Senator eyes $2.9B in assets

Associated Press

COLUMBUS

Ohio’s public colleges and universities have combined cash reserves nearing $3 billion, a figure that’s raising new questions about their requests for tuition increases and state aid.

Ohio State University leads the pack with $1.2 billion in a type of reserves known as unrestricted net assets, according to a document compiled by Senate Finance Chairman Chris Widener and obtained Monday by The Associated Press. Eleven more universities or colleges are holding more than $50 million in such assets, the document shows.

Widener, R-Springfield, told the AP he has met with university presidents and financial officers as well as state Chancellor Jim Petro about his findings. His concern is that some institutions are holding almost a year’s worth of expenses in their accounts, even as state budget writers are poised to allow them to raise tuition by as much as 3.5 percent.

“It’s our job as legislators to know the whole picture and to know why they would need increases in tuition and, at the same time, state support when their financial picture seems pretty strong,” he said. “My concern is families that are struggling to pay for college in a tough economic environment.”

Officials defended the reserves as a necessary part of their institutions’ financial well-being.

Bruce Johnson, executive director of the Inter- University Council of Ohio, which represents public universities, said unrestricted net assets shouldn’t be misunderstood.

“Is there cash on hand at university campuses? The answer is yes,” said Johnson, who also has met with Widener on the issue. “These are, in some cases, multi-billion[-dollar] institutions. If they’re going to meet their payroll, they need cash on hand. Universities are self-insured. They have to be prepared to pay cancer bills [for sick employees] right out of their pockets. Their liabilities is what’s missing from this picture.”

As the state faces an $8 billion budget gap, universities are fighting the perception that their cash reserves could help fill a significant portion of that hole.

Johnson said he’s fighting the notion of draining universities’ cash reserves for that purpose because it would set the schools on unsteady financial footing. Such a scenario would require them “to raise and lower tuition on a monthly basis” in order to meet their financial obligations.

Geoff Chatas, chief financial officer at Ohio State, said the reserves are part of complex budget calculations at the institution that determine their bond ratings, the interest rates at which they can borrow money and their insurance rates.

Chatas said the university is losing $65 million in state aid under the current version of the $55 billion, two-year state budget. A pending tuition increase won’t make up the difference, he said. The university raised tuition 7 percent during the last school year.

“We’re moving forward in a financially conservative way to make sure we’re not only strong today but strong for tomorrow as well,” he said.

Spokeswoman Claire Wagner at Miami University, which has unrestricted net assets of more than $167 million, said the state requires universities to keep a certain amount of a debt cushion.

“When we’re building and we need to borrow, it’s based on confidence that we can pay our debt,” she said. “It really is there to establish a safety factor.”

Widener said he’d like to review the debt and income ratios imposed on Ohio’s public colleges and universities in 1997. The requirements were laid out in Senate Bill 6, a response to financial crises at Ohio University and Central State University in the ’80s and ’90s that nearly closed the schools.