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Analysis of UO and the Oregon University System: February 2011
Howard Bunsis, PhD, CPA, JD Professor of AccounFng
Eastern Michigan University
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ExecuFve Summary • Both OUS and UO are in solid financial condi3on, with strong
reserves, posi3ve cash flows, revenues exceeding expenses and manageable levels of debt.
• This conclusion is not affected by the loss of Federal s3mulus dollars, and is not affected by the expected decline in the 2011-‐13 biennium State appropria3on.
• This conclusion is confirmed by the OUS System themselves, as well as by strong bond ra3ngs as measured by credit ra3ng agencies
• What is broken at UO are the priori3es of the administra3on. The audited financial statements and budgetary data reveal that the administra3on has not been true to the core academic mission.
• Faculty salaries at UO are the lowest among the 34 AAU Ins3tu3ons.
• Athle3c spending and coaches salaries are extremely high at UO when compared to peer ins3tu3ons.
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Roadmap • IntroducFon • OUS Financial Statements • UO Financial Statements.
– Assets, LiabiliFes and Net Assets – Close examinaFon of reserves – Debt – Cash Flows – Breakdown of Revenue and Expense Sources – State AppropriaFon
• Moody’s raFos for OUS and the State • UO President’s New Funding Plan • Student Enrollment and Number of Faculty • AthleFcs • Conclusions and AspiraFons
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Audited Financial Statements • The first part of this analysis will focus on the audited financial statements of both OU and the OUS System. It is always preferred to focus on audited statements for several reasons: – Audited financial statements represent actual results, while budgets are just plans or forecasts
– Audited financial statements are reviewed by an outside, independent accounFng firm (KPMG)
• We will focus on budgets in the la[er part of the analysis
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Budgets are Only Plans • Budgets are plans of what will occur • Audited financial statements report what actually occurred
• Administrators say: “we have a hole that needs to be filled”
• O_en this hole is overstated, not real, an based on only a small slice of the enFre university
• The best manner to ascertain the financial condiFon of a university is to analyze the actual financial statements. No plans, no small slices, no funds, no made up rules. Just the facts audited by an independent accounFng firm.
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OUS: Statement of Net Assets Source: Audited Financial Statements
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• Assets are growing every year, and are over $3.8 billion at the end of 2010 • Net Assets are the equivalent to owner’s equity in the for-‐profit world; a_er
declining through 2008, they are increasing again. • Why are they increasing? Because 2010 was a great year for the Oregon
University System, and for OU as well (later)
OUS in Their Own Words: Assets and Liabili3es
• From the Management Discussion and Analysis:
• “OUS�’s overall financial posiFon materially improved in 2010. Changes to Total Assets reflected a larger increase than Total LiabiliFes causing Total Net Assets to increase $189 million during 2010 compared to a modest $9 million increase in 2009.”
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OUS Reserves
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• The first category represents the value of capital assets, such as buildings, that do not have debt associated with them. This category does not tell us much about financial health
• We will focus on the other categories, specifically the last two categories, which represent the actual level of reserves that a university has access to
Component Units • The financial analysis herein does not include the results the component units of the OUS System, which are the individual campus FoundaFons.
• QuoFng from the financial statements: “Each foundaFon is a legally separate, tax exempt enFty with an independent governing board. The resources of each are restricted to the acFviFes of OUS universiFes by the donors.”
• At the end of 2010, the component units had unrestricted net assets of over $1.2 Billion. Though these funds may not be used for core operaFons, they are very relevant to the overall financial health of the university.
• Most of the net assets are due to investments and very few liabiliFes.
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Value of Investment Assets In Component Units (Founda3ons)
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• The value of the investments are over $1 billion • The effect of the stock market decline can be seen in 2009, but there
was a 2010 recovery.
Discussion of Reserves • Restricted net assets are those that are earmarked for specific
purposes, but which may be uFlized at the administraFon’s discreFon. Some of these are expendable, and some are not expendable.
• Unrestricted net assets, which can be seen as a pure reserve fund for OUS, can be used without restricFons.
