The Ohio Board of Regents downgraded Youngstown State University’s financial rating to its lowest point since 1999. YSU’s score of 2.3 out of 5 is a composite of three ratios that measure debt, cash reserves and total expenses.
State lawmakers instituted the practice in 1997. YSU’s scores for 1997, 1998 and 1999 were 1.8, 2.6 and 2.2, respectively. If any state university receives a score of 1.75 or less for two consecutive years, its board of trustees is suspended and a governor-appointed conservator takes over.
Dave Cannon, vice chancellor of finance and data management for the regents, said increased debt and a $10 million decrease in net assets for fiscal year 2011 drove down the latest score.
“It’s a snapshot of their financial condition,” he said.Katrena Davidson, director of general accounting for YSU, said the university anticipated the score.
“A lot of it has to do with the timing of our business activities,” she said.
The university spent more than $5 million in early retirement buyout programs for faculty and staff, but Davidson said money would be saved in future employee salaries.
Another $3 million relates to the acquisition of the University Courtyard Apartments from the University Housing Corporation.YSU bought the apartments from UHC for more than $17 million.
But because UHC exists to support YSU, the company is considered to be a component unit of YSU, according to the Governmental Accounting Standards Board.
UHC built the apartments in 2002 for $14 million. When YSU acquired them in FY 2011, the university recorded that original value as fixed assets. The difference counts as a decrease in assets, though it’s officially termed a contribution of capital to UHC.
University debt increased by more than $16 million from FY 2010 to FY 2011. This debt comes in the form of bonds issued through the RBC Bank to pay for new property and renovations to existing structures.
Among other projects, more than $21 million in bonds issued in 2009 built the new Williamson Hall and renovated the Pollock House.
In 2010, about $7.5 million went to the Watson and Tressel Training Site, while $10 million upgraded buildings around campus.
Bonds issued in 2011 paid for the University Courtyard Apartments.YSU issued more than $60 million from FY 2009 to FY 2011. Neal McNally, YSU budget director, said the university has already begun to control costs.
The Early Retirement Incentive Program and the Faculty Severance Plan are projected to save money in the long run. A 3.5 percent tuition increase and a 2.75 percent fee on credit card payments on tuition will bring in more revenues.
“The most important step we’ve taken is there are no plans to issue more debt in the immediate future,” McNally said.
Editor’s Note: The financial ratings for 2000 through 2011 are available on the Ohio Board of Regents’ website. The scores for 1997, 1998 and 1999 were provided by John Charlton, an OBOR spokesman, who said that the scores appeared to be accurate, but he could not verify them.