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Topic: Finances

Topic: Finances

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Recovering Journalist
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Finances

Posted: 12/14/2012 11:25:04 AM

The football section seems as logical a place as any to put this link. Ohio universities, including ours, feature prominently in this sobering report on debt and higher ed. It's something to think about next time you're fantasizing about expanding Peden.

www.nytimes.com/2012/12/14/business/colleges-debt-falls-on-students-after-construction-binges.html

OUcats82
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RE: Finances

Posted: 12/14/2012 2:19:58 PM

In looking at that picture of the Ohio on the Charles......I at first thought it was a picture of South Green from the "Bong Hill" vantage point.

While the arms race has probably always been a part of the college landscape it is really getting out of hand in my opinion.

I love so many features and thought processes about America and our culture but the buy now, pay later (if at all) mentality is going to be our downfall if we are not careful.

Ohio-The State University

ou79
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RE: Finances

Posted: 12/15/2012 6:01:03 AM

If we can spend $2.6 BILLION on projects around campus, a small portion of that ($50 - $60 million) can go to Peden. OUr overall annual budget only alots about 3% total to athletics. Athletics is just as much a part of Ohio as anything else, and right now with all of the national attention athletics has brought to the University through nationally televised games, my guess is that athletics is doing its fair share to produce revenue (both direct and indirect) as any thing else.

GO BOBCATS!

Mike Johnson
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RE: Finances

Posted: 12/15/2012 11:32:11 AM

When schools such as Leland Stanford Junior University - yes, that's Stanford's full name - begin offering online for-credit courses, the future of brick-and-mortar universities seems increasingly fragile.

Except for heavily endowed schools, I expect brick-and-mortar universities to slide slowly into oblivion.

Today's Wall Street Journal includes a sobering story. Headline: Who can afford State U?

Schools such as our beloved Ohio? Unless they become much more rigorous in their financial management, future generations will be listening to their grandparents reminiscing about schools that once were...

http://www.facebook.com/mikejohnson.author

Ohio69
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RE: Finances

Posted: 12/15/2012 11:44:49 AM

When Wall Street and big law firms start hiring people with online degrees, I'll start to believe all the hype.

Every time I add up what day care costs for toddlers I chuckle a bit at those complaining about college tuition.

Can somebody hit a pull up jumper for me?.....

cbus cat fan
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RE: Finances

Posted: 12/15/2012 8:52:46 PM

I talked to a guy I know who is an administrator in a large public university (not Ohio University.) He told me that campuses like our beloved Athens are in pretty good financial shape due to our reputation and tradition. He told me the same goes for many older public universities and religious oriented schools who have stayed true to their mission.

Those schools who are in trouble are newer run public schools in mismanaged states, pricey small private schools (you know those charging $30,000-40,000 a year,) along with liberal oriented religious schools who have strayed from their original mission.

While online growth is important for smaller schools like Ashland, there will always be a need for the campus experience. I think our tradition, reputation and sound financial footing leave us with little to worry compared to others who wouldn't be able to survive another economic downturn, as well as the coming education bubble which will be akin to the housing bubble.

Mike Johnson
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RE: Finances

Posted: 12/16/2012 11:09:25 AM

cbus cat fan wrote:

No disrespect intended to your source, but I disagree in part. I do agree that many small private colleges will fail. Schools such as Capital and Wittenberg both have teetered on the brink of financial collapse. They seem to have stepped back from the abyss, but others will teeter and plunge.

I disagree as to larger public schools such as "our beloved Athens" which is "in pretty good financial shape due to our reputation and tradition." Such schools are pricing themselves out of range for many families - or families who could obtain loans but don't want to take on strangling debt for themselves or their kids.

To me, a major weakness among many university presidents is their total absence of grounding in financial management. Ohio serves as an example. Charlie Ping had three degrees - all in philosophy. Bob Glidden had three degrees - all in music. Rod McDavis has three degrees - all in education. All three have contributed significantly to strengthening Ohio, but none of the three has possessed the financial management grounding to make - or to push for - decisions that would strengthen Ohio's chances for sustaining financial success in an increasingly fragile economic environment.

I see no evidence that cash-strapped states are likely to reverse their decline in assistance to their public universities. That translates into a greater likelihood that parents will have to continue taking on a larger chunk of college costs.

