year 2014
$2,500
$2,250
$2,000
$1,750
$1,500
$1,250
$1,000
$750
$500
$250
$-
Health System
OSU Physicians
2015
$2,135
$368
2014
$1,949
$318
10%
16%
% Change
Consolidated OSU Health System revenues of $2.1 billion increased $187 million, or 9.6%, in the first 11
months of fiscal year 2015 over the same period in 2014 and were 5.4% above budget. Total outpatient
visits were 2.4% above budget and 4.5% above prior year. Total number of patients treated in inpatient
beds was above prior year by 3.2%. OSUP revenue for the first 11 months of fiscal year 2015 increased
$50 million, or 15.9%, to $368 million compared to $318 million for the same period of fiscal year 2014.
The increase in OSUP revenues is due to volume growth and payer mix. Payer mix is changing as a
result of the Affordable Care Act increasing Medicaid while decreasing Self Pay revenues.
9
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
C.
August 28, 2015
Operating Expenses
Consolidated operating expenses of $4.8 billion for the first 11 months of fiscal year 2015 increased $234
million, or 5.1%, compared to the first 11 months of fiscal year 2014 of $4.6 billion. Below is a comparison
of operating expenses by expense type between the first 11 months of fiscal years 2015 and 2014. As is
shown, the mix of expenses remained constant between years, with salaries and benefits comprising
approximately 58% of total operating expenses.
Mix of Operating Expenses YTD First Eleven Months Fiscal Year 2015 vs. Fiscal Year 2014
Student Aid
Fee Authorizations
Benefits
Depreciation
2% 3%
2015
5%
3% 5%
2%
13%
13%
45%
46%
Salaries
2014
32%
31%
Supplies and Other
Consolidated Operating Expenses
(in millions)
Salaries
Supplies and Other
Benefits
Fee Authorizations
Student Aid
Depreciation
2015
$
2014
2,171
1,554
629
100
133
262
4,849
$
$
$
$ Change
2,098
1,440
611
98
125
243
4,615
$
$
73
114
18
2
8
19
234
% Change
3.5%
7.9%
2.9%
2.0%
6.4%
7.8%
5.1%
Salaries increased $73 million in the first 11 months of fiscal year 2015, or 3.5% over the comparable
period in fiscal year 2014 due to increases in physician staffing levels and average university merit pool of
2%. Supplies and other expenses increased $114 million, or 7.9%, primarily due to increases in supplies
and service expenses for the healthcare operations. Benefits increased $18 million or 2.9% due to a
combination of higher rates and an increase in salary base.
D.
Revenues Less Operating Expenses (Margins)
Consolidated revenues, excluding investment income and interest expense, less operating expenses for
The Ohio State University increased $95 million, to $209 million, for the first 11 months of fiscal year 2015
compared to the first 11 months of fiscal year 2014. University (excluding auxiliary) margins decreased
$10 million, Healthcare margins increased $97 million, and auxiliary margins were increased $7 million for
the first 11 months of fiscal year 2015 compared to last year.
10
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
Millions
Revenue Less Operating Expense by Area YTD First Eleven Months
Fiscal Year 2015 vs. Fiscal Year 2014
$400
$350
$300
$250
$200
$150
$100
$50
$$(50)
$(100)
University excluding Auxiliary *
Healthcare
Auxiliary
2015
$(174)
$367
$16
2014
$(164)
$270
$9
6%
36%
78%
% Change
* These figures exclude endowment distributions. Adjusted margins, including year-to-date distributions,
were ($44) million in 2015 and ($34) million in 2014.
E.
Investments
Long-Term Investment Pool
For the 11 months ended May 31, 2015, the market value of the university’s LTIP increased $44 million to
$3.66 billion. Changes in total valuation are summarized below:
Market Value at June 30, 2014
Net principal additions
$
Change in market value
3,613,866
94,344
78,571
Income earned
71,085
Distributions
(130,200)
Expenses
(69,619)
Market Value at May 31, 2015
$
3,658,047
Net principal additions include new endowment gifts ($55.6 million), reinvestment of unused endowment
distributions ($1.4 million), and other net transfers of university monies ($37.3 million). Change in market
value includes realized gains (losses) on the sale of investment assets and unrealized gains (losses)
associated with assets held in the pool at May 31, 2015. Income earned includes interest and dividends
and is used primarily to help fund distributions. Expenses include investment management expenses
($55.6 million), university development related expenses ($13.3 million) and other administrative related
expenses ($0.7 million).
LTIP Investment Returns
For the 11 months ended May 31, 2015 (FYTD), the LTIP earned a net of investment fee return of 4.56%
versus a Policy Benchmark of 3.57%, resulting in outperformance of 0.99%. During that period, our Real
Assets returned 11.6%, followed by Global Equities at 4.8%, and Global Fixed Income at 2.3%. Actual
performance figures differ from the financial statements due to a 3-month lag in reporting market values
for certain alternative investments.
The comparable 11 month period ended May 31, 2014 saw a net of investment fee return of 13.24%
versus a 10.58% Policy Benchmark for outperformance of 2.66%. During that period, our Global Equities
11
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
returned 16.1%, followed by Private Capital assets at 15.9%, Real Assets at 14.1%, and Global Fixed
Income at 6.5%.
Temporary Investments
For the 11 months ended May 31, 2015 (FYTD) the Intermediate Investments earned 1.05%
outperforming the Bank of America ML 1-3 year U.S. Gov’t/Credit benchmark (+0.92%) by 0.13%. ShortTerm Investments earned 0.97% outperforming the 90-day T-Bill benchmark (+0.01%) by 0.96%.
The comparable 11 month period ended May 31, 2014, saw Intermediate Investments lead the way with a
return of 1.70%. Short-Term Investments returned 1.19% for this same time period.
F.
Cash Flows
Cash flows used in operating activities were $108 million through the first 11 months of fiscal year 2015,
compared with net cash used by operating activities of $280 million for the same period in fiscal year
2014. The increase in cash is due primarily to sales and services from healthcare.
Cash flows provided by noncapital financing activities were $640 million through the first 11 months of
fiscal year 2015, compared with $644 million for the same period in fiscal year 2014.
Net cash used in capital financing activities was $272 million for first 11 months of fiscal year 2015,
compared with $556 million for the comparable period in fiscal year 2014. The increase in cash provided
by capital financing activities in fiscal year 2015 is due primarily to the bond issuance.
Capital outlay for the 11 months ended May 31, 2015 approximated $516 million. Within the hospital
system, $198 million was expended, including construction progress payments of $177 million related to
the $1.1 billion Medical Center Expansion. Within Student Life, $124 million was expended; the North
Residential District Transformation represented the largest portion of the expenditures as the project
progresses and construction of the exterior envelopes has begun. An additional $78 million was invested
within the academic buildings and campus infrastructure, primary projects being the recently opened
CBEC Building and the related East Regional Chilled Water Plant, which will provide chilled water for the
CBEC and other northern core academic buildings. Capital equipment expenditures included an
additional $38 million in medical center equipment not part of the expansion, and an additional $57 million
in university equipment. Total capital assets, net of accumulated depreciation increased $278 million, to
$4.85 billion.
Net cash used in investing activities was $16 million for the first 11 months of fiscal year 2015, compared
to net cash provided by investing activities of $155 million for the comparable period in fiscal year 2014.
The net cash inflow relates primarily to the sales of temporary investments.
G.
Cash and Investments
From June 30, 2014 to May 31, 2015, total university cash and investments increased by $426 million, to
$6 billion. Cash and short term investments increased $376 million, primarily due to the bond issuance
and healthcare revenues. Gifted endowment and other long-term investments increased $50 million
primarily due to market value increases.
12
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
Cash and Investments
($ in millions)
$7,000
$6,000
$5,000
$1,801
Gifted Endowments
$1,769
$4,000
$3,000
Long Term Investments
$1,949
$1,931
Cash and Temporary Investments
$2,000
$1,000
$2,282
$1,907
$0
2015
H.
2014
Debt
On October 9, 2014, the university closed on $136 million in tax-exempt Fixed Rate General Receipts
Bonds, Series 2014 A and $150 million in tax-exempt Variable Rate General Receipts Bonds, Series
2014 B1 and B2. The Series 2014 A bonds will have annual principal payments until final maturity on
December 1, 2044, with interest rates ranging from 2% to 5%. The Series 2014 B1 and B2 bonds will
have principal payments on December 1, 2034, 2039 and 2044. The initial interest rate was 0.04% and
will be subject to a rate reset on a weekly basis. The proceeds of the Series 2014 bond issues are being
used for the Wexner Medical Center expansion and campus infrastructure projects.
III.
Financial Highlights - For the Eleven Months Ending May 31, 2015
A.
State Support Outlook
Through May, the Ohio Office of Budget and Management shows total tax receipts being above initial
projections by 2.1%, with income taxes exceeding expectations by 4.1% and sales taxes being 1.1%
above projections. Overall revenues to the state are above expectations by 1.5%.
According to the Ohio Department of Jobs and Family Services the state unemployment rate for May was
5.2%, unchanged from April, and lower than the national average for May 5.5%.
The Governor signed the biennial budget bill in June. The bill increases Share of Instruction (SSI) funding
by 4.7% in fiscal year 2016 and another 4.0% in fiscal year 2017, but limits undergraduate fee increases
to 0% in each year for those institutions not offering a tuition guarantee program. The university is actively
engaged in discussions with the Inter-University Council and the Ohio Department of Higher Education
(formerly the Ohio Board of Regents) about the SSI formula and how it meets the needs of the state.
B.
OSU Wexner Medical Center
For the first 11 months of the fiscal year ending June 30, 2015, the Wexner Health System gain from
operations was 43.5% higher than the same period of fiscal year 2014, and 76.6% above budget.
13
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
∑
∑
∑
∑
∑
∑
∑
∑
∑
August 28, 2015
Inpatient admissions were 2.0% above prior year and the total number of patients treated in
inpatient beds was above prior year by 3.2%.
Total outpatient visits were 2.4% above budget and 4.5% above prior year.
Adjusted admissions were 0.3% below budget and 3.3% above prior year.
Operating revenue per adjusted admission was 5.7% above budget and 6.4% above prior year.
Operating expense per adjusted admission was 0.7% below budget and 2.5% above prior year.
Total operating revenue of $2,138.7 million was 5.4% above budget and 9.8% above prior year.
Total operating expense of $1,844.9 million was 0.9% below budget and 5.9% above prior year.
Excess of revenue over expense (before transfers for research, education and strategic
programs) of $294.1 million was 75.5% above budget and 40.8% above prior year.
Operating EBIDA (Earnings before Interest, Depreciation, and Amortization) margin was 40.3%
above budget, days cash on hand was 12.9 days above budget, and debt service coverage was
42.2% above budget.
Medical Liability Reserves - Contributions to the Medical Liability Self Insurance Funds I & II and
Oval, Ltd (the university’s captive insurance company) have been maintained according to
budget. Both self-insurance funds are fully funded and Oval, Ltd is in full compliance with the
funding requirements of the Bermuda Insurance Act.
C.
Enrollment
Columbus Campus
Enrollment is nearly 2% above budget at the Columbus campus and 1% up compared to fiscal year 2014.
The following tables are based on student headcounts for summer and autumn semesters combined.
ALL TERMS
Fiscal Year 2015
Fiscal Years 2014 & 2015
Actual Vs. Budget Headcounts
Headcount Comparison
Student Level
Actual
Budget Change % Chg
FY 2015 FY 2014 Change % Chg
Undergraduate
96,672
95,446
1,226
1.3%
96,672
95,587
1,085
1.1%
Graduate
25,963
25,005
958
3.8%
25,963
25,379
584
2.3%
Professional
7,601
7,726
(125)
-1.6%
7,601
7,758
(157)
-2.0%
Grand Total
130,236 128,177
2,059
1.6%
130,236 128,724
1,512
1.2%
Includes Summer & Autumn & Spring Terms; Excludes May Fee Waivers
As shown below, resident enrollments are down almost 1% between fiscal year 2014 and fiscal year 2015
and relatively flat to budget. Non-resident enrollment is 7% above fiscal year 2014 and is up 6% to
budget. For the academic year-to-date, total enrollment is up 1% between fiscal year 2014 and fiscal year
2015 and is nearly 2% above budget.
ALL TERMS
Fiscal Year 2015
Fiscal Years 2014 & 2015
Actual Vs. Budget Headcounts
Headcount Comparison
Student Level
Actual
Budget Change
% Chg
FY 2015 FY 2014 Change
% Chg
Resident
97,508
97,370
138
0.1%
97,508
98,230
(722)
-0.7%
Non-Resident
32,728
30,807
1,921
6.2%
32,728
30,494
2,234
7.3%
Grand Total 130,236 128,177
2,059
1.6%
130,236 128,724
1,512
1.2%
Includes Summer & Autumn & Spring Terms; Excludes May Fee Waivers
It appears that enrollments at the Columbus campus continue to rebound from the effects of semester
conversion.
14
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
Regional Campuses
The following are the summer, autumn, and spring semester’s headcount enrollment figures combined.
Overall, regional campus enrollment is nearly flat from fiscal year 2014 and is 1% above budget.
Although, it appears that enrollments at the regional campuses have started to stabilize from the effects
of semester conversion, several factors still appear to be negatively impacting regional campus
enrollment, including: the continued poor economic conditions in the communities they serve, the
decreasing number of high school graduates and the competition from community and technical colleges.
With the exception of the Mansfield and Marion campuses, all regional campuses were up from their
projection for fiscal year 2015. Marion was relatively flat and Mansfield was down 3%.
ALL TERMS
Fiscal Year 2015
Actual Vs. Budget Headcounts
Actual
Budget Change
% Chg
Fiscal Years 2014 & 2015
Headcount Comparison
FY 2015 FY 2014 Change
% Chg
Student
Level
Lima
2,210
2,149
61
2.8%
2,210
2,292
Mansfield
2,586
2,671
(85)
-3.2%
2,586
2,672
Marion
2,592
2,599
(7)
-0.3%
2,592
2,758
Newark
5,008
4,863
145
3.0%
5,008
4,837
ATI
1,433
1,369
64
4.7%
1,433
1,334
Grand Total
13,829
13,651
178
1.3%
13,829
13,893
Includes Summer & Autumn & Spring Terms; Excludes May Fee Waivers
D.
(82)
(86)
(166)
171
99
(64)
-3.6%
-3.2%
-6.0%
3.5%
7.4%
-0.5%
Research
Direct cost project expenditures through May 2015, at just under $365 million, are up 2.9% from the same
time in fiscal year 2014, while Facilities and Administrative (F&A) recovery has increased by 2.2%. The
greater differences in growth between direct cost expenditures and F&A recovery seen earlier in fiscal
year 2015 continue to even out as we near the end of the fiscal year, and as purchases for the new
cancer hospital taper off.
Award dollars reported through May 2015 are up by 6.2% overall from fiscal year 2014, with federal
funding increased by just under 1%. Share of award dollars from National Institute for Health (NIH), our
biggest funder, has dropped 3% compared to this time last year. However, the NIH made no awards
during a two week blackout period in May due to NIH systems updates. Funding is down from
Departments of Defense, Education, and Energy. On the positive side, funding is up justly slightly (1.1%)
from National Science Foundation (NSF), one of our major federal funders. Funding has also increased
from Department of Agriculture (57%), Department of Labor (46%), NASA (National Aeronautics and
Space Administration) (38%), and other Federal agencies (12%); but these agencies are less significant
sources of federal funding overall.
Included in the $36 million in federal dollars received in May was close to $6 million from the U.S.
Department of Labor, Bureau of Labor Statistics for carrying out the National Longitudinal Survey of the
U.S. labor force; $4 million from USAID (United States Agency for International Development) for
agricultural research and capacity building in Africa; a $1.25 million Army Research Office award in
materials science; and $2 million NSF Career awards, which provide five years of support for exceptional
new investigators.
