The deal that ended Wright State University’s faculty union strike will allow the school to improve its finances in the coming years, an independent analysis released found.
The report, from Moody’s Investors Service, states that the agreement will “give WSU flexibility to achieve long-term savings.” The agreements to end the strike, which extend through June 2023, will save the university somewhere between $3 million and $4 million, president Cheryl Schrader has said.
Moody’s is a bond credit rating business that gives analysis on the financial health of companies or institutions.
Wright State has been trying to navigate its way out of a budget crisis for the last few years. The university reduced spending by around $53 million in fiscal year 2018 and WSU leaders were projecting further revenue declines this year.
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The post-strike analysis from Moody’s was “comforting,” said Walt Branson, Wright State’s chief business officer.
“It’s easy for us to over interpret something good happening or maybe read too much into it,” Branson said. “But, this is a very objective third party that does this for their livelihood.”
The school’s new contract with the Wright State chapter of the American Association of University Professors will allow WSU to save money in at least three areas.
The AAUP-WSU’s 560 or so members will join a university-wide health care plan and summer pay for professors will be reduced by 15 percent to 20 percent, according to the two contracts. Wright State can furlough unionized faculty one day per semester.
Moody’s also noted that a retirement incentive plan to be implemented under the new contracts could also help Wright State regain its financial footing.
“The terms of the agreement do not materially impede WSU’s ability to achieve its financial objectives of sustaining sound operations and gradually rebuilding liquidity,” Moody’s analysts wrote.
The strike, which lasted 20 days, is thought to be the longest faculty strike in Ohio’s history. Both the union and administration have said they made big concessions to reach a deal to end the labor dispute.
The strike was expected to cost the university money but no estimate was available as of Friday. The administration also fears the strike could cause enrollment to decline, as it has at other schools such as Temple University where a 29-day strike in 1990 caused around 3,500 students to withdraw or leave.
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Moody’s in 2017 downgraded Wright State’s credit rating as the school was in the peak of its financial crisis. Moody’s decreased Wright State’s rating from A2 to Baa2 based on the college’s “severe financial deterioration in a short period of time.”
Wright State leaders have long said the university will avoid being placed on state fiscal watch this year, something Branson said he expects the state to confirm in March or April once it’s finished reviewing each college’s numbers.
Wright State had around 52 days of cash on hand, less than one third of the 178 days it had in 2011, according to Moody’s. The recommended days of cash on hand is around 25 percent of operating funds or 90 days, according to the National Association of College and University Business Officers.
The amount of cash a university has is important because it’s “an indication of your ability to operate if something disastrous happens,” Branson said. The measure of cash on hand, Branson said, is how the “financial world” gauges and institution’s fiscal “well-being.”
The board of trustees now receives regular updates of how much cash Wright State has on hand, which Branson said is always reflective of the university’s reserve fund.
“Our goal certainly is to build that up over time,” Branson said. “That’s part of our recovery. We took a dip and now we’ve got to build it back up.”
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By the numbers
52: Days of cash on hand WSU had in 2018.
178: Days of cash on hand WSU had in 2011.
90: National standard for cash on hand.
$53 million: Amount WSU reduced spending by last year.
2.5: Percent AAUP-WSU will get in raises in 2022 and 2023.