I do hope that time proves me wrong in concluding that the combination of rapidly escalating tuition and fees and increasing numbers of online courses will spell the end for many brick-and-mortar schools.

http://www.facebook.com/mikejohnson.author

bobcat695
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RE: Finances

Posted: 12/16/2012 11:29:15 AM

I couldn't agree more with Mike. College is a business. They provide a service for a cost, and if their customers don't think they are getting the proper value for their dollar, they will go elsewhere. One problem I see is that the cost is already almost to the boiling point for the masses. I seriously doubt we will see tuition decreases, so at what point to students and their parents determine the cost outweighs the benefits.

Community colleges and branch campuses don't provide the same collegiate experience as a traditional campus, but one could argue that their core classes and curriculum are very close, especially for the first two years. While I think the college experience is just as important as the classroom experience in molding young people, many others don't share that same feeling. It will be increasingly more difficult to convince people that the experience is worth an extra $20,000-$30,000 over four years.

I hope the administration recognizes this and becomes aggressive in the business management side of running the university, as well as marketing. There probably are a number of programs that will disappear, while other "hot" majors like those based in technology will grow. I am very interested to see how this evolves since I will be writing tuition checks for two kids starting in 7 years.

"You can't un-fist a fist pump." - Saul Phillips 1/24/15

Mike Johnson
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RE: Finances

Posted: 12/16/2012 11:47:18 AM

bobcat695 wrote:

Bobcat695, your closing comment on writing tuition checks calls to mind the following. When my kids - now ages 41, 40 and 38 were about 6,5 and 3 - U.S. News & World Report ran a story on college costs - what they were at the time and what they would be, assuming annual 6% or so tuition and fee increases. I whipped out a calculator, punched some numbers and was stunned. Immediately we - Lynne and I - began a savings/investment program with but one goal: Get those 3 kids thru college without either they or we having to take on debt. Doing so required making choices and discipline but years later when all 3 kids - plus Lynne who decided it was time for a master's - were in college simultaneously, my chief talent was writing those tuition checks.

Not only was I grateful that debt was avoided, but so were the kids. I well remember when I drove to OU to pick up my oldest, daughter Andrea, at the close of her freshman year. She surprised me when, riding in the car toward our Lyndhurst home, she thanked us for our financial management. "Lots of my friends," Andrea told me, "won't be coming back next September. They need to drop out and work before they can return to school."

I offer this to all bobcatattackers who are youngish parents. It is never too early to begin making savings/investment choices and imposing financial self-discipline to help assure that your kids will get the educations you desire for them.

http://www.facebook.com/mikejohnson.author

74 Cat
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RE: Finances

Posted: 12/16/2012 1:16:19 PM

I had a similar financial situation with my one daughter, now 25 years old. I started putting funds aside right after her birth and then later started an account in what was then called Ohio Tuition Trust. In simplistic terms, back then, college credits could be ‘bought’ at current prices and would be banked for future use. When the tuition caps came off, I saw the hand writing on the wall and was lucky to be able to front load what was left of the balance to ensure four years of tuition at any publicly funded Ohio school. (The funds could also be applied to private schools towards tuition.) Since graduating, my daughter has thanked me more than once. At least one of her friends, still attending a nursing program, is already $100K in debt.

Not sure if the tuition trust program still is available as it was but I also would also urge anyone with young ones to start saving what you can now and to seek out structured disciplined programs.

JSF
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RE: Finances

Posted: 12/16/2012 1:58:07 PM

I imagine there's not a long list of competent, highly-educated financial types that want to be university presidents.

"Loyalty to a hometown or city is fleeting and interchangeable, but college is a stamp of identity."- Kyle Whelliston, One Beautiful Season.

My blog about depression and mental illness: https://bit.ly/3buGXH8

bobcat695
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RE: Finances

Posted: 12/16/2012 5:48:43 PM

I am a Financial Planner, and have had my practice for nearly 20 years, so I am quite aware of college costs and the pain it takes to save enough. I started saving for college years before we ever had children. I still think college is way overpriced. I also recognize that I have no leverage if I want my boys to be educated, so I'll just suck it up a pay it. Last year I received fantastic news about OU. They rolled out a legacy tuition waiver which will allow my kids to attend OU for the in-state rate since my wife and I have dgrees from there. I have been saving for over a decade in anticipation of paying out-of-state rates in Athens. It's like I received $80,000.

To JSF's point, I think you are right. McDavis makes around $400,000, which is far less than one would make in business. A person that is even second level like a VP, CFO or other similar role at a medium sized company would make far more than that. The CEO at our local hispital makes over $700,000. He has 1/3 of the employees that are at Ohio, and less reliance/interference from government agencies. His job is far more desirable to most leaders.

