Ohio University Ending Employee Furloughs Early Thanks To Budget Boost< < Back to
ATHENS, Ohio (WOUB) — Ohio University expects to end the fiscal year with a balanced budget or even a surplus, a dramatic shift from previous projections.
As a result, the university will end the mandatory employee furloughs early and may even refund some of the lost earnings.
“We’re hopeful this decision on the furlough will provide some comfort to our staff who have sacrificed so much,” university President Duane Nellis said.
The dramatic shift in the university’s financial fortunes for this fiscal year is largely due to federal stimulus money tied to the coronavirus pandemic and more funding from the state than was expected.
This financial cushion is providing temporary relief and does not mean the university’s overall budget challenges are over. University leaders still project deficits in the years ahead until something is done to narrow the gap between revenue and expenses.
The university is not planning any furloughs moving into the next fiscal year, which begins July 1. However, it also is not planning for any pay raises, and any new hiring will continue to be closely scrutinized.
Heading into the current fiscal year, the university was projecting a $25 million deficit, and to cut costs it laid off several hundred employees and imposed mandatory furloughs on remaining employees. This amounted to a cut in pay.
The furloughs will now end three months early. Starting at the end of March, employee pay will return to normal. Then, if the university ends the fiscal year on June 30 with enough operating surplus, it may decide to refund some of the lost wages from the first nine months of the furlough.
Employees who have not yet taken all of their furlough days can still take them in the final three months of this fiscal year.
University leaders have also decided to allow employees to roll over into the next fiscal year an additional 10 vacation days beyond the usual limit.
Just two months ago, the university’s economic forecast for the remainder of this fiscal year was still bleak. In a budget update presented to the board of trustees in January, university leaders were projecting a $32 million draw from reserves to balance the budget, $7 million more than forecast in the initial budget.
What changed was increasing financial support from the state and federal government.
The university received nearly $48 million this fiscal year in multiple rounds of funding from the federal stimulus package passed last March at the start of the pandemic. And it now expects to receive another $27 million from the new stimulus package passed last week.
The university also entered the current fiscal year expecting significant cuts in state funding. The governor had announced the university would receive about $8 million less. And because of the financial hit the state was taking from the pandemic, university leaders budgeted for even deeper cuts.
The governor instead restored the $8 million which, combined with additional state funding, brought the total to nearly $18 million.
This government funding, along with savings from the layoffs and other budget-cutting moves, helped offset the tens of millions of dollars in additional expenses and revenue losses resulting from the pandemic. This includes the cost of mass COVID-19 testing and other campus safety measures, as well as lost revenue from room and board as students were either forced to stay home in the early months of the pandemic or opted to remain home even as the restrictions were eased.
But even if the pandemic dissipates to the point where campus life can return to normal in the fall, the university will continue to grapple with a steady drop in enrollment. Enrollment has been declining every year since its peak in 2016, and this trend is expected to continue for at least another couple of years.
Tuition along with room and board represent more than half of the university’s revenue, so these enrollment declines are steadily eating away at the university’s bottom line. And state funding is linked to enrollment, so the smaller incoming classes will have a ripple effect in the years to come resulting in declining state support.
Nellis said the university will be working over the next several months on a plan to address the structural imbalance in the budget and said that “everything is on the table.”
“We want to get to a stage where we’re not talking every year about how we’re going to work through this,” he said.