In general, the federal funding outlook remains fairly bleak, with flat budgets and very low funding rates at
our major sponsors, NIH and NSF. This situation is of concern because in the past the federal
government has provided approximately 80% of all research funding, either directly or as flow-through
from other organizations. In fiscal year 2015 to date, the federal share is about 75%. Continuing to grow
the research enterprise will require an increase in the number of competitive proposals to federal
agencies, as well as continued diversification of funding sources.
15
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
With respect to diversification, awards from non-federal entities (25% of reported award dollars) total
$110 million compared with $86 million at this time in fiscal year 2014, an increase of 25%. Awards are
spread across State of Ohio (38% of non-federal awards), industry (38% of non-federal awards) and
private agencies (23%).
E.
Key Affiliates
Affiliated entities are separate organizations that are “closely related” to the primary mission of the
university.
Revenues
Expenses
Net Income
Campus Partners
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
12,097 $
7,206 $
4,891
$
8,883 $
9,426 $
(543)
$
3,214 $
(2,220) $
5,434
%
67.9%
-5.8%
244.8%
Campus Partners’ revenues are up due to a grant of $5 million received from the Wexner Medical Center.
The grant was received in May. Outside of the grant, revenue is down slightly in fiscal year 2015
compared to fiscal year 2014 due to the loss of tenants. These tenants have been replaced with tenants
who have started to pay rent, but the spaces were vacant for the first half of the year.
Expenses are down in fiscal year 2015 as a result of savings in interest expense due to refinancing of
debt. Thus far in fiscal year 2015, Campus Partners has had $730,000 in interest expense savings
compared to fiscal year 2014. This savings has been offset partially by spending on legal and other
professional services related to the development on 15th and High.
Revenues
Expenses
Net Income
SciTech
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
5,688 $
5,296 $
392
$
5,035 $
4,699 $
336
$
653 $
597 $
56
%
7.4%
7.2%
-9.4%
SciTech has increased revenues in fiscal year 2015 compared to fiscal year 2014 due to an increase in
base rent of $304,000 and an increase in operating expense recovery of $58,000.
The increase in expenses at SciTech is driven primarily by $250,000 of funding paid to University
Development Strategies.
F.
Auxiliary Operations
Auxiliaries are entities that exist to furnish goods or services to students, faculty or staff, or the general
public for a fee. Auxiliary operations are essentially self-supporting. Examples at OSU include: Athletics,
Schottenstein Center, the Blackwell, Fawcett Center, Drake Union, housing and dining operations,
recreational sports, and the Ohio Union. Each of these operations is discussed below.
16
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
Revenues
Expenses
Net Income
August 28, 2015
Athletics Department
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
148,020 $
126,411 $
21,609
$
142,343 $
129,274 $
13,069
$
5,677 $
(2,863) $
8,540
%
17.1%
10.1%
298.3%
Revenue is $21.6 million higher than the prior year. The majority of the increase is due to premium
football ticket prices and the additional 2,500 seats in the stadium account for approximately $9 million of
the increase. Approximately $4 million is attributable to the second football bowl game ($2 million) and
increases in television and NCAA (National Collegiate Athletic Association) revenue ($2 million). Three
million dollars is due to additional capital received as a donation for the Schottenstein Center Auxiliary
Gym and Indoor Golf Facility and $2 million from other fundraising revenue. The rest of the increase is
comprised of revenues from camps, administrative fees and golf course fees. Expenses are $13 million
higher primarily due to increases in personnel costs ($2.5 million), bowl expenses ($1.5 million) and
capital ($3.6 million) and $3.9 million in other operating costs.
Revenues
Expenses
Net Income
Schottenstein Center
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
25,890 $
19,579 $
6,311
$
24,324 $
18,939 $
5,385
$
1,566 $
640 $
926
%
32.2%
28.4%
144.7%
Revenue is $6.3 million more than prior year primarily due to $6.6 million increase in external ticket sales
from The Rolling Stones concert, nine high school graduations, and the receipt of payments from high
school athletic tournaments held in March. The external ticket sales are slightly offset by a $318,000
decrease in internal ticket sales revenue and $11,000 in sponsorships. Expenses are above year-to-date
fiscal year 2014 by $5.3 million due to a $6.1 million increase in event cost of sales, $154,000 increase in
personnel expenses which is offset by a decrease of $853,000 in capital equipment costs for the prior
year scoreboard upgrades.
Revenues
Expenses
Net Income
Blackwell Inn
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
11,298 $
10,829 $
469
$
11,476 $
11,063 $
413
$
(178) $
(234) $
56
%
4.3%
3.7%
23.9%
Revenues are $469,000 over last year mainly due to increased room revenue of $256,000, food and
beverage revenue of $157,000, and $56,000 in other revenue. Room revenue is better than last year due
to higher occupancy and room rates. The average rate of $111.31 is currently $4.88 better than last year.
Food and beverage revenues are $157,000 better than last year due to growth in banquet and event
revenues which are up $170,000 and outlet revenues down $13,000 due to shortfall in student meal plan.
Expenses are $413,000 over last year due to increased payroll and benefits of $227,000, and other
variable expenses sales such as valet parking and linens relating to the increased sales.
17
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
Revenues
Expenses
Net Income
August 28, 2015
Housing & Dining
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
142,579 $
137,163 $
5,416
$
129,365 $
125,498 $
3,867
$
13,214 $
11,665 $
1,549
%
3.9%
3.1%
13.3%
Housing and dining revenues are up $5.4 million due to the 5% housing rate increase of $4.3 million and
stronger cash/credit food sales of $1.1 million. Housing and dining expenses are up $3.9 million from the
prior year. Housing expenses are $917,000 lower than prior year, driven by the $7.5 million in fiscal year
2013 debt service payments for the Residence on Tenth and South High Rise projects not being charged
until fiscal year 2014. Dining expenses are $4.7 million above fiscal year 2014 levels primarily due to
increased expenditures for labor, supplies and food as well as the start of debt service payments for the
North Residential District.
Revenues
Expenses
Net Income
Recreational Sports
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
18,530 $
18,979 $
(449)
$
15,892 $
15,757 $
135
$
2,638 $
3,222 $
(584)
%
-2.4%
0.9%
-18.1%
Revenues are tracking $449,000 below 2014 year-to-date revenues. This is a primarily due to EHE
payments to Recreation Sports which occurred in fiscal year 2014 and adjustments to projected annual
student recreational sports fee revenue. Current year expenses are $135,000 over that of fiscal year 2014
primarily due to the fiscal year 2015 mid-year addition of debt service payments for sports facility in the
North Residential District.
Revenues
Expenses
Net Income
Ohio Union
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
13,672 $
13,167 $
505
$
12,863 $
12,475 $
388
$
809 $
692 $
117
%
3.8%
3.1%
16.9%
Revenue is $505,000 higher than prior year primarily due to an increase in room rentals and
technology/equipment services and a marginal increase in general funds support. Expenses are greater
than prior year by $388,000 primarily due to increases in personnel, cost of sales and purchased
services.
Revenues
Expenses
Net Income
Fawcett Center
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
4,105 $
3,875 $
230
$
3,478 $
3,402 $
76
$
627 $
473 $
154
%
5.9%
2.2%
32.6%
Revenues are $230,000 better than last year due to increases in office space rental of $83,000 (due to
3% annual increase) plus two new tenants this year and an increase of $147,000 in food and beverage
18
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
sales despite food sales shortfalls, which is offset by increased banquet beverage sales. Expenses are
$76,000 over prior year due to increased variable costs related to the increased sales.
Revenues
Expenses
Net Income
Drake Union
Eleven Months Ended May 31, 2015
(In Thousands)
FY15
FY14
$ Change
$
1,013 $
1,007 $
6
$
659 $
744 $
(85)
$
354 $
263 $
91
%
0.6%
-11.4%
34.6%
Revenues are up $6,000 from the previous fiscal year. Increases in conference and office space rental
revenues of $7,000 (due to the 3% annual rate increase) are offset by vacancies due to the Department
of Dance. Expenses are $85,000 under the prior year-to-date due to a savings of $128,000 in
maintenance expenses (in the prior year, the HVAC [heating, ventilation, and air conditioning] was
replaced) offset by increases of $32,000 in utilities (mostly from the cost of steam), a $10,000 one-time
purchase of conference equipment, and a $4,000 purchase of promotional items.
19
August 2015 Board Meeting - Finance Committee Meeting
August 2015 Board Meeting
2014-15
Actual
CONSOLIDATED PERFORMANCE
A. Financial Snapshot (in thousands)
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
B. Institutional Financial Metrics
1.
2.
3.
4.
5.
6.
7.
8.
Liquidity – Primary Reserve Ratio
Liquidity – Days Cash on Hand
Actual Debt Service to Operations (measured semi-annually)
Short Term Investment Pool Return
Intermediate Investment Pool Return
YTD Long Term Investment Pool Return >4.25%
Long Term Investment Pool Average 3 Year Return >4.25%
Credit Rating
FY 15 | Through May 2015
2014-15
Budget
$ 5,166,540 $ 4,906,879
↑
$ 5,105,493 $ 5,078,948
↑
$ 305,662 $ 152,748
↑
$ 141,783 $ (93,633)
↑
$ 172,609 $ 114,583
↑
2014-15
2014-15
Actual vs.
Actual
Benchmark Benchmark
0.6
0.4
↑
141
120
↑
3.05%
4.00%
↓
0.72%
0.05%
↑
1.09%
0.78%
↑
4.56%
3.57%
↔
10.58%
8.96%
↑
AA
AA
↔
LEGEND
20
Current
Status
August 2015 Board Meeting - Finance Committee Meeting
August 2015 Board Meeting
FY 15 | Through May 2015
UNIVERSITY PERFORMANCE
2014-15
Budget
2014-15 Actual
A. Revenue Drivers (in thousands)
1. Tuition and Fees
2. Federal, State, Local and Private Grants & Contracts
3. Advancement Cash Receipts
4. State Share of Instruction
5. State Appropriations
6. Net Contribution from Auxiliary Enterprises
B. Financial Snapshot (in thousands)
1. Total Revenue
2. Total Expenses
3. Current Net Margin
4. Change in Net Assets
5. Change in Net Assets excluding endowment performance
C. Performance Metrics
1. Enrollment - Summer, Autumn, Spring
2. Credit Hours - Summer, Autumn, Spring
$
$
$
$
$
$
974,425
636,444
130,656
321,069
70,962
32,650
$
$
$
$
$
$
940,142
565,243
127,665
321,618
71,067
23,354
↑
↑
↑
↔
↔
↑
$
$
$
$
$
2,814,791
2,873,973
109,728
122,246
(35,168)
$
$
$
$
$
2,577,932
2,853,313
(109,161)
93,639
(148,925)
↑
↔
↑
↑
↑
112,908
1,771,858
↑
↑
114,646
1,839,314
Meets or exceeds goal
Below goal
Far below goal
21
Current
Status
LEGEND
↑ Performance up
↔ No change in performance
↓ Performance down
August 2015 Board Meeting - Finance Committee Meeting
August 2015 Board Meeting
FY 15 | Through May 2015
MEDICAL CENTER FINANCIAL PERFORMANCE
2014-15
Budget
2014-15 Actual
A. Revenue Drivers
1. Patient Admissions
2. Patients in Beds including Obs area
3. Patient Discharges
4. Total Surgeries
5. Outpatient Visits
6. ED Visits
B. Activity Metrics
1. Adjusted Admissions
2. Operating Revenue / Adjusted Admit
3. Expense / Adjusted Admit
C. Financial Snapshot (in thousands)
1. Operating Revenues
2. Total Expenses
3. Gain from Operations
4. Excess Revenue Over Expenses
D. Performance Metrics
1. Operating EBIDA Margin
2. Days Cash on Hand
3. Debt Service Coverage
53,192
69,388
53,421
68,982
↔
52,974
37,419
1,519,738
114,241
52,833
35,227
1,484,558
113,454
↔
$
$
98,999
20,490
18,809
↔
$
$
98,747
21,658
18,683
$
$
$
$
2,138.7
1,844.9
293.8
294.1
$
$
$
$
2,028.5
1,862.1
166.4
167.6
↑
19.5%
82.2
6.4
COMMENTS & FOOTNOTES
Current
Status
13.9%
69.3
4.5
↑
↔
↔
↑
↑
↔
↔
↑
↑
↑
↑
↑
LEGEND
Meets or exceeds goal
Below goal
Far below goal
22
↑ Performance up
↔ No change in performance
↓ Performance down
August 2015 Board Meeting - Finance Committee Meeting
August 2015 Board Meeting
FY15 YTD | Through June 2015
FY15 Year-To-Date
Actual Prior
Year Same
Period
(FY14 YTD)
Actual
Target
(Budget)
Target
%Var
$122,159,855
$129,152,624
$137,305,836
-5.9%
$137,323,482
$52,594,549
$59,277,991
$63,000,000
-5.9%
$63,000,000
2. %Total Projects Completed on Time
55.5%
84.9%
90.0%
-5.7%
90.0%
3. %Total Projects Completed on Budget
75.3%
94.3%
90.0%
4.8%
90.0%
783
1,314
3,000
-56.20%
3,000
Metric is measured Quarterly, showing 4th Quarter FY15
Metric is measured Quarterly, showing 4th Quarter FY15
PHYSICAL ENVIRONMENT
Actual
vs
Target
FY15
Annual Target
(Budget)
Comments
A. FINANCIAL
1. A&P Tot. Operating Expenses (General & Earnings Funds)
B. OPERATIONAL
1. Columbus Campus Gas & Electricity Expense
4. Utilities Customer Downtime Hours - Unplanned (QTRLY)
5. Capital Investment Program Spend
6. Facility Condition Index (%)
7. CABS Riders
-
$494.5 M
$640.6 M
-22.8%
$640.6 M
76.5%
76.0%
80.0%
-5.0%
80.0%
3,759,909
4,035,211
4,170,000
-3.2%
4,170,000
8. WMC Parking Garage Occupancy (%) *
85.5%
78.7%
85.0%
-7.5%
85.0%
9. Sum of Daily Temporary Parking Space Closures
15,089
12,612
20,000
-36.9%
20,000
1. Environmental Health Safety Index (5 Point Scale)
4.45
4.79
4.75
0.9%
4.75
2. Crimes- Part 1 (Major: theft, burglary, assault, arson, rape, etc.)
569
504
564
-10.6%
564
3,037
2,583
2,952
-12.5%
2,952
Price increase since prior year value
Average composite FCI to date
C. SAFETY
3. Crimes- All Other (Traffic violations, misdemeanor thefts, etc.)
4. Traffic Accidents Injury
25
28
25
12.0%
25
5. Traffic Accidents Non-Injury
303
319
300
6.3%
300
6. Off-Campus Crime Statistics
2,813
2,227
2,940
-24.3%
2,940
1. BIM for Existing Buildings %Implemented (Entire Project)
28.0%
46.4%
54.0%
-14.1%
54.0%
2. Enterprise GIS Implementation%
0.0%
100.0%
100.0%
0.0%
100.0%
Target changed from 4.25 to 4.75 January 2015
D. FY15 KEY INITIATIVES
* Please note: For WMC Parking Garage Occupancy (%), the target is 85% + or – 5%, with an additional 5% yellow range in both directions.
Meets or surpasses Target
4-Mo Target %Var improved from Prior 4-Mo
Within 10% of Target
Within +/- 2.5% of Prior 4-Mo Target %Var
Does not meet Target by >10%
4-Mo Target %Var decline from Prior 4-Mo
Data Pending
23
August 2015 Board Meeting - Finance Committee Meeting
Project Status Report – On Time/On Budget Scorecard
Project
Board
Budget
North Residential District
$370.0M
East Regional Chilled Water Plant
$68.3M
Phase 1 plant is operational. Phase 2
tunnel construction is underway with
partial opening in August.
$59.0M
Renovate Pomerene and Oxley for Data
Analytics. Enabling projects and
programming are underway. Project is
expected to complete Spring 2018.
