WSU messed up its budget;
now the state might get involved

By Sarah Sidlow

Cartoon by Greenville’s Paul Ackley,

Q: Should the State take over the management of WSU’s finances?

Managing a budget is hard—just ask Wright State University (WSU). This year, the school’s budget has hit a new low: Just $31 million dollars fills the school’s reserves, down a whopping $131 million from 2012.

Now, university departments are tasked with slashing 66 percent of their remaining budgets for the fiscal year (which ends June 30), to avoid being put on fiscal watch.

Tell me more
In Ohio, the fiscal viability of public colleges is measured by a “Senate Bill 6 score.” Half the score is based on the school’s reserve fund. The other half is split between a viability score (the school’s ability to service its debt), and an income ratio (the school’s change in net assets).

Any school that falls below a 1.75 two years in a row is put on notice—basically, budgetary detention. And it looks like WSU is right on track for that (last year’s score was a projected 0.8, and this year may cut it close).

Fiscal watch status comes with its own set of challenges, the biggest of which is a big, bright spotlight of scrutiny by the state. The school and its trustees would have to adopt a financial recovery plan with the goal of getting off of fiscal watch within three years. It could also mean that the chancellor of the Ohio Department of Higher Education could appoint someone to make those decisions for the university.

Bring in the adults
Enacted into law in 1997, Senate Bill 6 is intended to increase financial accountability of state colleges and universities. To a lot of taxpayers, it serves as a failsafe to ensure their tax dollars are spent appropriately at the university level. Since WSU has made it clear that they can’t handle adulting, many argue that it’s only fair for the state to step in and take charge to get them back on track.

Give ’em a break
At the same time, some argue that government oversight doesn’t solve unexpected issues like overall decreased enrollment and a decline in international students (which alone resulted in a $15 million loss in net tuition revenue). Also a big financial drain this year: The unexpected costs of medical insurance claims by WSU employees and their families, around $6 million.

If the state wants to do something useful, they argue, they could chip in some cash. Otherwise, requiring the school’s administrators and trustees to produce additional financial reports won’t get at the heart of the issue any faster, and installing someone unfamiliar with the culture and needs of the university will only work counter to the goal of adding more gold to the coffers.

What’s next?
For the record, WSU won’t be the first area school to get a financial slap on the wrist by the state in recent years. Central State University was placed on fiscal watch in the spring of 2015 and September 2016. Once it got its financial muscle back in action, the university was removed from fiscal watch in April 2017.

The Wright State projection should come down by the end of June, but it’s likely that the state won’t have a decision about fiscal watch until the end of the year. Bureaucracy, meet bureaucracy.

Q: Should the State take over the management of WSU’s finances?

W(right) State, Wrong College

It’s time for a reality check

By Missy Mae Walters

More than likely, if you have ever been a student at Wright State, you have heard the “W(right) State, Wrong College” joke. Nearly a decade ago, when I first enrolled, I just rolled my eyes and shrugged off the comment but over the past three years, I feel like they might have been on to something.

Let me just say it since apparently no one else will. The financial sorrows of Wright State University have been downright embarrassing. To the current students, alumni, and overall region as a whole, we are standing back in total disbelief. It is as if a house was on fire and the local fire department (Wright State Trustees and administration) has shown up, not with a fire pumper to combat the blaze, but with lawn chairs and sticks to roast their hot dogs and marshmallows.

Up until last week, I think many of us had lost track of the current status of Wright State because there is just way too much drama going on. From the immigration visa scandal, to the loss of the first presidential debate, to the enormous decline of the school’s reserves, to the continued list of employees being let go or forced into retirement. Overall, there has been nearly three years of financial disarray at Wright State and with only three months left in the fiscal year, they have a measly $200,000 left in the budget.

Whatever financial projections had been made, they were far from accurate. Wright State cites the reason for the shortfall being the result of a downward trend of enrollment from out-of-state tuition and international students paired with rising health care. Then, there also is a thing called pensions.

The 800-pound gorilla in the room, the one that the administration is blatantly ignoring, is being placed on fiscal watch by the state. Just like that one person in every person’s family that no one can stand, they are waiting until the last minute to give in and invite that person to Thanksgiving dinner. More specifically, I am referring to a state-imposed fiscal watch overseen by the Ohio Board of Regents.

The state gives every public institution an annual rating of 0 to 5. This composite score known as the “Senate Bill 6” score must stay above 1.75. If it falls below this level two years in a row, the institution is placed on fiscal watch. In 2015, Wright State’s composite score was 2.40; in 2016, the score dropped to 2.10; and in 2017, the score continued to drop to .80. This year is yet to be seen but the forecast is looking dim.

Once an institution is placed on fiscal watch, they are required to submit a “financial recovery plan” for approval to the Chancellor of the Ohio Board of Regents. The university would be under great scrutiny for a period of 2–3 years. They would need approval from the Ohio Board of Regents for all financial decisions.