• Expendable net assets are the numerical sum of restricted-‐expendable net assets and unrestricted net assets. The expendable net assets are those net assets that can be used for operaFons or to pay off debt of the OUS. Therefore, they are an indicaFon of financial flexibility. These expendable net assets do not represent a pot of cash; however, they indicate that OUS either has cash of this amount, or has access to cash in this amount. Expendable net assets are seen by the financial community as an important measure of financial strength, which is why we will see these metric used in several raFos created by bond raFng agencies.
• We will next analyze the level of these reserves, then determine if they represent liquidity.
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Reserves
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Total Net Assets
= Invested in Capital Assets +
Restricted Net Assets
+ Unrestricted Net Assets
Expendable Non-‐expendable
Reserves or Expendable Net Assets
= Restricted Expendable
+ Unrestricted Net Assets
Bo[om Line Reserves of OUS
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• The primary reserve raFo is defined as total reserves (total expendable net assets) divided by total expenses.
• There was a decline in reserves in 2009, and this was due to several factors, including a decline in the State appropriaFon
• The OUS System had a very strong 2010 • Overall, having a Primary Reserve raFo of 29% means that OUS has almost 3
months of expenses in reserves. This is very high and solid.
Do the Reserves Represent Liquidity?
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• The current raFo in 2010 was the highest since 2006 • Total cash resources are now over 1 BILLION! • The total reserves in 2010 were just under $600 million, so it is
clear that the reserves of the OUS system are definiFvely liquid
Debt Analysis
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• The viability raFo is defined as reserved divided by interest-‐bearing debt
• There was an increase in debt in each of the last three years (about 200-‐300 million per year). The debt is being used for the construcFon of capital assets
• Part of this is the UO Arena Project of 200 million, where the debt was issued in 2008.
• The MD&A reports that capital spending was greater than debt issued, as gi_s and other sources helped finance these projects.
Revenues vs. Expenses: Broad View
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Discussion of Revenues and Expenses • OUS had a profit (revenues greater than expenses) in each year from 2006 to 2010
• 2010 was by far the best year. • Total revenues are increasing each year • The federal sFmulus was 30 million in 2010 out of total revenues of over 2 billion.
• The federal sFmulus will sFll be part of OUS in 2011, but not therea_er. The removal of this 30 million, in a 2 billion budget, is not determinaFve
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OUS Revenue DistribuFon
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OUS Expense DistribuFon
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From the OUS MD&A: Unrestricted Net Assets increased $99 million. Growth in opera3ng revenues for unrestricted purposes outpaced the growth in opera3ng expenses, resul3ng in the build-‐up of unrestricted fund balance reserves.
OUS: Specific Revenues and Expenses
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OUS Revenues and Expenses: Percentage Changes and Misplaced Priori3es
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• It is clear that the 7 campuses have not been commi_ed to the core academic mission. Why? AdministraFve costs are increasing faster than instrucFonal costs
• The recent decline in the State appropriaFon is not an excuse for this misappropriaFon of funds
Moody’s RaFo Analysis
• Moody’s uses three raFos to judge the financial condiFon of public universiFes. In fact, the SFSU financial statements refer to the Moody’s raFngs of the State system.
• Then a composite score is compiled based on these 3 raFos:
• Primary Reserve RaFo – Are there sufficient reserves?
• Viability RaFo – Is there too much debt?
• Net Income RaFo – Are revenues and expenses in line with each other?
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Moody’s RaFo DefiniFons • Primary reserve ra+o: Expendable net assets divided by total operaFng expenses.
• Viability ra+o: Expendable net assets divided by debt.
• Net Income Ra+o: Change in total net assets divided by total revenues.
• Final Score = 50% * Primary Reserve RaFo + 30% * Viability RaFo + 20% * Net Income RaFo
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Moody’s Summary Scores
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OUS Moody’s Scores
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• To be in financial trouble, according to Moody’s, an insFtuFon must have a composite score of below 1.75 for two consecuFve years
• The primary reserve raFo is very strong each year • These are solid scores, and the increase in 2010 is due to revenues
exceeding expenses by a large amount.