Pomerene and Oxley Halls
Renovation
On
Time
On
Budget
Additional Information
Phase 1 buildings are nearly complete
with partial occupancy. The project will
add 3,200 beds to the district. The first set
of beds (1,500) will be ready for use fall
2015; the remaining beds will be ready for
fall 2016.
Key:
On track
Watching closely – actions are being taken to keep on track
Not on track
Project Status Report - On Time/On Budget
Page 1
24
August 2015
August 2015 Board Meeting - Finance Committee Meeting
Project Status Report – On Time/On Budget Scorecard
Project
Jameson Crane Sports Med Institute
Vet Hospital Enhancement and
Expansion
Total
Budget
On
Time
On
Budget
Additional Information
$45.0M
Construct a new facility for the Sports
Medicine department. Project is now
under construction.
$27.0M
Construct and renovate approximately
57,000 GSF as a multi-phase project.
Building addition (Phase 1) is now under
construction and is expected to complete
Jan 2016.
Key:
On track
Watching closely – actions are being taken to keep on track
Not on track
Project Status Report - On Time/On Budget
Page 2
25
August 2015
August 2015 Board Meeting - Finance Committee Meeting
The Office of Investments & Office of the Treasurer
Annual Review – Fiscal Year 2015
August 2015 Board of Trustees Meeting – Finance Committee
26
August 2015 Board Meeting - Finance Committee Meeting
Office of Investments
LTIP Policy Benchmark
•
The policy benchmark was changed on July 1, 2014 from an absolute approach to a
relative approach.
•
The new benchmark is: 60% Global Equities (ACWI), 30% U.S. Fixed Income (U.S.
Aggregate Bond Index), and 10% Real Assets (CPI + 5%).
•
The Office of Investments developed a transition plan to better align the portfolio to the
new benchmark.
•
The LTIP is currently in Transition.
•
The Transition is expected to be completed by April 1, 2016.
2
27
August 2015 Board Meeting - Finance Committee Meeting
Office of Investments
JUNE 30, 2015 LTIP SUMMARY
MARKET VALUE ROLLFORWARD
FY 2015
$3,547,565,865
63,172,933
46,683,938
(142,172,454)
(15,327,610)
133,964,134
$3,633,886,806
Beginning Market Value 1
Gifts
Other additions, net 2
Distribution
Development & Accounting
Investment income, net
Ending Market Value
1.
2.
PERFORMANCE
July 2009 June 2015
$1,651,561,030
294,424,616
1,028,839,648
(722,433,248)
(87,222,664)
1,468,717,424
$3,633,886,806
Month
Global Equities
MSCI ACWI
Public Equities
Long Equities
Long/Short Equities
Private Equities
Buyouts/Growth
Natural Resources
FoF/Secondaries
Venture Capital
Liquidating Assets
60.6% Global Fixed Income
43.2%
Fixed Income
28.3%
14.9%
Credit
Relative Value/Macro
Private Credit
17.2%
7.2% Real Assets
7.2% Real Estate
2.2% Infrastructure
0.6%
1 Year 3 Year 5 Year
(0.98%) 0.99%
(2.31%) 0.52%
3.75%
1.23%
Global Fixed Income
(0.39%) 0.64% 1.89%
Barclays U.S. Aggregate (1.09%) (1.68%) 1.86%
Real Assets
CPI + 5%
0.11%
0.74%
Total Fund
Policy Benchmark
3.53% 11.77%
2.32% 4.79%
(0.72%) 1.08%
(1.64%) 0.05%
3.81%
1.87%
9.86% 9.12%
7.55% 8.08%
SHARPE RATIO
Beginning Market Value for FYTD 2015 does not include audit adjustment writeup of $66.3M for alternative investment valuations received after Accounting
Close on July 16, 2014.
Other additions, net contains Operating Fund additions of: $265M in FY 2012,
$55M in FY 2013, and $50M in FY 2015. Also included is $483M Parking proceeds
addition in FY 2013.
Global Equities
Qtr
Total Fund
Policy Benchmark
30.2%
7.7%
11.2%
7.2%
4.1%
9.2%
5.0%
4.2%
0.2%
28
1 Year
0.9
0.3
3 Years
2.7
1.7
5 Years
1.9
1.2
August 2015 Board Meeting - Finance Committee Meeting
Office of Investments
Contribution Analysis for LTIP Fiscal Year 2015
Avg %
of Fund*
1 Year
Return
Long Equities
Long/Short Equities
Buyouts
Venture
Natural Resources
FOF/Secondary Funds
Liquidating Assets
Global Equities
ACWI
27.7
15.2
7.2
0.6
7.8
1.8
0.3
60.7
3.24
3.12
11.53
20.15
-3.19
11.70
-21.54
3.75
1.23
0.90
0.47
0.83
0.13
(0.25)
0.21
(0.07)
2.28
Fixed Income
Credit
Relative Value/Macro
Private Credit
Global Fixed Income
Barclays U.S. Agg
7.3
11.1
6.7
4.3
29.4
2.63
-0.76
3.26
6.28
1.89
1.86
0.19
(0.08)
0.22
0.27
0.56
5.9
4.1
9.9
14.11
10.05
11.77
4.79
0.83
0.41
1.17
Asset Class
Real Estate
Infrastructure
Real Assets
CPI + 5%
Total Consolidation
Policy Benchmark
Contribution
to Return*
3.81
1.87
*Avg. % of Fund is average of month-end allocations. Contribution to Return is estimated based on month-end
allocations without adjustments for cash flows.
29
4
August 2015 Board Meeting - Finance Committee Meeting
Office of Investments
LTIP Distribution by Designated Use as of June 30, 2015
Market Value
Distribution
% of
Distribution
Scholarships, Fellowships, & Loans
$631,173,530
$24,577,259
17.3%
Chairs, Professorships & Eminent
Scholars
474,179,218
18,729,611
13.2%
Educational Support & Libraries
943,176,140
37,284,593
26.2%
Research
223,221,655
8,799,166
6.2%
Administrative Support
155,425,119
6,082,559
4.3%
31,994,589
1,253,271
.9%
1,156,035,993
45,106,285
31.7%
18,680,562
339,710
.2%
$3,633,886,806
$142,172,454
100.0%
Public Service
University Operations
Pending Designation/Funding
Total
5
30
August 2015 Board Meeting - Finance Committee Meeting
Office of Investments
Calendar Year 2015 LTIP Transition
•
1/3 of the portfolio is invested in illiquid limited partnerships and an additional 1/3 is invested in
hedge fund structures with lock-ups as long as one to two years. We will continue the transition to the
new Policy Benchmark throughout calendar 2015 and into mid- 2016.
•
During the transition we will continue to protect the LTIP from downside risk. We are in the 7th year of
an equity bull market in the U.S. and a much longer time period of declining U.S. interest rates. In order
to track the new 60/30/10 Policy Benchmark and outperform consistently on a relative basis, we will
carefully increase both Equity exposure (beta) and U.S. Fixed Income exposure (duration), in a
measured manner.
•
Several major events could still unfold over the remainder of 2015 which could derail the bull market:
Federal Reserve Interest rate moves, U.S. growth slows, global growth continues to slow, a major
country default, U.S. companies sales/earnings decline along with slowing dividend growth, U.S.
multiples continue to expand, the strong U.S. Dollar and U.S. global company dollar sales (exports)
decline weighing on U.S. global companies.
•
Overall the LTIP is positioned to outperform the 60/30/10 Policy Benchmark if equities are slightly
positive to negative and fixed income yields are flat to increasing.
6
31
August 2015 Board Meeting - Finance Committee Meeting
Office of the Treasurer
University Operating Funds
Total $3,105 MM
Short Term
$1,299
Long Term
$1,156
Short-Term ≤ 1 year
Intermediate Term 1 - 3 years
Long-Term > 3 years
Short Term Cash
Short Term Investments
Benchmark - 91-Day T Bills
Intermediate Term Investments
Benchmark - BofA ML 1-3 year Gov’t Credit
Long Term
Benchmark
Total
Intermediate Term
$650
6/30/2015
6/30/2014
1 Year
3 Year
$892,997,803
$405,793,765
$1,017,077,586
$303,280,869
$650,513,166
$625,210,992
$1,156,035,993
$1,137,339,503
0.19%
0.94%
0.03%
1.01%
0.90%
3.81%
1.87%
N/A
N/A
0.10%
1.17%
1.00%
9.86%
7.55%
$3,105,340,727
$3,082,908,950
32
7
August 2015 Board Meeting - Finance Committee Meeting
Office of the Treasurer
Investment of Operating Funds – Policy Compliance
as of 6/30/2015
Board of Trustees Investment Policy
Target: >$856,000,000
Actual: $1,949,000,000
Comb. Short & Intermediate Pools ≥ 60 days cash flow
Value of Long-Term Pool ≤ 60% of total operating
funds
Target: <$1,881,000,000
Actual: $1,156,000,000
Target: >$657,000,000
Actual: $1,949,000,000
Combined short & Intermediate pools ≥ 110% of all
variable rate debt including commercial paper
Ohio Revised Code section 3345.05
Minimum of 25% of operating funds invested in U.S.
government securities or of its agencies or
instrumentalities, written repurchase agreements,
or money market funds
Target: >$785,000,000
Actual: $1,186,000,000
8
33
August 2015 Board Meeting - Finance Committee Meeting
INTERNAL BANK
ANNUAL REVIEW
August 2015
34
August 2015 Board Meeting - Finance Committee Meeting
Office of the Treasurer
Internal Bank Summary
The Office of Financial Services serves as a “bank” to university departments –
taking deposits, issuing debt, investing operating funds and distributing loans
•
Allocates scarce financial resources, manages risk and creates long-term
unrestricted resources
•
Facilitates Asset/Liability management
•
Leverages institutional borrowing and cash flow to address internal department
capital needs
•
Governed by an Internal Bank Executive Committee and the Senior VP & CFO
•
Approved loans or lines of credit are consistent with the University’s Academic
Plan and Strategic Goals
•
Applications must include a business plan with repayment sources
•
A Memorandum of Understanding (MOU) with a specific repayment schedule is
approved and signed by relevant parties prior to funding
35
2
August 2015 Board Meeting - Finance Committee Meeting
Office of the Treasurer
Internal Bank Summary
As of June 30, 2015
Type
Amount Outstanding
Internal Loans*
Master Lease
$
$
2,766,651,799
6,400,985
$
2,773,052,784
Total:
Borrower
Amount Outstanding
Medical Center
Student Life
Infrastructure
Athletics
Academic Units
Campus Partners
Internal Bank
Auxiliaries
Business Advancement
Sci Tech
Regional Campuses
Research
Transportation
$
$
$
$
$
$
$
$
$
$
$
$
$
983,392,897
945,774,445
393,403,769
167,567,381
91,288,921
62,156,784
45,412,564
23,296,904
21,481,228
15,268,275
14,789,518
5,506,443
3,713,655
$
2,773,052,784
Total:
*Of the existing Internal Loan portfolio, $2,555,903,298 is externally funded through capital markets issuance.
36
3
August 2015 Board Meeting - Finance Committee Meeting
Office of the Treasurer
Projects Funded During Fiscal 2015
External Borrowing
Series 2014 A General Receipts Bonds
Series 2014 B-1 Bonds
Series 2014 B-2 Bonds
Date
Oct-14
Oct-14
Oct-14
Internal Bank Loan Advances
Wexner Medical Center
Student Life (North Residential District and Other)
Facilities Operations and Development
Athletics
Support Units
Campus Partners
Other
Amount
$ 150,000,000
$ 75,000,000
$ 75,000,000
$ 300,000,000
Amount
$ 128,558,082
$ 126,969,615
$ 30,850,305
$ 12,394,620
$ 6,395,907
$ 3,786,350
$
688,976
$ 309,643,855
4
37
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
FISCAL YEAR 2016 BUDGET
Synopsis: Approval of the operating budget for the fiscal year ending June 30, 2016, is proposed.
WHEREAS The State of Ohio Biennial Budget for State Fiscal Years 2016 and 2017, including funding
levels for state institutions of higher education, has been signed into law; and
WHEREAS tuition and fee levels for the Columbus and regional campuses for the fiscal year ending June
30, 2016 were approved at the June 5, 2015, Board of Trustees meeting; and
WHEREAS the president now recommends approval of the operating budget for the fiscal year ending June
30, 2016:
NOW THEREFORE
BE IT RESOLVED, The Board of Trustees hereby approves that the university's operating budget for the
fiscal year ending June 30, 2016, as described in the accompanying Fiscal Year 2016 Budget Plan book,
be approved, with authorization for the president to make expenditures within the projected income.
38
August 2015 Board Meeting - Finance Committee Meeting
August 28, 2015
[FISCAL YEAR 2016]
Fiscal Year 2016 Operating Budget
The Ohio State University
Office of Business and Finance
Financial Planning and Analysis
The Ohio State University | Financial Planning and Analysis
39
1
August 2015 Board Meeting - Finance Committee Meeting
August 28, 2015
[FISCAL YEAR 2016]
Table of Contents
Executive Summary .............................................................................................................................
3
Fiscal Year 2016 Budget: Financial Statements .................................................................................
7
Consolidated Financial Statements .....................................................................................................
8
University Financial Statement (excluding Health System) .................................................................
9
ß
University Revenue Sources ...................................................................................................
o Tuition and Fees ........................................................................................................
o State Share of Instruction (SSI) .................................................................................
o State Line Item Support ..............................................................................................
o Capital Appropriations.................................................................................................
o Grants and Contracts .................................................................................................
o Sponsored Research Programs .................................................................................
o College/Support Unit Administered Grants and Contracts ........................................
o Sales and Service Revenues .....................................................................................
University Budget: Expense ...................................................................................................
o Salaries and Benefits .................................................................................................
o Student Financial Aid .................................................................................................
o Fee Authorizations .....................................................................................................
o Supplies and Other Expenses ...................................................................................
o University Overhead ...................................................................................................
o Advancement .............................................................................................................
o Financial Services and Investments ..........................................................................
10
10
14
15
15
16
16
17
17
18
18
19
20
20
20
21
21
Health System ......................................................................................................................................
23
OSU Physicians, Inc. ...........................................................................................................................
26
University Budget Process ...................................................................................................................
27
Appendices ..........................................................................................................................................
29
ß
ß
ß
ß
Columbus Campus Tuition and State Share of Instruction History ........................................
Undergraduate Tuition and Fees – Academic Year 2016 .......................................................
Board of Trustees ....................................................................................................................
The Ohio State University | Financial Planning and Analysis
40
2
29
30
31
August 2015 Board Meeting - Finance Committee Meeting
August 28, 2015
[FISCAL YEAR 2016]
Executive Summary
The Ohio State University continues to move forward to achieve its vision to be the world’s preeminent
public comprehensive university, solving problems of world-wide significance and, to fulfill our mission to
advance the well-being of the people of Ohio and the global community through the creation and
dissemination of knowledge. In his investiture speech on March 31, 2015, President Drake has committed
to maintaining access, affordability and excellence that have defined the role of public institutions since
their inception through the land grant purpose of extending higher education opportunities to Ohioans and
beyond. All strategic decisions must be made with these ideals in the forefront. We do not want to
continue to increase the already significant student debt carried by most college students.
In order to meet this vision and mission the university has
continued to work towards augmentation of traditional
revenue streams and streamlining expenses while
seeking to expand the revenue base in new and unique
ways in order to invest in areas core to the university
vision and mission.
Vision
The Ohio State University will be the
world’s preeminent public
When fiscal year 2015 closed, the university remained
comprehensive university, solving
financially strong. Tuition revenue is stable as student
problems of world-wide significance.
applications and enrollment continue to grow. However,
there are a number of challenges that we must manage.