Instead, newly appointed Wright State President Cheryl Schrader, despite the nickel left in Wright State’s operating budget mind you, has responded with a request for all departments and colleges to cut 66 percent of the remaining fiscal year’s budget. Schrader explains that her belief is that, if the cuts are made, Wright State will be able to ride out the storm. Now I am no fiscal genius, but I believe I remember reading about Schrader’s predecessor, Interim President Curtis McCray, making a near exact prediction to the current state of fiscal affairs.

Wright State needs to get a reality check. Ever heard the saying “desperate times call for desperate measures?” The quote comes from an ancient Greek named Hippocrates who originally said “desperate diseases call for desperate remedies.”

At the moment, Wright State has a major disease. It could possibly be as bad as the Ebola virus, which has a fatality rate as high as 90 percent. If Wright State’s administration and Trustees really want to save their institution, allowing the state to take over and have the final say in all financial matters is the right decision.

It’s not as if our region has never had a state-funded institution placed on fiscal watch before. Central State University was placed on fiscal watch in the spring of 2015. Within two years, they were removed from fiscal watch after they showed an increase in financial reserves. In Central State’s case, the fiscal watch was exactly what they needed to get their financial house in order.

With the exception of a small percentage of the population, most of us have to live within a budget. As much as I would like it, I cannot go out and buy a Maserati convertible and paint it pink. I might be able to make one payment on the car but it would eventually get repossessed. A state-funded institution of learning that is a primary contributor to training our area’s workforce should be the last place we have to worry about being financially stable.

As far as I am concerned, a swift kick in their bottom is exactly what they need, whether they like it or not. For the sake of our region, I sure hope they see it as
an opportunity.

Nothing better to do in Columbus?

The State should, for once, mind its own business.

By T. J. Savage

Another week, and another headline-worthy scandal that hits close to home. This time, the powers that be at Wright State University have their necks on the chopping block. It seems that they’re coming under heightened state scrutiny because the university’s budget is out of balance and it doesn’t have enough cash in the piggy bank. This
is news?

WSU’s financial woes have drawn the attention of the Ohio Senate. This august body of oh-so-pure legislators has taken it upon themselves to threaten the university with their version of sending the administration to the woodshed—something called Senate Bill 6. It was enacted in 1997, with the purpose of holding state-funded colleges and universities more accountable with their money.

In order to meet the legislative intent of Senate Bill 6, the Ohio Department of Higher Education computes three ratios from which four scores are generated. These include expendable net assets, physical plant debt such as bonds and notes payable, total operating revenues including grants and gifts, total operating expenses, total non-operating expenses, and change in total net assets and revenues. State colleges and universities are required to submit quarterly unaudited financial reports to the Ohio Department of Higher Education within 30 days after the end of each fiscal quarter. Failure to comply with these reporting guidelines requires the Ohio Department of Higher Education to withhold that campus’s monthly subsidy payment until its quarterly report is received.

In English: this State-sanctioned Department expects colleges and universities to sacrifice a small forest to generate enough paper to keep their interns busy analyzing records and looking for ways to be punitive under the guise of accountability. Oversight groups don’t expend this much effort in checking out a candidate’s campaign finances. If a college or university fails to provide proof of their budgetary intentions, they can be placed on the dreaded Fiscal Watch. This is Senate-speak for “We’re going to be looking over your shoulder from here to eternity, watching how you spend every dollar.”

Wright State isn’t the first area higher learning institution to be put under the magnifying glass. Central State University got The Treatment in 2015 and again in 2016. They promised to behave themselves and watch how much money they spent on croissants and coffee at faculty staff meetings and all was right with the world.

In WSU’s case, they’ve already slashed $30.8 million from their budget in an effort to right the ship. They still need to add $6 million to their reserve fund by June 30 to stay off fiscal watch, which is unlikely to happen this late in the game. This does, however, speak to one salient point—at least they’re trying! It may be too little, too late, but give them an A for effort.

The Senate’s reaction is reminiscent of the financial fallout and backroom dealing that happened in the waning days of the Bush administration. For the memory challenged, that was when the Wall Street banks and the Big Three automakers approached the feds with their hands out, begging for bailouts so that their CEO’s could keep their private Gulf Stream jets and condos in Puerto Vallarta. The Capitol Hill flacks caved in and rewarded their big money donors with blank checks, and all was well.

Then the new administration took over a few months later and when the CEO’s returned for another late Christmas gift, they were told that the rules had changed. If they took the money, their companies were basically going into receivership, being run by the federal government until the loans were repaid. No smiling faces exited the committee hearing room that time.

State and local governments put their trust in the people who administer semi-public institutions like WSU. These folks are highly trained and vetted by a committee before they take office. Let them do their job. The economy hasn’t been kind to colleges and universities the past few years, with declining enrollments, especially those of international students. Wright State cited this as one of the reasons for their economic shortfall. They have also laid some of the blame on unexpected costs of medical insurance claims by employees and their families. Granted, the bean counters in charge of budget forecasts could have foreseen both scenarios and put contingency plans in place. But do we let a bunch of bureaucrats who have no experience in running the day-to-day operations of a large university arbitrarily seize control? This is just another example of misplaced governmental oversight during a campaign year.

Surely you people have something better to do, like worrying about getting re-elected.

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