Moody’s RaFngs • OUS System: – Aa1 on April 16, 2010 – h[p://www.moodys.com/credit-‐raFngs/Oregon-‐State-‐Board-‐of-‐Higher-‐EducaFon-‐credit-‐raFng-‐820133308
• State of Oregon: – Aa1 on October 27. 2010 for General ObligaFon Bonds – Aa1 on April 16, 2010: Overall raFng
• UO does not have separate bond raFngs, as debt is issued through OUS
• These are all very high raFngs, as the next slide demonstrates
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Moody’s RaFngs
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Rating Description
Aaa Issuers or issues rated Aaa demonstrate the strongest creditworthiness relative to other US munici-‐pal or tax-‐exempt issuers or issues.
AaIssuers or issues rated Aa demonstrate very strong creditworthiness relative to other US municipal or tax-‐exempt issuers or issues.
A Issuers or issues rated A present above-‐average creditworthiness relative to other US municipal or tax-‐exempt issuers or issues.
Baa Issuers or issues rated Baa represent average creditworthiness relative to other US municipal or tax-‐ exempt issuers or issues.
Ba Issuers or issues rated Ba demonstrate below-‐average creditworthiness relative to other US munici-‐pal or tax-‐exempt issuers or issues.
B Issuers or issues rated B demonstrate weak creditworthiness relative to other US municipal or tax-‐ exempt issuers or issues.
Caa Issuers or issues rated Caa demonstrate very weak creditworthiness relative to other US municipal or tax-‐exempt issuers or issues.
Ca Issuers or issues rated Ca demonstrate extremely weak creditworthiness relative to other US munic-‐ipal or tax-‐exempt issuers or issues.
C Issuers or issues rated C demonstrate the weakest creditworthiness relative to other US municipal or tax-‐exempt issuers or issues.
Modifiers for Municipal RatingsMoody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end the modifier 2 indicates a mid-‐ range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
How are these high raFngs possible? • How can the State and OUS System receive high bond raFngs when everyone thinks the State and the System are broke?
• Answer: Neither the State nor the OUS System is broke
• Both OU and the OUS System have solid reserves and both have steady and predictable revenue sources
• In fact, OUS has almost $600 million of reserves for a rainy day. These reserves, along with varied revenue sources, give OUS the ability to handle any future declines in the State appropriaFon.
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More on these high bond raFngs • Note the dates of the raFng: 2010. • Therefore, the raFng agencies are aware that the Federal sFmulus money is running out – the cliff is not a cliff but a small bump.
• NoFce how small the Federal sFmulus money is to the overall picture; in 2010, federal sFmulus money was $30 million in a $2 billion operaFon.
• As we will see, even for 2011-‐12 when the sFmulus money runs out, the 30 million will likely be covered by increases in other revenue sources.
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State of Oregon Moody’s Scores
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• The State of Oregon has seen declining performance, though there was some improvement in 2010
• What is most important is that the OUS System has higher Moody’s scores than the State of Oregon.
The Future for Oregon • From the 2010 MD&A (November 2010): “Oregon’s annual employment level in 2010 is expected to be about 1 percent less than in 2009, but nonfarm employment is expected to grow 0.9 percent in 2011.
• Annual employment should rise 2.2 percent in 2012 and again in 2013 before slowing to 2 percent in 2014 and 2015. The State should mirror the naFon’s growth rate in 2011 and 2012 and then grow faster through 2015.
• The State’s populaFon should increase slightly faster than the naFon’s.
• Overall, employment should grow faster than populaFon in Oregon between 2010 and 2015
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Oregon Unemployment Rates: 2001 to 2010
Source Bureau of Labor StaFsFcs 32
Oregon Monthly Unemployment Rate: 2008 to 2010
Source: h[p://www.bls.gov/web/laus/laumstrk.htm 33
Selected State Unemployment Rates: December 2010 (Source: Bureau of Labor Sta3s3cs)
Source: Bureau of Labor StaFsFcs 34
More State Forecasts • The December 2010 revenue forecast projects $12.5 billion of General Fund revenues for the 2009-‐11 biennium. This amount represents a decrease of $1.1 billion from the 2009 close of session forecast.