State subsidy revenue has declined in real dollars over
recent years. We anticipate continued pressure on
government expenditures for research and student financial aid. The anticipation of nominal growth from
traditional government revenue sources, coupled with our intent to maintain student affordability, create
an imperative to continue to explore alternatives to traditional financial strategies. The university must
also consider leveraging core assets into incremental revenue while continuing to explore non-traditional
revenue opportunities. A strong focus on both revenue enhancement and expense streamlining is
required to ensure that resources are in place to fund our strategic initiatives while maintaining a strong
balance sheet. President Drake emphasized his commitment to the dual goals of increasing revenue and
administrative efficiencies in his Investiture Address by identifying $200 million in administrative
efficiencies and generating $200 million in revenue over the next five years.
The OSU Wexner Medical Center Health System (Health System) continues to strengthen its financial
position through the opening of the new James Cancer Hospital and Critical Care Tower (CCCT) in
December, 2015. The fiscal year 2016 Health System budget sets aggressive targets to deliver
improvements in profit margin, cash on hand and debt service ratios. Numerous expense control and
productivity initiatives have been implemented or will be implemented during the course of fiscal year
2016. These measures are critical in order to manage the operational risks associated with transitioning
into the new facility and the uncertainty surrounding the impact of federal insurance exchanges and
Medicare rate reductions.
In fiscal year 2013, we invested $483 million into our long-term investment pool as a result of leasing our
parking operations to a third party. From the investment yield, $22 million was distributed to campus
priorities in fiscal year 2015, bringing the total since inception to $62 million. An additional $21 million is
expected to be distributed in fiscal year 2016. The money is being used to fund faculty initiatives and
research, transportation and sustainability, student scholarships and invest in our University Arts District.
This document presents The Ohio State University’s fiscal year 2016 budget for approval. The budget is
presented on a consolidated basis with the university and Health System also presented as unique
operating entities. This document also provides narratives on the overall budgeting process, and the key
drivers of revenue and expenses budgeted for fiscal year 2016.
The Ohio State University | Financial Planning and Analysis
41
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August 2015 Board Meeting - Finance Committee Meeting
August 28, 2015
[FISCAL YEAR 2016]
Foundation of The Ohio State University’s Academic Mission
President Drake has directed the university to focus on three specific areas that underpin Ohio State’s
academic mission:
1. Work to reduce student debt. Education
transforms lives, but only if we can deliver on
our promise of access to an excellent and
affordable education.
2. Re-commit our university to its motto of
Education for Citizenship, engaging with our
community partners to extend our scholarship
with the full force and precision of one of the
most powerful institutions in the world.
3. Lead our colleagues in exemplifying what it
means to be an inclusive university in the 21st
century, a place where diversity is a defining
characteristic and a source of strength.
Mission
We exist to advance the well-being of
the people of Ohio and the global
community through the creation and
dissemination of knowledge.
Strategic Context
The fiscal year 2016 budget is further built upon the foundation of The Ohio State University strategic
plan. The plan outlines four core goals, with a specific focus for investment across three discovery
themes: Health and Wellness, Energy and Environment, Food and Production Safety.
Core Goals
Four institution wide goals are fundamental to Ohio State’s mission and future success and must be
reflected in all that we accomplish:
ß
ß
ß
ß
Teaching and Learning: to provide an unsurpassed, student-centered learning experience led
by engaged, world-class faculty and enhanced by a globally diverse student body.
Research and Innovation: to create distinctive and internationally recognized contributions to
the advancement of fundamental knowledge and scholarship and to solutions of the world’s most
pressing problems.
Outreach and Engagement: to establish mutually beneficial partnerships with the citizens and
institutions of Ohio, the nation, and the world so that our communities are actively engaged in the
exciting work of The Ohio State University.
Resource Stewardship: to become the model for an affordable public university recognized for
financial sustainability, unsurpassed management of human and physical resources, and
operational efficiency and effectiveness.
The Ohio State University | Financial Planning and Analysis
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August 2015 Board Meeting - Finance Committee Meeting
August 28, 2015
[FISCAL YEAR 2016]
Discovery Themes at The Ohio State University
The university’s move to eminence will continue to be founded in the university’s three discovery themes
of Health and Wellness, Food Production and Security, and Energy and Environment. These
themes are based on special, broad, and deep expertise across the university. Through these discovery
themes, Ohio State will focus its resources and activities on finding durable solutions to issues of global
as well as regional importance. The discovery themes are essential elements of Ohio State’s strategic
planning. The initial area of focus for all three of
the Discovery Themes is data analytics.
Data analytics is a process of collecting,
organizing, integrating and examining vast
amounts of information in order to extract insight.
With today’s increasingly large, complex, and
diverse data sets, problem-solving is more data
driven than ever. In this environment, the ability to
find, analyze, and interact with these data will be
the difference-maker in accelerating the pace of
change: from disease prognosis to smart
materials, from environmental mapping to
sustainable energy systems, from bioinformatics
to precision agriculture. As part of this focus, the
university has established a new interdisciplinary
undergraduate major in data analytics. This major
was designed by the colleges of Arts and
Sciences, Engineering, Medicine and Fisher
College of Business. With this new degree
offering, Ohio State becomes the first university in
the country to offer an undergraduate degree in
data analytics.
Discovery Themes
Health and Wellness: will allow faculty from Ohio
State’s seven health sciences colleges and the Wexner
Medical Center to work with partners across the
university in nutrition, social work, health education,
and public policy, to cite but a few examples. These
experts will focus on such issues as disease
prevention, community health, and health systems.
Energy
and
Environment:
will
create
an
unprecedented interdisciplinary collaboration of experts
spanning the university and touching upon every
specialization to fully address issues related to energy
and environment. By working with experts beyond the
university, Ohio State faculty will lead the way in
developing scientific and policy responses to the global
need for energy and the associated effects on the
environment.
Food Production and Security: will draw on Ohio
Faculty from every college and all six campuses of
State’s unique expertise in food, agricultural, and
the university will be encouraged to actively
environmental sciences as well as the arts and
contribute to these discovery themes. Meanwhile,
sciences, health sciences, business, law, and beyond.
as these colleagues concentrate their efforts on
Working with partners within and outside the university,
the issues the discovery themes are meant to
these experts will focus on enhancing the quality of
food and animal feed and ensuring an adequate,
address, they and others will continue to advance
affordable and safe food supply for a global population.
our understanding of history and philosophy,
languages and cultures, and the arts as they
pursue excellence in our core goals. Our
programs in medicine, agriculture, veterinary
sciences, engineering, business and many other fields of study are rich and strong because they are
grounded by excellence in the arts, humanities and physical as well as social sciences.
Strategic Finance: Planning for Success
In recent years, we have launched a number of successful initiatives to increase the resources available
to support the core academic mission. Revenue generation initiatives have included the establishment of
unique partnerships and collaborations, such as the affinity agreements with organizations such as
Huntington Bank and Nationwide Insurance; innovative financing strategies such as the issuance of $500
million in century bonds; asset monetization strategies such as the 50-year parking concession
agreement; and strengthening the endowment through diversification and value orientation strategies.
Going forward, the university must increasingly focus on generating additional revenue from traditional
and innovative sources, including continued exploration of asset monetization opportunities, enhanced
The Ohio State University | Financial Planning and Analysis
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August 2015 Board Meeting - Finance Committee Meeting
August 28, 2015
[FISCAL YEAR 2016]
funding, continued exploration of public/private partnerships, technology commercialization and
endowment growth. We continue to explore these untapped revenue opportunities in addition to the
leased parking funding, century bond funding, and current affinity contracts. We continue to focus on our
financial investment strategies, streamlining activities and procurement strategies in order to maximize
the funding available to advance our goals of Teaching and Learning, Research and Innovation, Outreach
and Engagement, and Resource Stewardship.
The university is playing a leadership role in Governor Kasich’s Task Force on Affordability and Efficiency.
This will allow universities to work together to develop best practices to make significant strides in cost
containment. We will also continue to build on our own successful cost containment strategies, which
have included strategic procurement initiatives such as reducing the number of suppliers in our database;
leveraging the buying power to negotiate more aggressively; implementing systems designed to improve
operational efficiencies; lean process reengineering; and supporting the university’s sustainability efforts
by moving to paperless systems.
By investing in the activities as outlined above, the university will be well on its way of meeting President
Drake’s goals of increasing revenue by $200 million and implementing administrative efficiencies that
generate $200 million in savings over the next five years.
Fiscal Year 2016 University Budget: Key Themes
The major themes for the budget this year are affordability, access and quality. The Ohio State University
announced a comprehensive freeze on in-state undergraduate tuition, room and board early on in the
budget process. Throughout the State of Ohio’s Biennial Budget deliberations, student affordability and
student debt also were major areas of focus. The final state budget as passed also contained a freeze on
undergraduate instructional fees for all institutions, along with a corresponding increase in the State
Share of Instruction (SSI). The SSI pool was increased 4.7% in fiscal year 2016 and another 4.0% in
fiscal year 2017. Paired with our freeze on costs for in-state undergraduates, President Drake committed
to increase financial aid for low- and middle-income Ohioans by $15 million in fiscal year 2016, with a
long term plan to expand need-based student aid by a total of $100 million over five years. As
conversations continued among leadership at the university, it was decided to also freeze instructional
fees for master’s and doctorate candidates as well.
Fiscal year 2016 will be the third year of the State of Ohio’s new funding model for higher education. This
outcome based funding model was established based on recommendations developed by the
Commission on Higher Education under the leadership of former Ohio State President Gee. This new
model emphasizes degree completion as the main driver for funding and course completions as
secondary. It also rewards the ability of the university to retain the best and brightest in Ohio after
graduation as well as recognizing the additional financial requirements for assisting at-risk students to
degree attainment. The university continues to assess the impacts of the funding model change within the
context of growth in distance education and other non-traditional programs across the state.
The fiscal year 2016 budget continues our commitment to hire 160 new tenure or tenure-track faculty by
2019 who will be specializing in disciplines that support the Discovery Themes. Start-up funding is also
budgeted to assure that the university can hire the best faculty for our programs.
The budget also focuses on additional compensation for faculty and staff, increasing the institutionally
funded financial aid for undergraduate students, supporting colleges with additional revenue generated
from tuition dollars, funding for increased benefit costs and priority requests for support operations, all
while assuring that general funds are balanced.
The Fiscal Year 2016 Budget Plan outlines important aspects of the university’s financial strategy in the
year ahead. The budget plan, coupled with our Annual Financial Report, presents our current financial
state and our future opportunities and challenges. It illustrates our financial path for achieving our vision
of being the world’s preeminent public comprehensive university.
The Ohio State University | Financial Planning and Analysis
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
Fiscal Year 2016 Budget: Financial Statements
The fiscal year 2016 budget includes a consolidated financial statement in addition to discrete financial
statements for each of the following segments:
ß
ß
ß
The Ohio State University
The Ohio State University Health System
The Ohio State University Physicians Practice Plan
Given the operational differences between segments, we will provide narratives around the key drivers for
each segment.
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
Consolidated Financial Statements
Fiscal 2015
Projected Actual
$ in thousands
Fiscal 2016
Budget
$ Change
% Change
Operating Revenues
Tuition & Fees, net of schol arship allowance
850,284
866,690
16,406
1.9%
Grants & Contracts
699,146
694,443
(4,703)
-0.7%
Sales & Services - Educational Departments
145,638
137,781
(7,857)
-5.4%
Sales & Services - Auxiliaries, net of schol allow
236,502
228,425
(8,076)
2,724,327
3,002,465
Sales & Services - Health System & OSUP
Other Operating Revenues
278,138
57,425
55,876
4,713,322
4,985,680
272,359
Salaries
2,372,481
2,487,801
115,320
4.9%
Benefits
685,515
763,972
78,458
11.4%
96,547
95,867
Total Operating Revenues
(1,549)
-3.4%
10.2%
-2.7%
5.8%
Operating Expenses
Fee Authorizations
Student Aid
Supplies, Services & Other
Depreciation
Total Operating Expenses
Operating Gain (Loss)
(680)
-0.7%
123,913
144,513
20,600
16.6%
1,637,103
1,730,138
93,035
5.7%
296,555
307,000
10,445
3.5%
5,212,115
5,529,292
317,177
6.1%
(498,793)
(543,611)
(44,818)
9.0%
350,001
359,047
9,045
2.6%
85,820
85,823
3
0.0%
Non-Operating Revenues (Expenses)
State Share of Instruction
State Line Item Appropriations
Non-Exchange Grants
75,831
75,652
Gifts (Current Use)
157,898
177,000
19,102
12.1%
Investment Income
147,102
340,744
193,642
131.6%
Interest Expense on Plant Debt
(74,942)
(91,143)
(16,201)
21.6%
Other Non-Operating Revenues (Expenses)
Total Non-Operating Revenues (Expenses)
-0.2%
1,512
1,515
3
0.2%
743,223
948,638
205,415
27.6%
-
-
-
244,430
405,026
160,597
65.7%
45,780
45,875
94
0.2%
9,672
10,000
328
3.4%
Net Health System Transfers
Income Before Other Changes in Net Assets
(179)
Other Changes in Net Assets
State Capital Appropriations
Private Capital Gifts
62,707
61,000
(1,707)
-2.7%
Total Other Changes in Net Assets
Additions to Permanent Endowments
118,160
116,875
(1,285)
-1.1%
Change in Net Assets
362,590
521,901
159,312
The Ohio State University | Financial Planning and Analysis
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43.9%
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
University Financial Statement (excluding Health System):
Fiscal 2015
Projected Actual
$ in thousands
Fiscal 2016
Budget
$ Change
% Change
Operating Revenues
Tuition & Fees, net of scholarship allowance
850,284
866,690
16,406
1.9%
Grants & Contracts
688,839
684,136
(4,703)
-0.7%
Sales & Services - Educational Departments
145,638
137,781
(7,857)
-5.4%
Sales & Services - Auxiliaries, net of schol allow
236,502
228,425
(8,076)
-3.4%
57,425
55,876
(1,549)
-2.7%
1,978,689
1,972,909
(5,779)
-0.3%
Salaries
1,351,220
1,381,666
30,445
2.3%
Benefits
396,022
430,721
34,700
96,547
95,867
Student Aid, net of scholarship allowance
123,913
144,513
Supplies, Services & Other
653,667
664,195
10,528
1.6%
Depreciation
182,219
170,038
(12,181)
-6.7%
2,803,589
2,887,000
83,411
3.0%
101,678
10.8%
9,045
2.6%
Other Operating Revenues
Total Operating Revenues
Operating Expenses
Fee Authorizations
Total Operating Expenses
Operating Gain (Loss)
8.8%
(680)
-0.7%
20,600
16.6%
(824,900)
(914,091)
350,001
359,047
State Line Item Appropriations
85,820
85,823
Non-Exchange Grants
75,831
75,652
Gifts (Current Use)
157,898
177,000
19,102
12.1%
Investment Income
147,102
340,744
193,642
131.6%
Interest Expense on Plant Debt
(46,086)
(48,632)
1,512
1,515
3
0.2%
772,079
991,149
219,070
28.4%
Net Health System Transfers
98,112
103,880
5,768
5.9%
Income Before Other Changes in Net Assets
45,291
180,938
135,647
299.5%
45,780
45,875
94
0.2%
Non-Operating Revenues (Expenses)
State Share of Instruction
Other Non-Operating Revenues (Expenses)
Total Non-Operating Revenues (Expenses)
3
0.0%
(179)
-0.2%
(2,546)
5.5%
Other Changes in Net Assets
State Capital Appropriations
Private Capital Gifts
9,672
10,000
62,707
61,000
(1,707)
-2.7%
Total Other Changes in Net Assets
118,160
116,875
(1,285)
-1.1%
Change in Net Assets
163,450
297,813
Additions to Permanent Endowments
328
134,362
The Ohio State University | Financial Planning and Analysis
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3.4%
82.2%
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
University Revenue Sources
Tuition and Fees
Gross tuition and fees, before scholarship allowance, are expected to increase by $26 million, or 2.6 %, to
$1.02 billion. The increase is driven by both an increased mix of non-resident students and increased
non-resident fees for fiscal year 2016. Instructional and mandatory fees will not increase in fiscal year
2016. However, for some
tagged
masters
and
professional
programs
differential
fees
are
scheduled to increase. For
all student levels, the nonresident surcharge will
increase
5.0%
across
most colleges.
