BGSU, state seek ways to address projected budget deficit

A less optimistic budget outlook than anticipated has the state looking at additional ways to economize, Gov. Ted Strickland has announced. While the two-year state budget that went into effect last July originally projected a surplus by the end of June 2009, circumstances have developed that now point to a shortfall of $733 million to $1.9 billion.

According to a Jan. 24 story in the Columbus Dispatch, the higher deficit could be as much as 3.6 percent of the budget. A slowing economy, lower tax revenue, climbing fuel prices, the fallout from the sub-prime mortgage crisis and job losses are among other factors that have contributed to the worsening of state finances.

To help deal with the shortfall, Strickland has again asked state agencies to identify spending cuts and other savings. Instead of raising taxes or cutting services, he called for doing things “at less cost and more efficiently.”

The governor has pledged to protect higher education from state cuts as happened in the past. But, as President Sidney Ribeau noted in his State of the University address, under current conditions, it is still possible that higher education may receive a reduction in its appropriation before the end of the next fiscal year on June 30, 2009.

Campus efficiencies studied
Just as Ohio must have a balanced budget, as required by the state Constitution, so must state universities, said Sheri Stoll, BGSU’s chief financial officer. At the University, “we need to look at things we can delay or defer in the upcoming year,” she said, asking all departments and areas to examine their budgets for possible savings.

Delaying or deferring expenditures that are discretionary in nature could potentially provide BGSU with needed flexibility in our financial planning as we navigate through the state’s economic and budgetary uncertainties, she explained.

“For example, the amount and timing of employee compensation increases are under consideration,” Stoll said. Traditionally, compensation increases at BGSU are determined as part of the University’s annual budget preparation in late spring and become effective with the start of the new fiscal year July 1.

“It seems prudent to me this year to consider delaying or limiting possible compensation increases until we are certain that we have sufficient resources to fund them,” she said. “If it becomes apparent that no state cuts are forthcoming and we can grant increases, we can then consider the possibility of making the increases retroactive to July 1. However, we want to be certain we can fund the increases without having to make position or operational cuts elsewhere in the University to pay for them.”

February 25, 2008