• The December 2010 revenue forecast projects an increase in General Fund revenues for the next two biennia, up 11.5 percent to $13.9 billion in 2011-‐13 and 13.5 percent to $15.7 billion in 2013-‐15.
Source: 2010 State of Oregon Comprehensive Annual Financial Report 35
Will The State Appropria3on Go Down 25%?
• Over 2 years, this is a 50 million per year reducFon in OUS’s total revenues
• OUS has about $2 billion in total revenues; if it losses $100 billion, this will hurt. But it will not be fatal. There are almost $500 million in reserves.
• Reserves can be used for short-‐term, temporary reducFons in revenues or unexpected increases in expenses.
• They should not be reduced on an annual basis conFnually. • With the future looking brighter, the use of reserves to deal
with this shoryall makes sense. • The OUS administraFon and campus administrators will
claim there are no reserves, or that this money can only be used for this, and that can only be used for that.
• This is not true; as we will see, this is an issue of prioriFes.
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Detail on State AppropriaFon
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• The 30,000 (30 million) of federal sFmulus money is gone for the 2011-‐13 biennium.
• However, that decline is not debilitaFng; the General Fund number will be the one to watch and consider
• Remember, the OUS System has many other revenue sources
State-‐wide LegislaFve AcFons • Passed: A bill that increases the State’s corporate income tax rate, establishes a new corporate minimum tax based on Oregon sales, and increases the Secretary of State filing fees.
• Passed: A second bill increases the State’s personal income tax rate on high income filers and phases out the subtracFon for federal taxes.
• Both of these bills were approved by the voters in January 2010.
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Oregon Tax Revenues are Increasing • Wall Street Journal, February 1, 2011 • Taxes Boost State Coffers • Rising Revenue in 2010 Reflects Economic Gains but Won't Bridge Budget Gaps
• For Oregon, 4th quarter 2010 personal and corporate income tax revenues are 9.6% above 4th quarter 2009. The naFonal change is 6.9%.
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But the New Governor Will Cut • Wall Street Journal, February 7, 2011 • Governors Chop Spending • PoliFcians in Both ParFes Aim to Balance State Budgets Through Cuts, Not Taxes
• A DemocraFc governor, John Kitzhaber of Oregon, has proposed a two-‐year budget that would: – Make cuts to mental-‐health insFtuFons and reduce state Medicaid reimbursements to doctors and hospitals.
– Among other proposed cuts: Fewer state agencies; fewer employees; and generally a smaller safety net for social services. State-‐funded universiFes would cost more.
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UO President’s Proposal • Wall Street Journal, 11/23/2010 By RICHARD LARIVIERE • Due to the unpredictability and reduc3on in the State appropria3on, the proposal is
to issue bonds of $800 million, and even before this happens, UO will raise $800 million. The earnings from this $1.6 million fund will be used to finance UO opera3ons and debt service on the bonds
• The university would have its own 15-‐member governing board appointed by the governor. In exchange for more independence, the university would agree to meet performance goals set by the Legislature reten3on, comple3on, etc.
• Pros – Increased autonomy from the State, so tui3on can be predictable – Set tui3on levels independently, and negate sending tui3on dollars to the central
system first. A new law allows the universi3es to charge more for different programs, but UO has chosen not to follow this model
• Cons – Will OU s3ll be public? What if the other publics tried to do the same thing? – Is this just a move to increase tui3on? – What about quality educa3on?
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LegislaFve Response • It is on the docket for this legislaFve session (SB 559 and
SJR 20); 559 would create a 15-‐person Board at UO; SJR 20 is about the bond issue.