The
university
is
committed to maintaining
tuition
affordability.
However,
the
limited
increases are necessary to
partially cover inflation and
to
provide
continued
investment in excellence
within the core academic
mission. Tuition and fees provide more than 70% of university revenue available to fund the core
academic mission. The remaining 30% is largely provided through the State of Ohio instructional subsidy,
SSI.
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
Enrollment - The university continues to execute against the most recent Enrollment Plan, which was
implemented in fiscal year 2012, to increase the quantity, quality and diversity of the student body. The
Plan has been successful in meeting those objectives and in providing higher levels of new students to
offset the temporary decline in existing students due to semester conversion which occurred in fiscal year
2013. Enrollment has since stabilized and enrollment for fall 2015 (fiscal year 2016) is expected to be
essentially flat versus fiscal year 2015. With many students taking advantage of the free credit hour
option in May term, summer revenue-generating enrollments and credit hours continue to lag behind preconversion levels.
Regional campuses, which account for 10% of the university’s enrollment, continue to be negatively
impacted by several factors including continued poor economic conditions in the communities they serve,
the decreasing number of high school graduates and the competition from community and technical
colleges. As a result, fiscal year 2016 enrollments are projected to decline an average of 1.6% over fiscal
year 2015 levels.
STUDENT ENROLLMENT FOR AUTUMN TERM
AUTUMN FY 2012 - FY 2016
Headcounts
Columbus
Lima
Mansfield
Marion
Newark
ATI
Grand Total
2012
2013
2014
2015
2016
56,867 56,387 57,466 58,322 58,169
1,306 1,131 1,077 1,056 1,035
1,388 1,265 1,204 1,188 1,188
1,525 1,273 1,259 1,204 1,120
2,677 2,390 2,315 2,396 2,343
666
612
643
702
755
64,429 63,058 63,964 64,868 64,610
1 YR
Chg
-153
-21
0
-84
-53
53
-258
1 YR
% Chg
-0.3%
-2.0%
0.0%
-7.0%
-2.2%
7.5%
-0.4%
5 YR
% Chg
2.3%
-20.8%
-14.4%
-26.6%
-12.5%
13.4%
0.3%
Undergraduate Fees - Resident instructional fees will not increase in fiscal year 2016 at all of the Ohio
State campuses. Also, the general and mandatory fees, including the recreation fee, student activity,
student union facility fee, and COTA bus fee will again not change in fiscal year 2016.
Graduate and Professional Fees - Masters and PhD instructional fees will not increase in fiscal year
2016. Some graduate and professional students pay a higher or differential instructional fee based
principally on market demand and market pricing. Revenue generated from these increases is earmarked
to support the graduate and professional programs that generate the fee income. Most differential fees
are not expected to increase, while some are budgeted to increase between 2% and 8% in fiscal year
2016.
Non-Resident Surcharges - Effective Autumn term fiscal year 2016, the non-resident surcharge will
increase 5.0% for most undergraduate, graduate, and most professional programs at each campus.
Exceptions to this include the Colleges of Law and Optometry, which will see no increase, four graduate
business programs, an on-line FAES program and an on-line Engineering Program that charge a flat nonresident surcharge.
Program, Technology, and Other Fees - Several colleges and academic programs have established
additional fees to support specific programs and initiatives. These include program fees designed to
provide financial support for specific programs, technology fees, international student fees, and course
fees and distance education fees.
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
Comparison with Selective Ohio Peers - Among Ohio’s public universities, Ohio State ranks highest in
academic reputation, yet has the second lowest undergraduate student fees among Ohio’s six public fouryear universities with selective admissions. Given the continued commitment to keep tuition affordable by
not raising resident undergraduate rates in the 2015-2016 academic year, Ohio State will continue to
have one of the lowest student fees among the selective public institutions. This makes Ohio State an
excellent value for students and taxpayers.
Comparison with Benchmarks and Top Public Schools - In comparing Ohio State with our peer
institutions on tuition and fees (latest data available is fiscal year 2013), tuition and fee revenues per
student FTE were 3.4% below the average of OSU’s benchmark institutions and 14.3% below the top 10
ranked public institutions’ average.
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
Sources: AAUDE, IPEDS, & Ohio Board of Regents
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August 2015 Board Meeting - Finance Committee Meeting
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Again, even among other highly ranked institutions across the nation, Ohio State continues to be an
excellent value for students.
State Support
The State of Ohio is emerging from the Great Recession. Unemployment in the state, once at 10.6% in
February of 2010, is currently at 5.2% (June 2015). The state finances appear to be strengthening and
the state projects to have an unencumbered ending fund balance of $1.3 billion at the end of fiscal year
2015. This strengthening economic position enabled the leadership at the State to increase support for
higher education.
State Share of Instruction (SSI)
The SSI allocation is the State of Ohio’s primary funding support for enrollments and degree completions
at its colleges and universities. The SSI funds campuses on the basis of several criteria including
successful course completions, indexed by financially and academically at-risk resident undergraduate
students, degree completions with added funding for degree completions by undergraduate at-risk
students, and a number of other criteria intended to advance the goals of the state.
The state budget increases SSI funding by 4.7% from $1.82 billion in fiscal year 2015 to $1.90 billion in
fiscal year 2016, and another 4.0% to $1.98 billion in fiscal year 2017, but also holds instruction and
general fees in both years to 2015 levels. In total, the university projects to receive $359 million in SSI
funding in fiscal year 2016, an increase of $9 million over ending fiscal year 2015. Because of the three
year averaging used in the SSI calculations, the fiscal year 2016 allocation uses enrollments and degrees
awarded in fiscal years 2013, 2014, and 2015. The increase in enrollments and degrees that happened
during the last year of quarters, fiscal year 2012, was not used in the calculation of fiscal year 2016 SSI.
However, the university’s total share of SSI remains relatively stable with past years.
Fiscal year 2016 will mark the third year of the implementation of the recommendations of the committee
chaired by former President Gee. In the fall of 2012, Governor Kasich asked former President Gee to
chair a committee comprised of the presidents from Miami University, Ohio University, Wright State
University, and Shawnee State University to recommend changes to the State Share of Instruction (SSI)
formula to better align it with the goals of the state. The committee was tasked with finding ways to use
the formula to support the following objectives:
ß
ß
ß
ß
ß
ß
Increase participation rates
Encourage the best and brightest to attend
Improve graduation rates
Make higher education more affordable
Graduate students with the skills they need
Encourage graduates to stay in Ohio
The committee recommendations were endorsed by the presidents of all public colleges and universities
in the state, as well as Governor Kasich, and have been incorporated into each subsequent budget bill.
In its first two years the formula:
ß
ß
ß
shifted to rewarding degree recipients
adopted a universal three year average as the basis of calculation for distribution of the
allocations
adopted STEM weights to degree completions
The Ohio State University | Financial Planning and Analysis
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August 2015 Board Meeting - Finance Committee Meeting
August 28, 2015
ß
ß
ß
ß
ß
[FISCAL YEAR 2016]
removed the re-allocation of funds from campuses to those whose allocations had dropped below
a certain threshold
combined the regional campus allocations with the main campuses,
awarded proportional degree credits for transfer students
awarded associate degree credits for all campuses
implemented proportional degree credits for out of state graduates that remain the in the state
In fiscal year 2016 the formula:
ß
ß
ß
allows funding of more than one degree earned by a student
caps the bonus awarded for degree recipients that started their careers outside the InterUniversity Council institutions
caps funding for students that were awarded an associate and then a baccalaureate to the
baccalaureate amount
The university is engaged in ongoing discussions about the impact of the funding changes on its
campuses and is involved in discussion with the Interuniversity Council of Ohio and the Ohio Department
of Higher Education (formerly the Ohio Board of Regents) on ways that the funding formula can better
meet the needs of the State.
STATE SUPPORT COMPARED TO TUITION INCOME
COLUMBUS CAMPUS
80%
70%
60%
% State Support
50%
% Tuition
40%
30%
20%
10%
0%
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
State Line Item Support
In addition to SSI funding the university also receives funding directed to specific purposes. In fiscal year
2016 the university expects to receive $86 million in line item funding the same as projected ending fiscal
year 2015.
Capital Appropriations
Ohio State also receives capital allocations from the State of Ohio used to improve the physical
infrastructure of the university. The state capital budget process occurs in the off years from the state
operating budget process. The fiscal year 2015-2016 capital process allocated approximately $99.2
million to the university, of which approximately $45.9 million is expected to be received in fiscal year
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
2016. These allocations will be used to fund the renovations of Pomerene and Oxley Halls to support
Discovery Themes, as well as funding renovations and repairs at all Ohio State campuses.
Grants and Contracts
Grants and contracts revenue is administered in two ways: recorded by individual units in segregated
grants and contracts funds, or as sponsored projects administered by the Office of Sponsored Programs.
For fiscal year 2016, revenue from grants and contracts (including non-exchange grants) is planned at
$760 million, which is down slightly from the fiscal year 2015 projections due to uncertainty with federal
research dollars.
Of the $760 million, $511 million is administered by the Office of Sponsored Programs and $249 million is
administered directly by colleges and support units. Projects administered by the Office of Sponsored
Programs typically have more stringent process and documentation requirements than projects that are
directly administered through the colleges and support units.
Sponsored Research Programs
The university secures funding for sponsored research programs from a variety of external sources.
External grants are awarded by federal, state and local agencies along with private foundations and
corporate sponsors. Total revenue for sponsored research programs administered by the Office of
Sponsored Programs is expected to remain essentially flat at approximately $511 million.
The sponsored research revenues discussed above include facilities and administrative (F&A) recoveries
which are projected to be $102 million which is essentially flat to fiscal year 2015 levels. F&A costs are
recovered from most sponsored programs to offset the cost of maintaining the physical and administrative
infrastructure that supports the research enterprise at the university. It is important to note that direct and
indirect cost expenditures do not necessarily align when comparing expected revenue streams, and this
occurs for two reasons. First, certain direct cost expenditures do not recover F&A. Second, not all
sponsors allow the university to recover F&A at the university’s fully negotiated rate.
Sponsored research funding comes from a variety of sources, each of which is impacted by economic
and political considerations. For example, the federal government is by far the largest source of research
support. However, federal research budgets are essentially flat but the number of proposals being
submitted is increasing, so funding rates are decreasing. In addition, State funding is being directed
toward private enterprises rather than to research development activities at universities.
The university is working to mitigate ongoing downward trends using two primary strategies. First, we are
actively focusing on increasing the competitiveness of researchers through activities internal to the
university. This effort includes facilitating multidisciplinary research to take advantage of the breadth of
expertise at the university through the Discovery Themes initiative; establishing new centers focused on
current and emerging research challenges; creating a proposal development center; and establishing and
maintaining cutting edge core facilities to support our growing community of research-intensive faculty.
The second strategy involves building external relationships that will help grow the university’s portfolio of
federally-funded research, expand strategic partnerships with industry and promote and develop the Ohio
Technology Consortium (OH-Tech).
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
College / Support Unit Administered Grants and Contracts
Revenue for grants and contracts administered directly by individual colleges and support units is
expected to decrease from $184 million projected for fiscal year 2015 to $173 million budgeted for fiscal
year 2016 due to federal grant uncertainty. Non-exchange grants and contracts, such as Pell Grants and
Ohio College Opportunity Grant (OCOG), are expected to remain flat.
Sales and Service Revenues
Sales and Services of Educational Departments - Sales and services of educational departments are
expected to decrease $7.8 million, or 5.4% versus fiscal year 2015, driven largely by a decrease of $4.3
million in OHTech VMWare revenue, a decrease of $2.7 million in Student Life due to a decrease in
student health insurance rates, and a reduction in fees within Education and Human Ecology in order to
decrease cash reserves of $1.3 million. Other revenue sources consist largely of clinical operations in
colleges such as Optometry and Veterinary Medicine and non-college departments such as Recreational
Sports.
Sales and Services of Auxiliary Enterprises - Student Life, Athletics, and Business Advancement
comprise the majority of sales and services of auxiliary enterprises. Operating Revenue from sales and
services of auxiliary enterprises is expected to decrease $8 million, or 3.4%. This decrease is driven
primarily by fewer anticipated stadium and arena events in fiscal year 2016.
The Ohio State University | Financial Planning and Analysis
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
University Budget: Expense
Salaries and Benefits
Salaries – Salary expense is expected to increase by $30 million or 2.3% over fiscal year 2015
projections. Faculty and staff salary guideline increases of up to 2.0% have been included in the budget
for fiscal year 2016. Additionally, there is proposed 1% merit based cash pool for faculty.
Consistent with prior years, the approved salary guidelines take into consideration the financial condition
of the university as well as statistics of the current labor market. The university continues to employ its
philosophy of setting faculty salaries at a level that will maintain or advance Ohio State’s position
nationally for the highest quality faculty, and to set staff salaries to be competitive with the local
employment markets.
Benefits - Benefit costs are expected to increase by $35 million or 8.8% over fiscal year 2015. Benefits
are driven by the 2% salary guideline increase, which directly affects the retirement plan contribution
expenses and a 7% average rate increase on other benefit plans combined. Benefits include the
university’s contribution to employee retirement plans, various medical, dental, vision, life and disability
plans, employee and dependent tuition plans and university expense related to compulsory plans, such
as workers’ compensation and unemployment compensation.
Retirement Plans - University employees are covered by one of three retirement systems. The university
faculty is covered by the State Teachers Retirement System of Ohio (STRS Ohio). Substantially all other
employees are covered by the Public Employees Retirement System of Ohio (OPERS). Employees may
opt out of STRS Ohio and OPERS and participate in the Alternative Retirement Plan (ARP) if they meet
certain eligibility requirements. Under each of the plans, the university contributes 14% of the employee’s
pay to the plan annually, while the employees contribute 10%. Vesting varies by plan.
Medical Plan - The university is self-insured for employee health insurance. Fiscal year 2016 medical plan
costs are budgeted based on historical cost trend data, projected employee eligibility, and expected plan
changes associated with governmental regulations. Given these factors, we are projecting a 7.5%
increase for fiscal year 2016 across all medical plans. The university will continue to monitor the impact
the new health care laws will have on the university as an employer as legislation and regulations evolve.
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
Student Financial Aid
Financial Aid is a critical investment of resources that keeps the cost of education manageable for
students. The Ohio State University engages both the federal and state governments in conversations to
stress the importance of financial aid and reasonable loan programs for students. Interactions with donors
also stress the importance of gifts that support financial aid.
The financial aid plan seeks to advance two specific goals for the university: to invest in the quality,
quantity and diversity of students in order to continue to move Ohio State towards its goal of being in the
top ten public universities in the country; and to invest in students to fulfill our role as the land grant
university for the State of Ohio, whereby access to college is afforded to those students with limited
resources. The university continues to work to support both goals and continues to develop the
appropriate balance in moving the university towards eminence. Fundraising efforts are also underway
through various initiatives including the Ohio Scholarship Challenge in which all 88 Ohio counties are
raising funds to recruit students from each county to attend Ohio State.
Ohio State expects to distribute a total of $333.3 million of financial aid, excluding graduate fee
authorizations, to students in fiscal year 2016. Sources for the aid includes institutionally funded aid,
federal and state programs, and gifts and endowments. The university financial statements present a
portion of financial aid, in accordance with GASB accounting requirements, as an allowance against
gross tuition and, in the case of Athletic scholarships, an allowance against Auxiliary sales. For fiscal year
2016, $194.7 million of the $333.3 million of financial aid has been presented as allowances.
