FAIRBORN — Wright State University hosted a forum Jan. 24 to explain its current financial status. While officials said the college is in less danger of being placed on state fiscal watch, the risk is still there.
University Controller Tina Heigel explained how the state determines if an institution will be placed on fiscal watch and what it could mean for Wright State.
She explained that Senate Bill 6, which was enacted in Ohio in 1997, stands to increase financial accountability by developing standards to measure financial health of higher educational institutes. The Ohio Department of Higher Education calculates ratios and composite scores based on information included in the annual audit provided by universities. It examines three ratios to determine an overall score. Heigel said a college can score up to a five. However, if a college scores below a 1.75 for two years in a row, it is placed on state fiscal watch.
“Each of the three ratios are designed to answer a specific type of financial question,” Heigel said, adding that the three scores are calculated together with the overall score then being subjected to a weight.
Fiscal year 2017 numbers are not official, nor have they officially been released. However, Wright State calculates its own score and is projecting that it will receive a score below 1.75.
“The financial strain the university has experienced as a result of lower tuition as enrollment has dropped and expenses increased,” Heigel said. “It results in a downward trend from repetitive loses … and an erosion of reserves.”
When a university is placed on fiscal watch, it will experience increased financial oversight and reporting at the state level. If Wright State were to be placed on fiscal watch, the board of trustees would be required to submit a recovery plan within 90 days.
“That plan would include things like a three-year forecast on how we would get out of fiscal watch, it would include descriptions of the financial difficulties the university has encountered and ways the university plans on remediating those difficulties,” Heigel said. “Other information could be requested by the chancellor and governor during that process.”
Fiscal watch would also require that Wright State submit a detailed review of its accounting systems and reporting, as well as its financial procedures. If Wright State is placed on fiscal watch, the board would be asked to undergo increased monthly oversight and would be required to present an annual report to state officials, such as the governor, chancellor, auditor of the state as well as representatives from house and senate.
“The biggest unknown for what fiscal watch could mean for this university is the impact to our students, to our ability to attract new students and retain the students we have here,” she said. “For a variety of reasons, we want to totally avoid fiscal watch.”
However, the projected budget for 2018 demonstrates that the university faces an estimated score about 1.75. Although Heigel pointed out that the score is close and leaves no room for error. She highlighted that the more reserves Wright State has going from one year to the next, the better.
“The way you get out of fiscal watch is by getting a [composite score] that’s 2.4 or above,” she said. “If you go for three years in fiscal watch and are not able to get a 2.4, the university could go into conservatorship — another thing we want to avoid.”
Contact Whitney Vickers at 937-502-4532.