• House Speaker Dave Hunt, D-‐Gladstone, said he was "cauFously pessimisFc" about the plan, which he compared to giving his children a 30-‐year advance on their allowance. "It has a way of ge|ng spent more quickly, and mom and dad don't have accountability anymore," he said. "It sounds like they want all the rewards and none of the risks," Hunt said. "This proposal would appear to be a big cash giveaway without any oversight.”
• Lariviere argued that mom and dad (the state Legislature) keep varying the allowance from year to year, forcing the university to clobber students and their families with periodic tuiFon spikes.
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Senate Bill 242 • Change the status of the university system from state agency to a public university system. Rather than line-‐item finding based on the prior budget, the system would receive block-‐grant funding similar to Oregon’s K-‐12 and community college system.
• There will be a reducFon in the 2011-‐13 biennium appropriaFon. The hope is that this bill will provide more certainty going forward
• Allows the universiFes to keep more of their tuiFon money. In December of 2010, there was $20 million of addiFonal tuiFon that the universiFes could not spend.
• Campuses would also have control over their reserves
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College A_ainment: Percent of Adults 25 and Over
Source: American Community Survey of the US Census Bureau, 2010 44
Other Varia3ons on the Proposal: University of Delaware
• They claim to be “A state-‐assisted, privately governed insFtuFon.”
• As a privately chartered, publicly supported insFtuFon, UD receives support each year from the state.
• They receive 15% of their total revenues from the state (117 million out of 777 million in total revenues).
• TuiFon is 38% of total revenues • They claim to be in solid financial posiFon, but are sFll making budget cuts (let no crisis go unused)
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Other Varia3ons: University of Michigan • There are two opFons being considered in the State:
– Create a state-‐wide system like OUS (the 15 Michigan publics are currently autonomous)
– Make the University of Michigan a private university • Michigan gets $362 million in the State appropriaFon
(Michigan is a $45 billion in total expenses state, versus $23 billion for Oregon). So the savings is 1% of the total
• Michigan does not need the appropriaFon: $362 million out of $5 Billion in total revenue, or 7%
• UM could charge students what they wanted without recriminaFons, and they could increase the % of out-‐of-‐state students. And the State would save money.
• Many in the State legislature are decrying the potenFal loss of educaFonal opportunity and access to the flagship university
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University of Oregon Financial Analysis (From the Audited Financial Statements)
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• Like OUS, UO is in strong financial posiFon • Assets and net assets are both growing • UO is far from broke or in any sort of financial difficulty
UO Assets
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• Capital assets – mostly buildings, make up the bulk of UO assets • However, there is a tremendous amount of liquidity. UO has
almost $400 million in cash and investments. • The next slide reveals that UO has almost $200 million in reserves;
therefore, there is a tremendous amount of liquidity and financial flexibility
UO Reserves
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• Like OUS, UO has a solid amount of reserves • Unrestricted net assets are over $55 million. The UO administraFon will
claim that these reserves cannot be spent, but this claim is without merit • The restricted-‐expendable net assets are free to be used as well; the UO
administraFon will claim they are spoken for. • Given that annual expenses are over $600 million, these are sufficient
reserves to deal with any shoryall in future appropriaFons
UO Founda3on
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• At the end of 2010 UO had over $700 million in assets, which is close to 70% of total OUS Founda3on Assets
• These assets cannot be used for opera3ons, but typically help to fund scholarships
UO Revenues and Expenses: Broad View
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• Revenues are increasing each year • Revenues are greater than expenses each year • UO is not in any financial trouble; in fact, UO is doing very well • The large increase in 2010 revenues is due in part to capital gils • We will next examine whether a future decline in the State
appropria3on will have a nega3ve impact on UO
UO Revenues
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• The State Appropria3on is not one of the top revenue sources for UO
• We will examine the percentage contribu3on from each item, as well as the changes in these items over 3me
UO Revenue Distribu3on (All items reported as a % of total revenues)
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• The State appropria3on was only 9% of total revenues in 2010, a bit higher than the President of UO claimed
• How can there be so much angst about a decline in a revenue source that is less than 10% of total revenues?
• LET NO CRISIS GO UNUSED!
