On July 12, the Ohio Board of Regents published their financial ratings for state colleges and universities for fiscal year 2012, and Youngstown State University’s financial rating has been upgraded from 2.3 to 2.6, out of a possible 5.
Senate Bill 6 requires state colleges and universities to submit quarterly financial reports to the Board of Regents within 30 days after each fiscal quarter. Using the year-end audited financial statements submitted by each public institution, the Board of Regents monitors individual campus finances and assigns them a financial rating.
David Cannon, vice chancellor of finance and data management for the regentst, explained that the rating system is in place to keep university finances in check.
“The financial rating is intended to increase the financial accountability of colleges and universities by using a standard set of measures with which to monitor the fiscal health of campuses,” Cannon said.
Cannon explained that a university’s financial rating is determined by its expendable net assets, plant debt, total revenues, total operating expenses, total non-operating expenses and change in total net assets.
Using this data, the board of regents calculates three ratios. A viability ratio – expendable net assets divided by plant debt, a primary reserve ratio – expendable net assets divided by total operating expenses, and a net-income ratio – change in total net assets divided by total revenues.
These individual ratios are used to determine the composite financial rating.
YSU’s composite score has improved .3 points since the 2011 fiscal year. Though a fraction of a point, Cannon said this increase is significant. It shows that YSU’s viability ratio improved over the 2011 score due to a decrease in debt and an increase in its expendable net assets.
“A .3 increase shows the university is getting a better handle on the finances from the previous year,” Cannon said. “
Neal McNally, director of budget planning and treasury operations for YSU oversees all aspects of the university’s budget and says the improved score is important.
“I would say that in any environment where revenues are falling, due to declines in both state funding appropriations and enrollment levels, any positive shift [in the financial rating] is significant,” McNally said.
Cannon and McNally both agree that the upgrade in YSU’s financial rating is an issue that should concern students.
“A student should be concerned about the financial health of the institution to understand the school’s ability to finance current and future operations,” Cannon said. “A student should be interested to know if the institution can maintain facilities, continue course selection and be able to pay its ongoing operation costs.”
McNally added that an increase in the financial rating is “something students and alumni should take pride in.”
“Having a strong financial position ensures the long-term viability and success of the University,” he said.