If Ohio’s budget suffers drastic revisions to account for plunging state tax revenues, the UT community may face another painful budget development process, said Vice President for Finance and Administration Scott Scarborough.
“We would essentially implement an abbreviated budget process similar to what we did [last academic year] in order to determine what adjustments need to be made,” he said.
Vice presidents and deans would be tasked with reexamining their previous budget submissions to produce a new budget reflecting the true amount of state aid. The budget would then need to gain approval from the university’s Finance and Strategy Committee — consisting of administrators, members of Faculty Senate and Student Government leaders — as well as UT President Lloyd Jacobs, the Board of Trustees Finance Committee and then the full BOT.
When the BOT approved UT’s current budget in mid-May, Ohio’s tax revenue shortfall was estimated around $900 million. On Thursday, Ohio Gov. Ted Strickland’s Budget Director, Pari Sabety, announced to a six-member Ohio House and Senate conference committee the shortfall is closer to $3.2 billion.
In fact, Ohio is expected to use its entire $962 million rainy day fund simply to balance the rest of the current state budget.
This state legislative committee is charged with developing a compromise between the versions of the budget proposed by the House and Senate.
According to UT’s Vice President for Government Relations Bill McMillen, there are 632 differences between these budget versions.
This committee’s recommended budget will then need to gain approval by both houses of the legislature as well as the governor, who is capable of vetoing any line item in the document.
The House’s $56 billion budget, which was passed early in May, differed only slightly from the budget proposed by the governor. It added $682 million to Strickland’s version in higher education as well as other social programs. It did not include an increase in state share of instruction funding, though, which remained at 6.1 percent.
The Senate’s version, which was released June 3, cut about $1 billion from the House’s version, primarily from state government funding. According to McMillen, the Senate also changed funding for K-12 programs and eliminated a $100 million program that would have enhanced undergraduate co-ops for state university and community college students.
According to Scarborough, the Senate’s budget would have meant, “about $120,000 of additional funding in the first year of the biennium [for UT] and removed about $1 million of funding in the second year of the biennium.”
Ohio’s budgets cover two fiscal years.
Scarborough added that, as far as he knows, higher education is the only state entity that has thus far been spared considerable cuts in funding.
McMillen said this charitable treatment of higher education in recent years may not persist, though. State legislators declared their support for it two years ago, realizing along with Strickland the importance of higher education in the transition away from a manufacturing state economy. This support followed years of funding cuts to higher education by state officials.
According to McMillen, President of the Senate Bill Harris said the Senate had cut many of the items in their budget that were expendable, leaving initiatives like higher education vulnerable to further cuts.
In an e-mail to state universities written earlier this month, the Inter-University Council of Ohio President Bruce Johnson said, “We may end up with a budget that looks like the Senate or House version, and we may end up with a huge cut in the [state share of instruction].”
“Key members [of the legislature] are talking about cutting higher education — so it is not off the table,” he said.
McMillen said any cuts to the state share of instruction may be compensated by the legislature, allowing universities and community colleges to raise tuition rates this academic year. Universities are barred from raising tuition this year but will be able to increase it up to 3.5 percent next year. Community colleges must freeze tuition for both years.
Though the deadline for approval of the budget is June 30 by midnight, the legislature has the ability to pass continuation budgets allowing the state government to function for an established period of time until the permanent budget is agreed upon. According to McMillen, these interim budgets can last for weeks or even a month.
“Minimally, this [committee process] is going to the wire [of June 30]. There is going to be public testimony and negotiation among members,” he said.
He added that while Ohio has a history of passing budgets on time, the high state unemployment rate of 10.2 percent along with the possible exodus of thousands of auto industry jobs from the state is contributing to a troubled and uncertain economy.
Though more budget cuts at UT are a distinct possibility, Scarborough said he is “confident that the university community will come together and produce a solution to whatever problem is presented to us. I’m just hoping for the best at this point.”
Under current UT administrative projections, the state share of instruction for fiscal year 2010 is projected to account for 28 percent of academic operating revenue. Tuition and fees are expected to constitute 51.5 percent, and revenue generated from sales and services should make up 16 percent. The rest comes from non-governmental gifts, grants, contracts and other forms of revenue.
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