When the VP of Finance role opened up at OU, I was curious at the salary. For the responsibility and pressure, it pays nowhere close to what one could make in business or industry. I think this is a big problem in education. Of course, you will always have the academics complaining like crazy at the salaries of administrators if they are actually paid market rate. It is likely to never be resolved because of this.

"You can't un-fist a fist pump." - Saul Phillips 1/24/15

Alan Swank
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RE: Finances

Posted: 12/16/2012 8:55:33 PM

bobcat695 wrote:

Excellent points across the board my WV friend. I would beg to differ or cite two things though: much of what you say is based on private sector folks getting paid an appropriate salary which is debatable and secondly, there is the issue of the number of administrators in higher education. When I came to OU in 1979 as a graduate student in the education department, the number of administrators was far less than it is today. This is not a call to return to Beaver's 211 Pine Street house but something in between where we were and where we are today.

cbus cat fan
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RE: Finances

Posted: 12/17/2012 1:07:40 AM

Great posts everyone, let me just say that my former colleague whom I sourced earlier has a pretty stellar reputation. Mike, I am not quite sure what you mean by Ohio pricing itself out of the market. Besides community colleges, who is really cheaper than Ohio and other state schools? I can honestly tell you that I have heard some parents wonder if state schools are a good place for their child because they are cheaper than the Wittenberg's, Kenyon's, Dennison's and Ohio Wesleyan's. I have seen families who could scarcely afford a public schools tuition max their credit out on the belief that the aforementioned schools will somehow help their child.

A couple of points, in some ways college has become a racket when one considers what the price was in the 1970s and 1980s. It has far exceeded the rate of inflation and yet the average professor's salary has not gone up exponentially either. In some colleges there are far too many professors simply not teaching, but spending their time in research. Corporations are pouring money into colleges, especially for scientific and medical research. If anything this should make the experience cheaper. If one considers that most of the university presidents make 5-10x what the Governor makes, I don't think have it too bad. They live rent free and have their expenses paid for, not a bad way to live. Even if you get fired, it isn't like you have to worry about your next job, these folks are in heavy demand.

I don't believe you have to have a Business degree to be a good administrator, as evidenced by our recent successful crop of university leaders. The ability to be a successful leader is an innate skill which can't be taught, one is either a good leader or one is not.I still believe we are a far better position for the future as compared to schools I referenced in the first paragraph.

JSF
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RE: Finances

Posted: 12/17/2012 1:14:45 AM

There is and has been zero downside for schools raising tuition every year. The money has never stopped coming. There are always loans to be found.

Ohio69
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RE: Finances

Posted: 12/17/2012 9:12:28 AM

This belief that college presidents and those who assist in running finances of universities are dumb is astounding to me. Wow.

Change is happening. And, its going to happen organically. The market will change somewhat, with the Columbus State type schools gaining and small liberal arts private colleges losing at first, and then the Ohio's and Bowling Green's and Central State's -- isolated public schools -- struggling next.

Online education is nice but I think it will be a long time before major employers hire individuals with 100% online degrees. So far, it appears online MBA programs are gaining acceptance. Not sure about any others.

I remember listening to Mark Cuban attack higher education not so long ago. But, I'm guessing he doesn't have any University of Phoenix folks working for him at all. Likely exactly the opposite.

Last Edited: 12/17/2012 9:41:50 AM by Ohio69

Can somebody hit a pull up jumper for me?.....

BillyTheCat
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RE: Finances

Posted: 12/17/2012 10:51:58 AM

74 Cat wrote:

Not sure if the tuition trust program still is available as it was but I also would also urge anyone with young ones to start saving what you can now and to seek out structured disciplined programs.

State did away with the Tuition trust as it was then, mainly because they figured out that the cost of education was quickly outstripping the growth on those invested dollars. If you had already bought in, you kept those credits, but were unable to purchase anymore. Now, it's all about purchasing those annutities, and are mainly dogs.

Mike Johnson
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RE: Finances

Posted: 12/17/2012 11:26:42 AM

Ohio69 wrote:

This belief that college presidents and those who assist in running finances of universities are dumb is astounding to me. Wow.

Change is happening. And, its going to happen organically. The market will change somewhat, with the Columbus State type schools gaining and small liberal arts private colleges losing at first, and then the Ohio's and Bowling Green's and Central State's -- isolated public schools -- struggling next.