UO Percentage Changes in Revenue Items
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• Over the 2006 to 2010 period (far right column), total revenues went up 49% • The largest revenue source increased almost that same % in that period. • The almost flat state appropria3on did not have a significant effect on total
revenues
Big Picture: Poten3al 25% Decline in the State Appropria3on
• The State ≠ OUS or UO • The OUS System gets only 19% of total revenues from the State; it is 9% for UO.
• Increases in other revenue sources can (and has) more than overcome the decline in the State appropriaFon
• For UO: – The Federal sFmulus is 7% of the appropriaFon, or $4.6 million
– $4.6 million in a $700 million organizaFon is not significant at all. Blaming the Federal sFmulus money running out for anything needs to stop.
– If there is another 18% drop in the State appropriaFon, that is another $11.9 million, for a total of $16.5 million.
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Can UO Handle a $16.5 M Hit? • Consider that UO is a $700M operaFon • If the hit ends with the 2011-‐13 biennium, then it is very easy to deal with in the short term: – Reduce administraFve costs – Use reserves
• If the hit is permanent, so that the appropriaFon is $50 forever, it is sFll likely that other revenue sources can alleviate this reducFon.
• There is no cliff, and the hit can be dealt with. • There is no need to affect the core academic mission!
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UO Expense DistribuFon
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• Instruc3onal expenses are less than 30% of total expenses, which is lower than at most public ins3tu3ons.
• Note how the percent devoted to instruc3on DECLINED over 3me. This should NEVER happen. This demonstrates that the UO administra3on is not being true to the core academic mission
UO Percentage Changes in Expenses: Misplaced Priori3es
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• It is startling and inappropriate that ins3tu3onal support (pure upper administra3ve costs) increased three 3mes as fast as instruc3onal expenses
• This is clear evidence that the UO administra3on has not been true to the core academic mission
UO: 2006 to 2010 % Changes in Expense Items
59
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Generic OperaFng Expense Categories 1) Instruc3on: Faculty, Lecturers, Adjuncts, Dept. Heads,
Dept. Secretaries, Graduate Assistants, Distance EducaFon & off-‐campus sites
2) Research: InsFtutes & Centers, BioinformaFcs, Matching Funds, New Faculty Awards, Faculty Research Fellowships, GeospaFal Research
3) Public Service: Clinics and centers, radio staFon 4) Academic Support: College Deans, Library, Doctoral
Fellowships, AccreditaFon (NCATE, NCA, etc.), Extended program administraFon, Faculty Development Center, Honors Program, Academic Advising,
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Expense Categories (cont)
5) Ins3tu3onal Support: President’s Office, Business & Finance, University MarkeFng & CommunicaFons, Academic Affairs, Advancement, DPS, Legal Affairs, Human Resources, Governmental RelaFons, Enrollment Management, Alumni RelaFons
6) Student Services: Admissions Office, Financial Aid Office, Office of the Registrar, Learning Center, Student Services, Campus Life, Student Center, Band
7) Opera3on of the Plant: Physical Plant OperaFons & Campus Plan, Purchasing, Architect & Engineering, University House, Grounds, UFliFes, Custodial
8) Auxiliary Expense: AthleFcs, Dorms, Health Center, Rec Center
9) Scholarships: Funded, Graduate Fellowships 10) Other: Debt ReFrement, DepreciaFon, Miscellaneous
More on AdministraFve Costs • The administraFve costs in the prior slides refer to administraFve costs at the OU campus.
• The President of OU’s proposal would likely have an effect on the costs of the central OUS System.
• However, it is clear that the OU administraFon has not been true to the core academic mission. There are three items to consider with administraFve costs: – Number of administrators – Salaries of administrators – Budgets and staffs of administrators
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OUS AdministraFve Costs
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Na3onal Report on Administra3ve Costs in Higher Educa3on: Goldwater Ins3tute and Administra3ve Bloat • Source: No. 239 I August 17, 2010: AdministraFve Bloat at
American UniversiFes: The Real Reason for High Costs in Higher EducaFon. h[p://www.goldwaterinsFtute.org/
• “Enrollment at America’s leading universiFes has been increasing dramaFcally, rising nearly 15 percent between 1993 and 2007. But unlike almost every other growing industry, higher educaFon has not become more efficient. Instead, universiFes now have more administraFve employees and spend more on administraFon to educate each student. In short, universiFes are suffering from “administraFve bloat,” expanding the resources devoted to administraFon significantly faster than spending on instrucFon, research and service.”
