Despite Gov. Ted Strickland’s proposed increase to state contributions to higher education in exchange for freezing tuition, Ohio University’s $11 million budget deficit remains an obstacle.

In his State of the State address earlier this month, Strickland introduced a higher education compact as part of the state budget. It proposes a 5 percent increase in state funding next year and 2 percent more the following year to public colleges and universities that join. In return, the institutions will agree to freeze tuition in 2008-09 and raise it a maximum of 3 percent the following year.

“We’re placed in a very difficult situation,” said William Decatur, vice president for Finance and Administration. “As the numbers show, the compact isn’t very good in investing in quality at Ohio University. I think right now the sense is that we will participate in the compact, but it remains to be seen if the compact will retain everything in its current form.”

After not meeting projected enrollment and transfer-student targets, the university is projecting an estimated $11 million budget deficit.

OU will see only a 3 percent increase in state funding by joining the compact, Decatur said. The increase would be a little more than $3 million, or about 1 percent of the Athens campus total budget. In the second year of the compact, OU would receive a .87 percent increase, or less than $900,000.

“The 5 percent that everyone reads is a statewide number,” he said. The money is then distributed through a formula that factors in enrollment, degree programs, capital needs and other considerations.

OU could choose not to join the compact and raise tuition instead. A 3 percent raise in tuition would net the university about $4.2 million and a 6 percent raise would bring in approximately $8.4 million, Decatur said.

Tuition revenue accounts for about 65 percent of Ohio University’s budget, while state funding makes up about 30 percent, OU President Roderick McDavis said at a news conference during spring break.

“We’re going to look at this from the standpoint certainly of what’s in the best interest of the university, but we’re not going to be politically naïve,” McDavis said. “We understand that our decision can have political impact as well.”

University officials appreciate Strickland’s proposal of making higher education a priority in the state budget, McDavis said. While joining the compact would leave the university with a larger budget deficit than if it increased tuition, not joining could negatively affect the state’s budget decisions regarding higher education in the future.

Strickland’s proposed budget has to be approved by the state legislature, which could take until June, said Teri Geiger, director of government relations.

“I would expect, as with any proposal, this will see changes as it goes through the legislative process,” she said. “Members of the legislature, much like we at the university level, are still learning the full impact of the governor’s proposal.”

Decatur expects to have a university budget prepared in time for the June 28 Board of Trustees meeting.

“Quite frankly, with the budget not being submitted until late March and not knowing what our fee caps are, we’re a little behind our usual schedule,” he said.

Strickland’s late budget, coupled with the budget deficit, has created a challenge for the university, McDavis said.

“We understand that we have a challenge, but we also understand that we have a responsibility to provide the Board of Trustees with a balanced budget, as they have requested,” he said. “So by June we will be moving forward with a balanced budget.”