Institutionally funded financial aid is expected to increase by $15 million, or 10.1%, in fiscal year 2016 to a
total of $162.7 million. This increase is driven by further investments in financial aid to support needbased financial aid, as the president has committed to significantly increasing financial aid for needy
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August 2015 Board Meeting - Finance Committee Meeting
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[FISCAL YEAR 2016]
students in order to help to mitigate ongoing increases in student debt. It is currently anticipated that an
additional $15 million will be budgeted each year beginning in fiscal year 2016, growing to a total annual
investment of up to $100 million.
Federal financial aid, which consists primarily of Pell Grants and some Supplemental Educational
Opportunity Grant, is expected to slightly increase by $0.2 million to $55 million in fiscal year 2016. State
financial aid is expected to increase $1.0 million in fiscal year 2016 to $9.4 million and is driven by funding
levels for programs such as the OCOG. Donor and other funds are also expected to remain flat to fiscal
year 2015 actuals at $26.3 million.
Athletic scholarships are planned to increase $3.1 million to $19.6 million due to a cost attendance
adjustment. The remaining aid provided directly by colleges for graduate fellowships and awards is
projected to decrease $1.8 million in fiscal year 2016.
Fee Authorizations
Fee Authorizations are an additional component of student aid directed toward graduate student
appointments. Total University Fee Authorization expense is expected to be relatively flat at $96 million in
fiscal year 2016.
Supplies & Other Expenses
Supplies and Other Expenses are projected to increase $10.5 million or 1.6% versus fiscal year 2015.
The primary driver is an $11.8 million increase in utilities cost versus fiscal year 2015 and general
inflationary increases.
Utilities - Columbus campus utilities expense is expected to increase by $11.8 million, or 11.9% over the
fiscal year 2015 budget to $116 million. The increase is driven primarily by purchased power costs related
to higher consumption brought on by the opening of the North Residential District.
Building Maintenance and Custodial Services - Services provided include repairs resulting from
normal wear and tear, including plumbing, central HVAC and electrical systems, elevator repair and
maintenance, and maintenance of the building envelope, including windows, foundations, walls, and
floors. Maintenance expenses are expected to decrease by $326,000, or 1.0%, in fiscal year 2016 to
$31.9 million. The decrease is driven primarily by cost savings efforts.
Custodial expenses are expected to increase by $141,000, or 0.9%, in fiscal year 2016 to $16.7 million.
For fiscal year 2016, contract services will provide custodial services for approximately 56% of Columbus
campus buildings.
Other Changes in Supplies & Other - These increases in utilities, building maintenance & custodial
services and other inflationary increases are partially offset by decreases in other expense categories.
Cost of Sales reductions attributed to fewer planned events at the Schottenstein Center and Stadium of
approximately $6 million is a primary offset. Also, a roughly $3 million investment pertaining to Distance
Education and eLearning non-capital equipment occurred in fiscal year 2015 and is not budgeted in fiscal
year 2016. Additional university wide reductions are budgeted in travel of $1.7 million and supplies of $1.3
million.
University Overhead
Overhead is charged to non-general funds units to help fund centrally-provided services. In fiscal year
2016, $75 million is expected to be allocated via internal charges to fund centrally-provided services, an
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increase of $2 million (2.7%) from fiscal year 2015. Since overhead is an intra-university allocation,
entries are eliminated in the financial statement consolidation process.
Specific expense categories comprising the overhead rates include Facilities Support, Administrative
Support, and Specialized Support (Health Administration and Student Services). Different overhead rates
are calculated based on participation in the different expense categories. The base rate includes all
expense categories; other rates are calculated to include only those expenses applicable to those units.
For example, the regional campus rate includes only the insurance, academic administration, and central
support expense categories. For fiscal year 2016, the rates ranged from 2.6% for the Wexner Medical
Center to 5.7% for most earnings operations. The calculated overhead rates for fiscal year 2016 are
stable compared with fiscal year 2015 rates, reflecting moderate growth in both revenues and allocated
overhead costs.
Advancement
The university launched the public phase of its $2.5 billion But for Ohio State campaign in October 2012.
The fundraising campaign invites those who believe in Ohio State to invest in our students, our faculty,
and our potential. By supporting Ohio’s land-grant institution, alumni, friends, parents and partners can
help us secure educational opportunities for futures generations of students and meet the enormous
challenges we face as a society. Campaign proceeds will be used to fund scholarships to attract the most
promising students, elevate faculty, create modern learning environments, promote multidisciplinary
research, and drive high-impact innovation.
In fiscal year 2016, the university expects to
report “New Fundraising Activity” of $450 million,
including pledges and certain private contracts,
by engaging a variety of constituents, including
students, faculty and staff, alumni, friends,
corporate partners and private foundations. The
Advancement strategic plan focuses on aligning
fundraising
with
communications
and
alumni/constituent engagement to use innovative
funding approaches with Ohio State’s partners
across all facets of the university.
The Advancement related line items within the fiscal year 2016 financials are representative of expected
cash receipts for current use gifts and gifts provided as endowment additions. Any fundraising activity
generated from private contracts would be reflected as Grants and Contracts. Pledges of $88 million
where we do not expect to receive cash in fiscal year 2016 have been excluded.
Financial Services and Investments
The Office of Financial Services manages cash, short and intermediate term investments and other funds
totaling over $2.0 billion. They also oversee a debt portfolio of $2.7 billion. In performing these functions,
the office serves as internal bank to the university taking deposits, issuing debt, investing operating funds
and approving loans. The internal bank is a framework for coordinating these activities and providing a
consolidated view of the associated assets, liabilities, revenues and expenses.
The Office of Investments manages the Long Term Investment Pool (LTIP), which totals over $3.6 billion
and includes gifted endowment funds, designated funds and a significant portion of operating funds.
Through a partnership with external managers, the Office of Investments has adopted an asset allocation
model for the LTIP that groups assets into three broad categories. This model enables the investment
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team to build a portfolio of specialized investment teams around the world to implement our strategic
allocation and to be responsive to changing market conditions.
Investment Income - Investment income on cash, short and intermediate term investments is budgeted
at $14 million, a $ 3.5 million increase over our fiscal year 2015 forecast. The fiscal year 2016 budget
reflects the continued low interest rate environment.
The LTIP is budgeted to return $357 million, at an 8.0% return, in fiscal year 2016. The LTIP has
produced a 2.7% net of investment fee return, and $140 million net investment income in the first nine
months of fiscal year 2015. This compares to a 14.4% return and $577 million for the full fiscal year 2014.
Debt - The proceeds of past debt issuance have been utilized to fund major construction projects
including the Wexner Medical Center expansion and dormitory refurbishments, as well as significant
campus infrastructure improvements .
The debt is comprised of a mix of tax exempt and taxable bonds. Over 78% of the outstanding debt
balance is comprised of fixed rate obligations ranging between 1.2% and 5.00%. The remainder is
variable rate agreements. The variable rates, most of which are subject to change every seven days,
averaged 0.04% through the first 10 months of fiscal year 2015 and have a 15-year average of 1.2%.
Under the terms of the variable rate agreements, the rates cannot exceed 8% or 12%, depending on the
issue.
The university expects to incur approximately $104 million of interest expense on plant debt in fiscal year
2016, an increase of $9 million over fiscal year 2015 projected levels. Approximately $19 million will be
capitalized resulting in a net expense of $76 million for fiscal year.
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[FISCAL YEAR 2016]
Health System
$ in thousands
Fiscal 2015
Projected Actual
Fiscal 2016
Budget
$ Change
% Change
Operating Revenues
Inpatient Services Revenue
Outpatient Services Revenue
Deductions from Patient Revenue
3,929,723
4,177,618
247,895
6.3%
3,385,592
3,588,563
202,971
6.0%
(5,051,095)
(5,274,871)
(223,776)
4.4%
Other Operating Revenue
102,276
128,938
26,662
26.1%
2,366,496
2,620,248
253,752
10.7%
Salaries
722,707
786,321
63,614
8.8%
Benefits
234,731
274,536
39,805
17.0%
Professional Fees
102,977
104,678
1,701
1.7%
Supplies
263,540
287,971
24,431
9.3%
Drugs & Pharmaceuticals
206,807
262,967
56,160
27.2%
Services
269,651
276,779
7,128
2.6%
49,081
52,335
3,254
6.6%
Total Operating Revenues
Operating Expenses
Residents
University Overhead
49,901
48,902
114,336
136,962
22,626
19.8%
28,856
42,511
13,655
47.3%
2,042,587
2,273,962
231,375
11.3%
323,909
346,286
22,377
6.9%
1,788
1,415
325,697
347,701
22,004
6.8%
(135,032)
(140,000)
(4,968)
3.7%
190,665
207,701
17,036
8.9%
Depreciation & Amortization
Interest
Total Operating Expenses
Operating Gain (Loss)
Net Non-Operating Revenue
Excess of Revenue over Expenses
Medical Center Investments
Change in Net Assets
(999)
(373)
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-2.0%
-20.9%
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[FISCAL YEAR 2016]
OSU Wexner Medical Center Health System
The OSU Wexner Medical Center, which is comprised of the Health System, OSUP (Physicians) &
College of Medicine (COM), has an operating budget which provides an overall operating margin of $265
million. The operating margin for the Health System is budgeted at $346 million for fiscal year 2016. The
Health System’s model of continued support of Physicians and COM is expected to total $140 million for
fiscal year 2016.
Revenue Drivers
Overall revenue is budgeted to increase approximately
10.7% compared with the current year rate of 11.0%.
Activity increases account for approximately 7.0% and
rates account for 3.7% of fiscal year 2016 growth.
Inpatient and outpatient activity growth is expected to be
consistent over the fiscal year as the James Cancer
Hospital continues its growth in the CCCT and
University Hospital begins to backfill the vacated space.
Medicaid Expansion continues to be favorable for the
Health System as patients previously covered under
charity programs now have coverage. This change in
coverage has led to a substantial decrease in charity
care write offs. Medicaid has made additional rate cuts in order to fund the expansion. As a result of
expanded federal insurance exchange coverage there has been a significant increase in bad debts
related to higher deductible plans. Overall the expansion and exchanges have had a positive impact on
operating revenues and are expected to continue in fiscal year 2016.
Medicare inpatient rates will see a decrease while outpatient rates will increase slightly. Managed care
arrangements are negotiated through the end of 2015 and in some cases into 2016. Quality and riskbased contracts as well as tiered pricing are expected to be prevalent in ongoing negotiations with
payors. This budget does not anticipate significant negative impacts to fiscal year 2016. The payment
increases for managed care contracts provides most of the 3.7% rate growth noted above. There are also
no planned list price increases in this budget.
Expense Drivers
Expenses before interest and depreciation will grow by 10.2% compared to the current year growth of
4.4%. The fiscal year 2016 budget includes $41 million in increased drug cost associated with the
specialty pharmacy and new FDA approved oncology drugs. Excluding those costs, expenses will grow at
approximately 7.0%, of which 3.8% will be activity driven and 3.2% rate driven. Salary increases
averaging 2% overall will be given to employees. Benefit rates are increasing 7.5% as a result of
increased medical premiums and subsidizing physician benefits previously being underpaid. Expense
management initiatives will continue to be an emphasis during fiscal year 2016. Labor productivity has
been held equal to or less than the current year’s staffing models.
EBIDA and Profitability
With a full year of the CCCT open, depreciation and interest expense will increase from $143 million to
over $179 million and debt service will exceed $93 million. The increase in depreciation and interest
expense dilutes the 2016 operating margin growth. Knowing that the opening of the building would have
material impact on operating margin, the Health System has historically utilized EBIDA (Earnings before
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Interest, Depreciation, and Amortization) as a metric to provide comparability across fiscal years. The
Health System set an EBIDA margin target in 2016 of 20.1%. Margin is budgeted to increase from $324
million in 2015 to $346 million in 2016, while EBIDA increases from $467 million to $526 million.
Cash Management
Operating EBIDA margin is expected to continue to grow in fiscal year 2016 by 1.8%, which will provide
funding to service the increased debt, grow cash by five days and fund other working capital needs
associated with impacts of ICD-10 implementation. The Health System will also increase its support for
clinical and academic activities to $140 million in 2016 and the capital budget will increase by $38 million
to $106 million, equal to 90% of depreciation. Fiscal year 2016 capital spend on a cash flow basis will be
$126 million due to previously approved capital projects still in process.
Continued Growth
The Health System will continue to grow operations with three major projects beginning to take shape
during fiscal year 2016. The Jameson Crane Sports Medicine Institute, the Brain and Spine Hospital and
Upper Arlington Outpatient Care Center are all anticipated to begin operations during calendar year 2016.
These projects will be funded by donations, operating capital funds and university borrowings.
Overall the Health System is coming off of one of its strongest financial years and the fiscal year 2016
budget looks to continue to build off of that momentum. However, payment transformation will continue to
put pressure on providers to link payments to quality, cost and outcomes. As these new models take
shape, changes to care coordination will drive the need for continued collaboration between the Health
System, Physicians, and the College of Medicine.
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[FISCAL YEAR 2016]
OSU Physicians, Inc.
Fiscal 2015
Projected
Actual
Fiscal 2016
Budget
$ Change
366,938
395,213
28,275
-
-
-
366,938
395,213
28,275
Staff Salaries & Benefits
76,096
79,342
3,246
4.3%
Supplies & Pharmaceuticals
32,239
30,164
(2,075)
-6.4%
Services
33,992
34,080
General Administrative Expenses
10,317
12,773
2,457
23.8%
Other Expenses
14,012
7,628
(6,384)
-45.6%
Total Operating Expenses
166,656
163,989
(2,668)
-1.6%
Excess of Revenue over Expenses Before Provider Expenses
200,282
231,224
30,943
15.4%
Provider Expenses
228,139
246,852
18,713
8.2%
Excess of Revenue over Expenses After Provider Expenses
(27,857)
(15,628)
12,230
-43.9%
$ in thousands
% Change
Operating Revenues
Net Patient Revenue
Other Operating Revenue
Total Operating Revenues
7.7%
7.7%
Operating Expenses
88
0.3%
Net Non-Operating Revenue
2,569
3,438
868
33.8%
Medical Center Investments
36,920
36,120
(800)
-2.2%
Change in Net Assets
11,632
23,930
12,298
105.7%
Total revenue is budgeted to increase $24M or 6.5% over fiscal year 2015 projections. Total revenue
includes net patient revenue and other revenue. Net patient revenue is budgeted to increase $17M or
5.5% over fiscal year 2015 projection. The increase in net patient revenue is due to faculty recruitment,
increased clinical productivity, and improved payment rates as a result of the Affordable Care Act.
Total expenses increased $16M. Expense categories with the largest increases were staff and physicians
salaries & benefits. Net new physicians in fiscal year 2016 is 78. Net new staff in fiscal year 2016 is 43.
The fiscal year 2016 budget includes revenue and savings opportunities identified during departmental
effectiveness and efficiency meetings. Opportunities identified include adjusting clinical time to match
benchmark targets, completion of support staff centralization, where possible, and complete the transition
of Physicians’ purchasing function into the medical center’s purchasing system.
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University Budget Process
For the Fiscal Year 2016 Budget Plan, the university continued to implement a revised budgeting process
that encompasses all funds of the university. This approach affords a holistic view of all operations of the
university in an easily understood format that will enable the university to highlight the evolution of funding
sources. This will allow leadership to make informed strategic decisions in a timely manner.
This all funds, total operating budget will provide the base framework for evaluating the activities of all
academic and support units within the university, allowing proactive responses to changing economic
issues as they arise.
Budget System
The university uses a budget system that is comprised of two components: a modified Responsibility
Center Management (RCM) model and the strategic investment of central funds. This structure allows for
decentralized decision making and control of financial resources at the colleges and support units. The
modified RCM budget model assigns substantial control over resource decisions to individual colleges
and support units. The underlying premise of the university’s decentralized budget model is entrusting
academic and support unit leaders with significant control over financial resources, leading to more
informed decision making and better results and outcomes for the university as a whole. Through this
decentralized model, colleges in particular are incentivized to increase resources by teaching more credit
hours and increasing research activity.