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Na3onal Report on Administra3ve Costs in Higher Educa3on: Delta Project
• Source: Trends in College Spending, 1998-‐2008. Released July 8, 2010. h[p://www.deltacostproject.org/
• “The share of spending going to pay for instrucFon has consistently declined when revenues decline, relaFve to growth in spending in academic and student support and administraFon. This erosion persists even when revenues rebound, meaning that over Fme there has been a gradual shi_ of resources away from instrucFon and towards general administraFve and academic infrastructure.”
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Cash Flow Analysis • The revenues and expenses on the financial statements are recorded using the accrual method (as opposed to the cash method)
• Therefore, the change in net assets (revenues less expenses), a key measure of performance, is not necessarily the same as the change in cash.
• This does not mean that cash flow is superior in terms of analyzing performance; the accrual method is sFll more appropriate. However, we also need to examine cash flows to see if there are potenFal cash problems or cash surpluses
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OperaFng Cash Flows
67
• Opera3ng cash flows were posi3ve in every year, and 2010 was the best year in the last five
• Cash from non-‐capital financing is dominated by the State appropria3on, and also has private contracts and gils
• Even if there is a temporary drop in the appropria3on in 2012 and beyond, cash flows should s3ll be posi3ve
Change in Net Assets vs. Opera3ng Cash Flows
68
UO Faculty Salaries
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• Source: 2009-‐10 AAUP Salary Survey • Benefits are approximately 33% of salary for full professors, and 38% for
all ranks. This includes re3rement, health care, tui3on benefit, etc. • The teaching faculty at OU cost just over $80 million in 2009-‐10
UO Faculty Salaries Within OU’s Expense Structure
70
• Faculty costs are less than ½ of instruc3onal costs • Faculty costs are only 13% of the total expenses at OU. That is very
low when compared to other ins3tu3ons. • Even if another 500 “fixed term” faculty are added, the total is only
18% of all expenses
Faculty Salaries: UO vs. Peer Ins3tu3ons (All are AAU Members)
Source: 2009-‐10 AAUP Salary Survey
71
UO Faculty Salaries vs. All Other AAU Ins3tu3ons (N=33)
Source: AAUP 2009-‐10 Salary Survey
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Faculty Salaries at OUS InsFtuFons
Sources: h[p://classificaFons.carnegiefoundaFon.org/ and AAUP 2009-‐10 Faculty Salary Survey 73
AthleFcs: Data Issues • The audited financial statements of OUS do not report any specific informaFon on athleFcs at either the total OUS or individual insFtuFon level.
• The Equity in AthleFcs Data Analysis website from the US Department of EducaFon reports 2009-‐10 expenses
• USA Today reports athleFc revenues and expenses at the insFtuFonal level, but only through 2008-‐09 (uses federal EADA data)
• UO Budget has some athleFc informaFon
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AthleFcs Overview
Source: EADA Federal Department of EducaFon 75
AthleFcs Revenue and Expense Details
76 Source: EADA Federal Department of EducaFon
UO Athle3cs Expenses in Context
77
UO AthleFc Salaries in Context
Source: EADA Federal Department of EducaFon and AAUP 2009-‐10 Salary Survey
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Percentage Changes in Athle3c Expenses
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• Athle3c expenses increased more than instruc3onal expenses • UO s3ll increased administra3ve costs faster than athle3c costs
over the last five years • Sources: EADA for athle3c data; OUS Audited Financial
Statements for other items
Athle3c Sta3s3cs vs. Peer Ins3tu3ons
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UO may be last in faculty salaries among this group, but UO is first in athle3c expenses per par3cipant
More Athle3cs Sta3s3cs vs. Peer Ins3tu3ons
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• Note that UO is last in faculty salaries among this group of peer ins3tu3ons • UO is towards to the top of athle3c spending variables • Where are the priori3es of the UO administra3on?