Online education is nice but I think it will be a long time before major employers hire individuals with 100% online degrees. So far, it appears online MBA programs are gaining acceptance. Not sure about any others.

I remember listening to Mark Cuban attack higher education not so long ago. But, I'm guessing he doesn't have any University of Phoenix folks working for him at all. Likely exactly the opposite.

Indeed this thread has generated some thoughtful posts.

To clarify, I don't see anyone here alleging that college presidents are "dumb." It is, though, an inescapable fact that many college presidents have no grounding in financial management. How many can look at and understand an income statement or balance sheet and implications for their enterprises (universities)? How many of them possess a body of experience that intuitively enables them to make financially sound choices?

Alan Swank, your point about the increasing numbers of university administrators is spot on. I've seen little or no evidence that university presidents have heard and absorbed messages or lessons related to doing more with less or practicing continuous improvement.

JSF, re your comment about steadily increasing tuitions and fees - ones that have been consistently larger than inflation - having "no downside," and that loans continue to be available. The salient point is that increasing numbers of families are declining to take on crippling debt loads. And thousands upon thousands of students and parents who have taken on such loads have found them to be albatrosses to advancing their quality of life.

Two examples: A niece of mine who graduated from Ohio in 2001. She has been building a good career but still is paying off her student loan and has little in the way of discretionary income. A friend who made the mistake of co-signing a student loan for his Ohio-degreed daughter. She has defaulted on loan repayments and he finds himself on the hook when, now past 65, he is trying to negotiate his way out of this web.

Studies continue to conclude that individuals with college degrees achieve larger lifetime earnings than persons without them. But sharply increasing tuitions and fees and the necessity for many families to take on debt to pay those costs are eroding the advantage conferred by degrees.

The future? Youngish bobcatattack parents would do well to examine the current total cost of a year at Ohio or other state-assisted university. Then consider how many years will pass before your child or children enter college. Then compound that current total cost figure by 6%. Then after the shock dissipates start planning.

http://www.facebook.com/mikejohnson.author

C Money
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RE: Finances

Posted: 12/17/2012 1:39:00 PM

Mike Johnson wrote:

The future? Youngish bobcatattack parents would do well to examine the current total cost of a year at Ohio or other state-assisted university. Then consider how many years will pass before your child or children enter college. Then compound that current total cost figure by 6%. Then after the shock dissipates start planning.

As the parent of a 7 month old, this reality is really starting to hit hard. My wife and I laughed when we first announced her pregnancy, and everyone said, "START SAVING NOW!!!!" But the numbers, they are not pretty. And we have had quite a few discussions/disagreements over how to approach it. We both agree that getting him (and any future siblings) through college without debt is critical. But I am of the "Save so he knows he can go to college without debt" mindset, and she takes the "Saving is great, but he needs to be willing to work his way through college without taking on debt" approach.

Basically, dad is the softee and mom is the hardass. But don't tell her I said that.

BillyTheCat
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RE: Finances

Posted: 12/17/2012 1:50:30 PM

C Money wrote:

Mike Johnson wrote:

Problem is, 20+ years ago a kid could work their way through college, however today, the cost is so high and wages low in those part time jobs that one cannot pay their tuition through part-time work, and many entry level jobs will not pay for a year of school.

Ohio69
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RE: Finances

Posted: 12/17/2012 2:01:30 PM

Mike Johnson wrote:

[QUOTE=It is, though, an inescapable fact that many college presidents have no grounding in financial management. How many can look at and understand an income statement or balance sheet and implications for their enterprises (universities)? How many of them possess a body of experience that intuitively enables them to make financially sound choices?

I disagree. And, am not sure why you think this. Just because they don't have an MBA? These folks come up through the ranks (faculty to chair to dean to exec) and spend a large portion of their time on fiscal management.

Not taking actions you might take is one thing. Saying they are incapable is of understanding finances is over-reaching in my opinion. These folks know exactly where university money is being spent. And, exactly how they can impact it.

Can somebody hit a pull up jumper for me?.....

cbus cat fan
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RE: Finances

Posted: 12/17/2012 2:41:30 PM

Again very interesting posts, one thing that hasn't been discussed are endowments which are becoming a modified pryamid scheme of their own. I don't disagree with the concept but when you have hundreds of millions of dollars in the bank and you are only drawing a small portion of the returns each year, something is wrong. Secondly where does the money go? It certainly doesn't go to reducing the costs for the rank and file.