The OSU Health System and OSU Physicians, Inc. prepare their
budgets based upon projected activity and associated costs. External
factors, such as government regulations and reimbursements rates, as
well as contractual agreements with health care payers also play an
integral part in developing the health system’s budget.
Fund Accounting
The university’s budget is developed and managed according to the
principles of fund accounting. We manage over 20,000 active
expendable funds and over 5,100 endowment principal funds through a
robust accounting system. Revenue is segregated into a variety of fund
types, the use of which is governed by the restrictions of the specific
fund. Some fund types are unrestricted, including general funds and
some earnings funds. Others have restrictions derived from the source
of the revenue, including grants and contracts received from government
agencies, foundations, and other outside sponsors. Individual funds are
set up to ensure strict adherence to the terms of the grant or contract
that governs these funds.
“As the University’s sources
of funding continue to evolve,
it has become evident that a
consolidated view of all
sources of funding received
and monies spent is
necessary to make informed
decisions in a timely
manner.”
Endowments are another type of restricted fund, where separate funds are set up to preserve the corpus
or principal of the gifts. As those funds earn investment returns, annual income distributions are made out
of the endowment fund and into a current fund for spending in accordance with the donors’ restrictions.
The segregation of each gift allows the university to ensure the funds are spent appropriately and to
enable reporting to donors on the activities that their funds support.
Although emphasis was placed on including all university funds in the fiscal year 2016 budget process,
general funds continue to remain a key component of the budget. General funds can generally be used
for any university purpose whereas restricted funds are more specifically targeted. These funds play a
major role in the budget, as they cover many expenses in the colleges and support units for which it is
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August 2015 Board Meeting - Finance Committee Meeting
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difficult to raise money. The main sources of general funds are tuition and other student fees, state
support of instruction, indirect cost recovery, and overhead charged to earnings units.
Allocation of Funds
Each college and support unit receives a portion of general funds in support of both academic and
administrative functions. The process for allocating the funds is administered through the Office of
Financial Planning & Analysis under the guidance of the Chief Financial Officer and Provost. General
funds are allocated to colleges and support units on a marginal basis under an established set of criteria.
In other words, increases (or decreases) in the pool of general funds available each budget year are
allocated back to colleges and support units as increases (or decreases) to their base general funds
budgets.
Marginal changes in revenue are allocated to colleges based on three primary funding formulas. The first
funding formula for colleges utilizes a model to distribute undergraduate marginal tuition and state
support. Sixty percent of the funding is allocated based on total credit hours taught, while forty percent is
allocated based on the cost of instruction. This budget allocation method takes into account the fact that
some courses have a higher cost for delivery and are, thus, allocated a greater share of the funding. The
other two primary funding formulas allocate graduate tuition and state support based on credit hours in
fee-paying categories (tuition) and type of course taught based on cost of instruction (state support). As a
college teaches more of the share of total credit hours, it receives a larger share of the incremental
funding. Conversely, if a college’s share of the hours taught declines, the college’s allotted share of
incremental funding will correspondingly decline. Colleges will receive their share of revenue on indirect
research cost recovery, based upon the college’s share of research revenue. Fee revenue from learning
technology, course and program fees are provided directly to colleges based upon course.
Support units are funded through a combination of central tax, specific activity-based assessments
charged to colleges and an overhead rate charged to auxiliary and earnings units. The central tax,
assessments and overhead charges are designed to provide the funds necessary to maintain support
services such as payroll services, central human resource services, and student life services. Support
units are generally ineligible for marginal revenue changes because the funding formulas rely on credit
hours taught; instead, support units must request additional funding during the annual budget process to
support new services or mandates.
Auxiliaries and earnings units are expected to operate at a break even or better margin and generally do
not receive general fund support. One exception is the Office of Student Life which does receive general
fund support via special Student Activity, Ohio Union and Recreational Facility fees that were enacted to
specifically advance the student experience.
Regional campuses develop their own individual campus budgets primarily based on the student tuition
and fees received from the regional campus students, the State Share of Instruction they expect to collect
and costs directly incurred to operate those campuses.
Traditionally, university-wide initiatives and special requests by colleges and support units are funded
through the formal budget process or through central reserves established to fund campus-wide projects
that benefit the entire population or advance the mission of the university. For fiscal year 2016, the formal
support office budget request process was not implemented, given the number of multi-year funding
commitments that the university has already begun. It was anticipated that any marginal revenue
available would be limited and already committed to the multi-year funding projects.
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Appendices
COLUMBUS CAMPUS TUITION AND STATE SHARE OF INSTRUCTION
Year
Resident
Undergraduate Percent
Tuition (1)
Change
Total Nonresident
Percent
Change
$5,628
State Share
of
Instruction
(000's) (2)
Percent
Change
1989
$2,040
1990
$2,190
7.4%
$6,279
11.6%
$238,111
$251,658
1991
$2,343
7.0%
$6,942
10.6%
$262,311
4.2%
1992
$2,568
9.6%
$7,608
9.6%
$246,306
-6.1%
1993
$2,799
9.0%
$8,292
9.0%
$240,881
-2.2%
1994
$2,940
5.0%
$8,871
7.0%
$251,406
4.4%
1995
$3,087
5.0%
$9,315
5.0%
$264,759
5.3%
1996
$3,273
6.0%
$9,813
5.3%
$273,327
3.2%
1997
$3,468
6.0%
$10,335
5.3%
$283,012
3.5%
1998
$3,687
6.3%
$10,896
5.4%
$297,551
5.1%
1999
$3,906
5.9%
$11,475
5.3%
$305,161
2.6%
2000
$4,137
5.9%
$12,087
5.3%
$312,839
2.5%
2001
$4,383
5.9%
$12,732
5.3%
$317,721
1.6%
2002
$4,788
9.2%
$13,554
6.5%
$305,389
-3.9%
2003
$5,691
18.9%
$15,114
11.5%
$300,064
-1.7%
2004
$6,651
16.9%
$16,638
10.1%
$299,998
0.0%
2005
$7,542
13.4%
$18,129
9.0%
$301,898
0.6%
2006
$8,082
7.2%
$19,305
6.5%
$305,588
1.2%
2007
$8,667
7.2%
$20,562
6.5%
$314,597
2.9%
2008
$8,676
0.1%
$21,285
3.5%
$330,269
5.0%
2009
$8,679
0.0%
$21,918
3.0%
$362,682
9.8%
2010
$8,726
0.5%
$22,298
1.7%
$391,658
8.0%
2011
$9,420
8.0%
$23,604
5.9%
$390,830
-0.2%
2012
$9,735
3.3%
$24,630
4.3%
$329,548
-15.7%
2013
$10,037
3.1%
$25,445
3.3%
$331,829
0.7%
2014
$10,037
0.0%
$25,757
1.2%
$334,394
0.8%
2015 (2)
$10,037
0.0%
$26,537
3.0%
$330,878
-1.1%
2016 (3)
$10,037
0.0%
$27,365
3.1%
$330,878
0.0%
5.7%
(1) Resident Undergraduate Tuition includes instructional, general, and
mandatory fees.
(2) 2015 state share of instruction based on main campus proportion
after regional campus allocation
(3) 2016 state share of instruction based on ending FY 15
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Board of Trustees
Jeffrey Wadsworth, Chair (2019)
Alex Shumate, Vice Chair (2020)
Linda S. Kass (2017)
Janet B. Reid (2018)
W. G. Jurgensen (2018)
Clark Kellogg (2019)
Timothy P. Smucker (2020)
Cheryl L. Krueger (2021)
Michael J. Gasser (2021)
Brent R. Porteus (2022)
Erin P. Hoeflinger (2022)
Alex R. Fischer (2023)
Abigail S. Wexner (2023)
Vacant - To Be Named by Governor
Vacant - To Be Named by Governor
Corbett A. Price, Charter Trustee (2017)
Alan VanderMolen, Charter Trustee (2017)
James D. Klingbell, Charter Trustee (2018)
Steven M. Loborec (2016)
Halie M. Vilagi (2017)
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August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
FISCAL YEAR 2016 CAPITAL INVESTMENT PLAN
Synopsis: Authorization of the Capital Investment Plan for the fiscal year ending June 30, 2016, is
proposed.
WHEREAS the university has presented the recommended capital expenditures for the fiscal year ending
June 30, 2016; and
WHEREAS the recommended capital expenditures are the result of the university’s comprehensive annual
capital planning process; and
WHEREAS only those projects outlined in these recommendations will be approved for funding:
NOW THEREFORE
BE IT RESOLVED, That the Board of Trustees hereby approves that Capital Investment Plan for the fiscal
year ending June 30, 2016, as described in the accompanying documents, be approved; and
BE IT FURTHER RESOLVED, That any request for authorization to proceed with any project contained in
these recommendations or for university funds for any such projects must be submitted individually by the
university for approval by the Board of Trustees, as provided for by Board policy.
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August 2015 Board Meeting - Finance Committee Meeting
FY2016‐2020 Capital Investment Plan
($ Millions) Proposed New Projects to Begin in FY2016
$254
Prior Commitment Remaining Spend $797
Total $1,051
Table 1 ‐ Prior Commitment ‐ Remaining Spend
Line
Projected Capital Expenditures
Capital Priority
FY2016 FY2017 FY2018 FY2019 FY2020
1 NRD Construction
Total 137.1
57.2
6.3
0.0
0.0
200.6
2 Wexner Medical Center Expansion
3.8
5.0
0.0
0.0
0.0
8.8
3 CBEC Building
2.5
3.6
0.0
0.0
0.0
6.1
4 East Regional Chilled Water Plant
6.0
5.7
5.6
0.0
0.0
17.3
13.6
16.2
1.8
0.0
0.0
31.6
6 Pomerene and Oxley Renovations
4.1
21.8
21.8
10.9
0.0
58.6
7 School of Music, Weigel Reno/Hughes Design
0.0
0.0
0.9
59.1
0.0
60.0
159.6
204.1
40.5
9.5
0.0
413.7
326.7
313.6
76.9
79.5
0.0
796.7
5 WMC ‐ Jameson Crane Sports Med Institute
8 Roll‐up of Other Previously Approved Projects Total
71
August 2015 Board Meeting - Finance Committee Meeting
FY2016‐2020 Capital Investment Plan
Table 2 ‐ New Projects Beginning in FY2016
Projected Capital Expenditures
Capital Priority
Line
FY2016 FY2017 FY2018 FY2019 FY2020
Total 1 Small Programmatic Cash‐Ready (18 projects)
0.4
7.4
2.5
0.2
0.0
10.5
2 Anticipated Spend for CIP Additions/Changes
0.4
8.9
0.7
0.0
0.0
10.0
3 WMC ‐ Roll‐up of Multiple Cash Ready Projects
2.4
33.9
55.7
4.5
0.0
96.5
4 Small Infrastructure and RDM
1.1
8.5
4.2
0.3
0.0
14.1
5 Covelli Multi‐Sport Arena
0.5
3.6
10.5
10.6
4.8
30.0
6 Student‐Athlete Development Center
0.6
3.8
11.2
11.3
5.1
32.0
7 Schottenstein Concourse Reno & New Offices
0.6
3.8
11.2
11.3
5.1
32.0
8 Airport Enhancements (design only)*
0.4
1.6
0.0
0.0
0.0
2.0
9 Newark Campus Residence Halls Phase 2
0.2
2.8
4.5
0.4
0.0
7.9
10 Veterinary Med Center Renovation Ph 2
5.3
0.0
0.0
0.0
0.0
5.3
11 Veterinary Med Center Renovation Ph 3
4.1
0.0
0.0
0.0
0.0
4.1
12 WMC ‐ Jameson Crane Sports Med ORs 0.2
1.2
3.5
3.5
1.6
10.0
16.2
75.5
104.0
42.1
16.6
254.4
Total
* Requesting design approval only at this time. Total project budget will be brought back to the Board for approval
once design has confirmed project budget and scope.
Table 3 ‐ Funding for New Projects Beginning in FY2016 by Unit Type
Funding Sources
Line
1
Unit Type
Academic/Academic Support
(including Student Life)
Fund
Raising
$
WMC
Operating
11.7
2 Affiliated Entities
3 Athletics
4
Framework/Infrastruct/Renewal
and Deferred Maintenance
5
Wexner Medical Center and
College of Medicine
$
Totals by Funding Source $
% by Funding Source
62.0
73.7
29.0%
$
106.5
$
106.5
41.9%
72
Local
$
36.8
$
2.5
$
6.7
$
1.2
$
47.2
18.6%
University
Financing
$
$
$
-
27.0
27.0
10.6%
Totals by
% by Unit
Unit
$
48.5
19.1%
$
2.5
1.0%
$
95.7
37.6%
$
1.2
0.5%
$
106.5
41.9%
$
254.4
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
APPOINTMENTS TO THE SELF-INSURANCE BOARD
Synopsis: Appointment of members to the Self-Insurance Board, is proposed.
WHEREAS the Board of Trustees directed that a Self-Insurance Board be established to oversee the
University Self Insurance Program; and
WHEREAS the Board of Trustees on December 6, 2002, approved the expansion of the University SelfInsurance Program to include the faculty physicians and their clinical staff who are employees of Ohio State
University Physicians, Inc.; and
WHEREAS all members of the Self-Insurance Board are appointed by The Ohio State University Board of
Trustees upon recommendation of the president; and
WHEREAS Gary Katz, MD was reappointed to the Self Insurance Board in May 2015 with a term that
expires on April 30, 2017; and
WHEREAS Gary Katz, MD has resigned from this appointment effective July 23, 2015:
NOW THEREFORE
BE IT RESOLVED, That the Board of Trustees hereby approve that the following individuals be appointed
as members of the Self-Insurance Board effective September 1, 2015, for the terms specified below:
Charlotte Agnone, MD, FACS, term ending June 30, 2017
James Gilmour, term ending June 30, 2017
BE IT FURTHER RESOLVED, That this appointment entitles each member to any immunity, insurance or
indemnity protection to which officers and employees of the university are, or hereafter may become,
entitled.
73
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
APPROVAL TO ENTER INTO/INCREASE PROFESSIONAL SERVICES
AND ENTER INTO CONSTRUCTION CONTRACTS
APPROVAL TO ENTER INTO/INCREASE PROFESSIONAL SERVICES CONTRACTS
Campus Hazard Mitigation Plan
Covelli Multi-Sport Arena
Schottenstein Center - North Expansion and Concourse Renovation
Student-Athlete Development Center
Lima Campus - New Student Life Building
Newark Campus - Residence Hall
APPROVAL TO ENTER INTO CONSTRUCTION CONTRACTS
300 West 10th Brain and Spine
Mount Hall Renovation
Lima Campus - New Student Life Building
Synopsis: Approval to enter into/increase professional services and enter into construction contracts, as
detailed in the attached materials, is proposed.
WHEREAS in accordance with the attached materials, the university desires to enter into/increase
professional services contracts for the following projects:
Prof. Serv.
Increase/Approval
Requested
Total Project
Cost
Campus Hazard Mitigation Plan
$0.4M
$0.6M
university funds
Covelli Multi-Sport Arena
$3.0M
$30.0M
development funds
Schottenstein Center - North
Expansion and Concourse
Renovation
$4.5M
$32.0M
development funds
and university debt
Student-Athlete Development
Center
$3.0M
$32.0M
development funds
Lima Campus - New Student Life
Building
$0.8M
$4.2M
development and
state funds
Newark Campus - Residence Hall
$1.4M
$12.9M
university funds
WHEREAS in accordance with the attached materials, the university desires to enter into construction
contracts for the following projects:
74
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
APPROVAL TO ENTER INTO/INCREASE PROFESSIONAL SERVICES
AND ENTER INTO CONSTRUCTION CONTRACTS (cont’d)
Construction
Approval
Requested
Total Project
Cost
300 West 10th Brain and Spine
$13.2M
$14.3M
auxiliary funds
Mount Hall Renovation
$11.1M
$15.0M
university funds and
university debt
$3.4M
$4.2M
development and
state funds
Lima Campus - New Student Life
Building
NOW THEREFORE
BE IT RESOLVED, That the Board of Trustees hereby approves that the president and/or senior vice
president for business and finance be authorized to enter into/increase professional services contracts and
enter into construction contracts for the projects listed above in accordance with established university and
State of Ohio procedures, with all actions to be reported to the board at the appropriate time.