UO 2010 and 2011 Budgets Source: h[p://brp.uoregon.edu/analysis_fmr#BudgetReports
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• There may be cuts coming for the 2011-‐12 budget, but when the 2011 budget was created, it was 10% above 2010 levels.
• This is not the en3re university as certain funds are excluded • There is no cliff or crisis
UO 2010 and 2011 Budgets: Selected Items
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First Quarter 2010-‐11 Budget vs. Actual Results Source: Unaudited YTD Banner FIS Summary Statements
July 1, 2010 – September 30, 2010
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• As with the overall budget, we see increases in revenues • We also see an increase in “profit” • 2011 is off to an excellent start • FIS = Financial Informa3on System
First Quarter 2010-‐11: Analysis of Payroll Expenses Source: Unaudited YTD Banner FIS Summary Statements
July 1, 2010 – September 30, 2010
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• Within payroll, the costs for instruc3on in the first quarter of 2011 are lower than in the first quarter of 2010. However, costs for ins3tu3onal support are 37% higher.
• The administra3on will likely claim that the 3ming is off, or that some expenses have been categorized differently. However, the data is clear that once again the UO administra3on does not seem commi_ed to the core academic mission
First Quarter 2010-‐11 Revenue Analysis Source: Unaudited YTD Banner FIS Summary Statements
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• This clearly demonstrates why the hysteria over the State Appropria3on is overblown
• No3ce how tui3on (student fees) clearly overcomes any decline in the State appropria3on. This is only ¼ of the year, but even if there is a huge decline in the 2011-‐13 biennium appropria3on, tui3on and grant revenue can make up for the decline – and then some.
Some UO Administra3ve Salaries
Source: UNCLASSIFIED PERSONNEL LIST UNIVERSITY OF OREGON Employees on Record for the Period: September 1, 2010 – November 30, 2010 87
Number of Employees: 2005 to 2009
Source: UO Employee Head Counts h[p://ir.uoregon.edu/data 88
• The number of administrators has gone up more than the number of faculty • This is yet another indica3on that the UO administra3on is not commi_ed to
the core academic mission
Number of Faculty by Type: 2005 to 2009
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• The number of regular faculty has been rela3vely flat • The number of other faculty has increased significantly • Source: h_p://ir.uoregon.edu/data
Student Faculty Ra3os: 2005 to 2009
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• The number of students has increased, but faculty FTE (not the same as the number of faculty in the prior slides) has declined.
• This has led to significant increases in the student-‐faculty ra3o • Source: Teaching Faculty to Student Ra3o: h_p://ir.uoregon.edu/data
Tui3on and Fees
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• Average faculty salaries increased 17% from 2006 to 2010 • The number of faculty declined over this period • Faculty salaries are only 13% of total expenses at UO
Conclusions • Is there really a financial crisis at UO? No, as OUS and OU
have solid reserves, revenues exceeding expenses, strong cash flows, and manageable debt. This conclusion is true even with the advent of the loss of Federal sFmulus money and a large expected drop in the 2011-‐13 biennium appropriaFon.
• The 2010-‐11 budget shows another increase in total revenues, despite a decline in the state appropriaFon. There is no crisis, but the UO administraFon is using the economic crisis to make budget cuts that do not have to be made.
• What is really broken are the prioriFes of the UO administraFon, as the increase in the number and amount of resources devoted to administraFon proves that the UO administraFon is not devoFng sufficient a[enFon to the core academic mission.
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AspiraFons • Change the conversaFon – do not just accept the fact that cuts have to be made no ma[er what. No ma[er what, the core academic mission has to be preserved.
• CollecFve bargaining can give you the mechanism to ensure that the UO administraFon is being true to the core academic mission.
• The response that we should be lucky to have our jobs needs to be rejected.
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