Without disclosing too much info let me just state that in my line of work I have collaborated with these fundraising agencies. Believe me, they don't come cheap. Before the Economic Meltdown of 2008, I know that some of the companies (some of which are connected to many Ohio Higher Ed institutions) did very well. Now believe me I am a card carrying Capitalist and I certainly don't begrudge anyone for legally making as much money as possible. However, some of these companies were giving their employees bonuses like you wouldn't believe. Even younger employees who weren't making nearly the bonuses that some of their senior colleauges were making did ask for 50%-100% salary increases for their next higher ed fundraising effort. Not surprisingly many of these salary requests were met.

Now this was pre-2008 Economic Meltdown but suffice to say these fundraising organizations were hardly struggling as are many parents and students today. If anyone knows the current state of these companies and where they stand in relation to Ohio University, I would be very interested to know.

Mike Johnson
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RE: Finances

Posted: 12/17/2012 3:37:47 PM

Ohio69 wrote:

Mike Johnson wrote:

I disagree. And, am not sure why you think this. Just because they don't have an MBA? These folks come up through the ranks (faculty to chair to dean to exec) and spend a large portion of their time on fiscal management.

Not taking actions you might take is one thing. Saying they are incapable is of understanding finances is over-reaching in my opinion. These folks know exactly where university money is being spent. And, exactly how they can impact it.

(Note: a weakness of postings is not hearing the poster's tone of voice. I say that because I want to be clear that my forthcoming reply is not said in anger or exasperation.)

I think this because I don't see appreciable evidence to the contrary. What I do see is ever escalating tuitions and fees and bloating admin staffs.

Which reminds me: I know of no organization - business or university - that doesn't see staff bloat during good times. It's just natural. Example: Times are good. At a meeting of senior staff, one says, "I see an opportunity. Here it is...I could achieve it if I just had one or two more staff."

He/she meets no resistance because others around the table know full well that they might soon be making the same case.

Then, inevitably, recessionary pressures will begin building. Bloated staffs are an early casualty - as, I believe, they should be.

Universities? Not so much blood-letting. Not nearly enough.

Any exceptions? I'm familiar with one. When the market was cratering in 2009 and interest rates were tumbling, Stanford's GSB took a meat axe to staff. Stanford? Rich Stanford? Wow! Well, GSB has enough admin and faculty members with business experience - many sit on corporate boards and consult to businesses - to take tough and decisive action. And of course, accompanying those Stanford cuts was the requirement for survivors to do more with less - and do it darned well.

http://www.facebook.com/mikejohnson.author

Ohio69
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RE: Finances

Posted: 12/18/2012 9:40:46 AM

Mike Johnson wrote:

I consider this a friendly conversation -- Just to clarify.

Really the only thing I'm disagreeing with you on is your belief that university leaders are lacking in financial acumen. Many universities are doing more than folks realize. It seems many peoples first instinct is to see how many people were laid off. Well, OU for example hasn't laid off hundreds, but through attrition has reduced many departments, including some very large ones, by 25-30% in the last decade, including mine. I know one segment of the staff this is down like 150-200 bodies. Also, there appears to be a national move to instructors over tenured faculty, which will not reduce head count but will reduce costs. Etc.

I do think the industry right now is built so that decadence = success. The customer wants state of the art dorms and facilities. The customer wants a high touch experience in and out of the classroom. The customer wants small class sizes. The customer wants a tenured professor teaching all classes. Etc. And, those who rank universities do so in a way that high cost strategies result in high rankings. When the customer starts changing, so will higher education. It feels like we are in the initial stages of a shift. If the US economy recovers, the shift will be delayed.

Last Edited: 12/18/2012 9:43:27 AM by Ohio69

Can somebody hit a pull up jumper for me?.....

JSF
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RE: Finances

Posted: 12/18/2012 7:19:06 PM

Mike Johnson wrote:

JSF, re your comment about steadily increasing tuitions and fees - ones that have been consistently larger than inflation - having "no downside," and that loans continue to be available. The salient point is that increasing numbers of families are declining to take on crippling debt loads. And thousands upon thousands of students and parents who have taken on such loads have found them to be albatrosses to advancing their quality of life.

We may well reach a tipping point, but enrollment is still up. The money is still coming. And the schools don't care about that debt, though it will eventually come back to hurt them (and all of us).

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