75
August 2015 Board Meeting - Finance Committee Meeting
Project Data Sheet for Board of Trustees Approval
Campus Hazard Mitigation Plan
OSU-150234
Project Location: N/A
•
•
N/A GSF
approval requested and amount
professional services increase
$0.4 M
project budget
professional services
total project budget
$0.6 M
$0.6 M
•
project funding
☐ university debt
☐ development funds
☒ university funds
☐ auxiliary funds
☐ state funds
•
project schedule
initial approval
10/14
BoT prof services increase approval
08/15
plan development
03/15 – 12/15
•
project delivery method
☐ general contracting
☐ design/build
☐ construction manager at risk
☒ study
•
planning framework
o supports risk management and business continuity for the university
•
project scope
o development of an all natural hazards mitigation plan
o development of a flood mitigation and implementation plan
o initial funding of $200,000 was approved in October 2014 which is for the all natural hazards
mitigation plan
o an additional $400,000 has now been set aside for this study for a detailed flood response plan
and additional recommendations of flood protection equipment
•
approval requested
o approval is requested to increase professional services contracts
•
project team
University project manager:
AE/design architect:
DB or CM at Risk:
Tom Ekegren
Michael Baker Jr Inc
Office of Administration and Planning
August 2015
76
August 2015 Board Meeting - Finance Committee Meeting
Project Data Sheet for Board of Trustees Approval
Covelli Multi-Sport Arena
OSU-150637 (CNI# 12000801)
Project Location: corner of Fred Taylor and Ackerman Road
•
•
approval requested and amount
professional services
project budget
construction w/contingency
professional services
total project budget
TBD GSF
$3.0M
$27.0M
$3.0M
$30.0M
•
project funding
☐ university debt
☒ development funds
☐ university funds
☐ auxiliary funds
☐ state funds
•
project schedule
BoT professional services approval
08/15
design/bidding
10/15 - 10/16
construction
11/16 - 05/18
•
project delivery method
☐ general contracting
☐ design/build
☒ construction manager at risk
•
planning framework
o this project is identified in the One Ohio State Framework Plan Athletics District
o this project is included in the FY 2016 Capital Improvement Plan
•
project scope
o the project will develop a program, design and construct a new Multi-Sport Arena within the
Athletics District
o the facility will serve as the home for the Men’s and Women’s Varsity Volleyball teams and
include home and visiting locker rooms for competition
o the facility will be home competition site for Fencing, Wrestling, and Men’s and Women’s
Gymnastics and Volleyball teams
o the facility will seat approximately 3000 spectators and will include concessions, restrooms and
other usual spectator amenities, as well as offices, storage, maintenance, and mechanicals
spaces
•
approval requested
o approval is requested to enter into professional services and construction manager at risk
preconstruction contracts
•
project team
University project manager: Kristin Poldemann
AE/design architect:
DB or CM at Risk:
Office of Administration and Planning
August 2015
77
August 2015 Board Meeting - Finance Committee Meeting
Project Data Sheet for Board of Trustees Approval
Schottenstein Center - North Expansion and Concourse Renovation
OSU-140300 (CNI# 14000409)
Project Location: 555 Borror Drive
•
•
700,000 GSF
approval requested and amount
professional services
project budget
construction w/contingency
professional services
total project budget
$4.5M
$27.5M
$4.5M
$32.0M
•
project funding
☒ university debt
☒ development funds
☐ university funds
☐ auxiliary funds
☐ state funds
•
project schedule
BoT professional services approval
08/15
design/bidding
12/15 – 11/16
construction
12/16 – 11/17
•
project delivery method
☐ general contracting
☐ design/build
☒ construction manager at risk
•
planning framework
o this project is included in the FY 2016 Capital Improvement Plant
•
project scope
o this project will create new sport program offices and provide improved visibility and functionality
for ticket office and team store operations
o the addition will align the new practice gym with the rest of the building
•
approval requested
o approval is requested to enter into professional services and construction manager at risk
preconstruction contracts
•
project team
University project manager:
AE/design architect:
DB or CM at Risk:
Kristin Poldemann
Office of Administration and Planning
August 2015
78
August 2015 Board Meeting - Finance Committee Meeting
Project Data Sheet for Board of Trustees Approval
Student-Athlete Development Center
OSU-150638 (CNI# 12000800)
Project Location: 2490 Fyffe Road (former Ernie Biggs Athletic Training Facility)
•
•
approval requested and amount
professional services
project budget
construction w/contingency
professional services
total project budget
TBD GSF
$3.0M
$29.0M
$3.0M
$32.0M
•
project funding
☐ university debt
☒ development funds
☐ university funds
☐ auxiliary funds
☐ state funds
•
project schedule
BoT professional services approval
08/15
design/bidding
10/15 - 10/16
construction
12/16 - 07/18
•
project delivery method
☐ general contracting
☐ design/build
☒ construction manager at risk
•
planning framework
o this project is identified in the One Ohio State Framework Plan Athletics District
o this project is included in the FY 2016 Capital Improvement Plan
•
project scope
o this project will take down the existing Biggs Facility, which is located on the west end of the
Woody Hayes Athletic Center, and replace it with a state-of-the-art athletic training center and
house new facilities for weight training and cardio conditioning for most of the University’s sports
programs
•
approval requested
o approval is requested to enter into professional services and construction manager at risk
preconstruction contracts
•
project team
University project manager: Gary Collier
AE/design architect:
DB or CM at Risk:
Office of Administration and Planning
August 2015
79
August 2015 Board Meeting - Finance Committee Meeting
Project Data Sheet for Board of Trustees Approval
Lima Campus - New Student Life Building
OSU-071557 (CNI# 12000701, #12000703, #13000303)
Project Location: 4240 Campus Drive, Lima Ohio
•
•
approval requested and amount
professional services/construction
$4.2M
project budget
construction w/contingency
professional services
total project budget
$3.4M
$0.8M
$4.2M
10,000 GSF
•
project funding
☐ university debt
☒ development funds
☐ university funds
☐ auxiliary funds
☒ state funds
•
project schedule
BoT prof. services/construction approval 8/15
design/bidding
10/15 – 09/16
construction
10/16 – 07/17
•
project delivery method
☐ general contracting
☐ design/build
☒ construction manager at risk
•
planning framework
o this project is identified in the 2008 Lima Campus Master Plan
o this project is included in the FY 2015 Capital Improvement Plan
•
project scope
o the project will construct a new 10,000 gsf Student Life building on the Lima campus
o the project will include program for a fitness component with support spaces; wellness concept
that aligns with OSU Lima resources; multi-purpose room; grab-and-go dining concept, dining
and lounge zones; study spaces and group study rooms
o project is currently in design and supplemental funding is contingent upon State Controlling Board
approval
approval requested
o approval is requested to move forward with design and construction
•
project team
University project manager:
AE/design architect:
CM at Risk:
Nikolina Sevis
The Collaborative Inc.
Ruscilli Construction
Office of Administration and Planning
August 2015
80
August 2015 Board Meeting - Finance Committee Meeting
Project Data Sheet for Board of Trustees Approval
Newark - Residence Hall
OSU-160054 (CNI# 12000652)
Project Location: Newark Campus


approval requested and amount
professional services
project budget
construction w/contingency
professional services
total project budget
TBD GSF
$1.4M
$11.5M
$1.4M
$12.9M

project funding
☐ university debt
☐ development funds
☒ university funds
☐ auxiliary funds
☐ state funds

project schedule
BoT professional services approval
08/15
design/bidding
10/15 – 10/16
construction
11/16 – 07/17

project delivery method
☐ general contracting
☐ design/build
☒ construction manager at risk

planning framework
o this project is included in the FY 2015 Capital Improvement Plan
o this project is included on the Newark Campus Framework Plan developed in 2012

project scope
o this project will construct a new 120 bed residence hall located on the Newark campus
o the project will also include a meeting/event space to accommodate 300 people, hall support
spaces and maintenance spaces

approval requested
o approval is requested to enter into professional services and construction manager at risk
preconstruction contracts

project team
University project manager:
AE/design architect:
CM at Risk:
Office of Administration and Planning
August 2015
81
August 2015 Board Meeting - Finance Committee Meeting
Project Data Sheet for Board of Trustees Approval
300 West 10th - Brain and Spine
OSU-130683 (CNI# 14000439)
th
Project Location: 300 W 10 Avenue (former James Cancer Hospital)
•
•
approval requested and amount
construction
$13.2M
project budget
construction w/contingency
professional services
total project budget
$13.2M
$1.1M
$14.3M
265,423 GSF
•
project funding
☐ university debt
☐ development funds
☐ university funds
☒ auxiliary funds
☐ state funds
•
project schedule
BoT professional services approval
01/15
BoT construction approval
08/15
design/bidding
02/15 – 11/15
construction
12/15 – 07/16
•
project delivery method
☐ general contracting
☐ design/build
☒ construction manager at risk
•
planning framework
o this is a signature project backfilling spaces vacated as a result of the expansion of the Ohio
State University Wexner Medical Center
o this project is included in the FY 2015 Capital Improvement Plan
•
project scope
o the project will renovate 59,000 GSF on three floors to house the inpatient component of a Brain
and Spine Hospital, totaling 90 private inpatient beds. This capacity includes epilepsy monitoring
beds, progressive care beds, a neuro “safe” unit, and the acute rehabilitation clinically necessary
to support the Brain and Spine Hospital.
o upgrades include an exterior building sign and lobby modification required for the program’s
image and branding
•
approval requested
o approval is requested to enter into construction contracts
•
project team
University project manager:
AE/design architect:
CM at Risk:
Paul Lenz
Design Group
Whiting-Turner Contracting Co.
Office of Administration and Planning
August 2015
82
August 2015 Board Meeting - Finance Committee Meeting
Project Data Sheet for Board of Trustees Approval
Mount Hall Renovation
OSU-150059 (CNI# 14000052)
Project Location: Mount Hall
•
•
72,186 GSF
approval requested and amount
construction
$11.1M
project budget
construction w/contingency
professional services
total project budget
$13.1M
$1.9M
$15.0M
•
project funding
☒ university debt
☐ development funds
☒ university funds
☐ auxiliary funds
☐ state funds
•
project schedule
BoT professional services approval
08/14
BoT construction approval for
demo/abatement ($2.0M)
06/15
design/bidding
02/15 - 10/15
construction
06/15 - 11/16
•
project delivery method
☐ general contracting
☐ design/build
☒ construction manager at risk
•
planning framework
o the objective of the project is to consolidate the OCIO staff in one location
•
project scope
o the project will include a total renovation of Mount Hall to house the Office of the Chief
Information Officer and the Office of Distance Education
o spaces will include offices, meetings spaces, collaborative spaces, and support spaces
o the project will also include enabling project work to move existing tenants out of Mount Hall and
into another location that may require renovation, some of which will be completed under a
separate project number
o enabling work in Bevis and demo/abatement work in Mount Hall is scheduled to start in
September
•
approval requested
o approval is requested to enter into a second Construction Manager at Risk GMP for renovation of
Mount Hall.
•
project team
University project manager: Ruth Miller
AE/design architect: Mecham & Apel Architects
CM at Risk: Smoot Construction Company
Office of Administration and Planning
August 2015
83
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
SALE OF REAL PROPERTY: 506 PARK OVERLOOK DRIVE DISPOSITION
PARCEL ID#100-001348
WORTHINGTON, FRANKLIN COUNTY, SHARON TOWNSHIP, OHIO
Synopsis: Authorization to sell +/- 0.50 acres of land of improved real property located at 506 Park Overlook
Drive, Worthington, Franklin County, Sharon Township, Ohio, Parcel ID #100-001348, is proposed.
WHEREAS the property is titled to the State of Ohio for the use and benefit of The Ohio State University
and legislative approval authorizing the sale of this property has been granted; and
WHEREAS the property is currently zoned R-10, Low Density Residential; and
WHEREAS the university acquired this property in 2004 as a gift donation valued at $187,000 from the
Harding Hospital Asset Holding Company; and
WHEREAS this property was part of the Harding Center for Mental and Behavior Health (Harding Hospital)
acquisition by the university; and
WHEREAS this parcel was not included in the sale to Step by Step Academy in 2014; and
WHEREAS appropriate university offices have categorized this as a surplus property and determined that
the sale of the +/- 0.50 acres is in the best interest of the university; and
WHEREAS proceeds from the sale of the above referenced property will benefit the Wexner Medical
Center:
NOW THEREFORE
BE IT RESOLVED, That the Board of Trustees hereby approves that the president and/or senior vice
president for business and finance be authorized to take any action required to effect the sale of the property
for a purchase price of no less than 90% of the current appraised value and to negotiate a purchase contract
containing terms and conditions deemed to be in the best interest of the university.
84
August 2015 Board Meeting - Finance Committee Meeting
former OSU
Harding site
PA R K O V E R L O O K D R
DUBLIN
UPPER
ARLINGTON
WORTHINGTON
OSU
GAHANNA
INDIANOLA AVE
COLUMBUS
OSU Property
FRANKLIN
COUNTY
COLO NIA L AVE
506 PARK OVERLOOK DRIVE
WORTHINGTON, OH 43085
85
Prepared By: The Ohio State University
Office of Planning and Real Estate
Issue Date: July 27, 2015
The Ohio State University Board of Trustees
August 2015 Board Meeting - Finance Committee Meeting
The Ohio State University
Board of Trustees
August 28, 2015
SALE OF REAL PROPERTY: 786 GRISWOLD STREET DISPOSITION
PARCEL ID#100-000601
WORTHINGTON, FRANKLIN COUNTY, SHARON TOWNSHIP, OHIO
Synopsis: Authorization to sell +/- 0.157 acres of unimproved real property located at 786 Griswold Street,
Worthington, Franklin County, Sharon Township, Ohio, Parcel ID #100-000601, is proposed.
WHEREAS the property is titled to the State of Ohio for the benefit of The Ohio State University and
legislative approval authorizing the sale of this property has been granted; and
WHEREAS the property is currently zoned R-10, Low Density Residential; and
WHEREAS this property was part of the Harding Center for Mental and Behavior Health (Harding Hospital)
acquisition by the university; and
WHEREAS this parcel was not included in the sale to Step by Step Academy in 2014; and
WHEREAS appropriate university offices have categorized this as a surplus property and determined that
the sale of the +/- 0.157 acres is in the best interest of the university; and
WHEREAS proceeds from the sale of the above referenced property will benefit the Wexner Medical
Center:
NOW THEREFORE
BE IT RESOLVED, That the Board of Trustees hereby approves that the president and/or senior vice
president for business and finance be authorized to take any action required to effect the sale of the property
for a purchase price of no less than 90% of the current appraised value and to negotiate a purchase contract
containing terms and conditions deemed to be in the best interest of the university.
86
PROPRIETORS RD
GRISWOLD S T
GRANVILLE SQ
E
CL EA
RVIEW AVE
August 2015 Board Meeting - Finance Committee Meeting
E DUBLIN-GRA
N
VILLE RD
DUBLIN
ANDOVER S T
UPPER
ARLINGTON
WORTHINGTON
OSU
GAHANNA
COLUMBUS
OSU Property
FRANKLIN
COUNTY
786 GRISWOLD STREET
WORTHINGTON, OH 43085
87
Prepared By: The Ohio State University
Office of Planning and Real Estate
Issue Date: July 27, 2015
The Ohio State University Board of Trustees
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