the financial state of the university geoff chatas, chief financial officer | the ohio state...
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The Financial State of the University
Geoff Chatas, Chief Financial Officer | The Ohio State University
THURSDAY, NOVEMBER 15, 2012 | UNIVERSITY SENATE
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University Core Goals
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Teaching and Learning
Research and Innovation
Outreach and Engagement
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The Financial State of the University
Our Focus: The Academic Core
Our Financial Strategy: Supports the Academic Core
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The Financial State of the University
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Look before you leap. To achieve our ambitious academic goals, we need to take a strategic approach:
Where are we going?
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The Financial State of the University
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Otherwise, just where will you land?
Strategy is paramount.
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The Financial State of the University
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“Even before the recession struck, it was evident that expanding our funding streams would protect our academic core as nothing else possible could.”
President Gee, Address to Faculty, October 18, 2012
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The Financial State of the University
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“We cannot carry out our historic purposes and focus on teaching and knowledge without a firm financial foundation.”
President Gee, Address to Faculty, October 18, 2012
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The Financial State of the University
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Progress
Challenge
Uncertainty
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Ambitious Academic Goals
From Excellence to Eminence
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So, just how do we fund our ambitions?
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What We Know
Government support is permanently shrinking.
Financial burdens cannot be shouldered by students and families alone.
Federal budget sequestration looms.
We need to identify new revenue sources.
We need to use existing resources responsibly.
We need to understand and manage our risk.
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Examples of Recent Funding Efforts
Asset Monetization
Parking Lease $483 million
Faculty Initiatives and Research Discovery Endowment Fund:
$200 million
Century Bonds
Funding expansion of Wexner
Medical Center
Additional revenue will be available for
other needs over the years
Partnerships
Huntington Bank Affinity Agreement
$25 million from Huntington, which the university will use for academic scholarships
and educational programming
Tech Commercialization
Pathway for faculty to
bring their innovations to market
Cost-Savings Efforts
Strategic procurement saves nearly $22 million
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Striving for Simplicity
Improve quality Reduce wasteful efforts Maximize our existing resources Minimize costs Reduce time
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The Financial State of the University
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Our bold financing strategies are attracting attention.
• September 2012: Columbus Business First awarded “Transaction of the Year” honors for the sale of $500 million worth of 100-year bonds – making Ohio State the first public university to issue century bonds.
• November 2012: Ohio State earns The Bond Buyer “Deal of the Year” in the non-traditional financing category for our 50-year lease and concession agreement of parking facilities and operations in exchange for a $483 million up-front payment.
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The Financial State of the University
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Moody’s Investors Service has assigned a Aa1 rating
to the university. The
outlook is stable.
Standard & Poor's Ratings Services: Long-term Rating
AA/Stable
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The Financial State of the University
What the Future Holds
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Fourth University Core Goal
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•To become the model of an affordable public university recognized for:•Financial sustainability•Unsurpassed management of human and physical resources•Operational efficiency and effectiveness
Primary Focus:
Resource Stewards
hip
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B&F Goals and Vision: 2012-2013
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Operating With Financial Soundness and Simplicity
Growing New Revenue
Reviewing Assets
Building the Endowment
Unlocking the Financial Potential of Our InventionsOperating With Efficiency and Effectiveness
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B&F Goals: Generation of New Resources
Generate new resources through:
• Identification of savings• Redirections of existing funds• Innovative development of new funding sources
Estimated Resource Generation Over Ten Years: More Than $2 billion
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Resource Generation Scorecard – Fiscal 2013 Targets
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Current Year
Current Year
Target
Progress Against Current
Year Target 2020 Goal
A. Revenue Enhancement1. Affinity Arrangements $25 $25 $1902. Commercialization $5 $5 $91
3. Tuition Management net of academic salary increases $7 $7 $1804. Auxiliaries $12* $12* $845. Net New Cash Development $10 $10 $3856. President/Provosts Reserve $34 $34 $440
B. One-Time Revenue Options1. Asset Monetization $200* $200* $400
C. Expense Management (Streamlining & Procurement)1. Strategic Procurement Savings $30 $30 $3902. Strategic Streamlining Savings $20 $20 $425
D. Capital1. Capital Sources Available $748 $748 $4,7272. Capital Uses Requested or Approved $748 $748 $3,627
E. Reallocation of Base Funding to Colleges/Support Units $3 $3 $24
* = 2 year goal
Resource Generation Scorecard Year to Date September 30, 2012
Metric (in millions)
Meets or Exceeds Goal Performance Up
Caution or Data Pending No Change in Performance
Below Goal - Action Needed Performance Down
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University Financial Scorecard: Fiscal Year-to-Date September 30, 2012
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Actual Budget
1. $208 $2202. $190 $1863. $264. $108 $1075. $4 $1
1. $1,207 $1,2032. $1,138 $1,1253. $144 $964. $69 $785. $652 $589
1. 79,062 79,419 2. 179 1503. NA < 4.0%4. 0.24% 0.07%5. 2.13% 1.52%6. 2.63% 4.25%7. 7.89% 4.25%8. AA AA
Meets or exceeds goal Performance up
Below goal No change in performance
Far below goal Performance down
Liquidity – Primary Reserve Ratio (Days Cash on Hand)Actual Debt Service to Operations (measured semi-annually)Short Term Investment Pool Return
YTD Long Term Investment Pool Return >4.25%Long Term Investment Pool Average 3 Year Return >4.25%Credit Rating
Intermediate Investment Pool Return
Enrollment - Summer & Autumn
Federal, State, Local and Private Grants & ContractsAdvancement Cash ReceiptsState SupportIncrease in Net Contribution from Auxiliary Enterprises
B. Financial Snapshot (in millions)Total Revenue excluding endowment performanceTotal ExpensesChange in Net AssetsChange in Net Assets excluding endowment performanceChange in Net Financial Assets
C. Performance Metrics
Tuition and Fees
University Financial ScorecardFiscal Year-to-Date: September 30, 2012
Metric Actual vs Budget
A. Revenue Drivers (in millions)
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Challenges For the Future
Aligning resources with academic priorities
Managing reductions in government support
Reducing student debt
Minimizing tuition increases
Diversifying revenue streams
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Challenges For the Future
Reducing expenditures
Meeting capital and infrastructure needs
Measuring performance
Managing risk in a complex world
Driving accountability
Understanding the implications of globalization in higher ed
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The Financial State of the University
Optimistic View for the Future Reinvestment in Our Academic Core Ambitious Goals to Achieve Positive Financial State and Outlook
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The Financial State of the University
Questions and Answers
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