OU President James Gallogly said OU is losing $7.1 million a year on the Cross Village project, adding to the university's $900 million debt, which Gallogly addressed among other things at a Sept. 13 Board of Regents meeting.
Although OU's previous financial advisors said OU would not incur financial burdens from the Cross project, Gallogly said he learned on July 2 the Cross parking garage lease and food services will cost the university $7.1 million per year.
"I was not aware of this until the afternoon of July 2, my first day in office," Gallogly said. "We have to pay rent on parking, it's significant and it's not in the budget. That's not acceptable. Hopefully we've found the things that aren't in the budget, but we've had a few surprises along the way."
Gallogly said he was given inaccurate information regarding the Cross project by financial advisors under the previous administration.
"Those people who said those things don't work at our university anymore, in fact, on the morning of July 2 they were no longer employees," Gallogly said. "I'll let you decide who that might be, but they did not explain we have those financial obligations."
In addition to the Cross issues, Gallogly spoke to the overall financial status of the university. Gallogly said OU still faces $900 million in debt and $100 million in synthetic debt, both numbers he mentioned at a June 19 regents meeting.
"Our budgeting process is very weak, and because of that, there seems to be surprise after surprise," Gallogly said at the meeting.
It is expected that OU will save $12.3 million during the fiscal year 2018-2019 and $20.6 million in the next fiscal year, Gallogly said.
The Residential Colleges, currently at 63 percent occupancy, cost the university a $2.3 million cash loss, according to Gallogly's report.
"Some of these projects we've done over the years have been a drag on our budget," Gallogly said. "That explains why a university that was once operating positively is now in the red. These are problems that are solvable. I think we've made good progress so far."
Natalie Shirley, the newest member of the Board of Regents, congratulated Gallogly for "taking a microscope to the finances."
Gallogly said his administration is still in the process of auditing different units and departments at the university, but that OU has already seen some improvement in terms of efficiency.
"We've been reviewing quite a few things over the last 60 days and as you saw on an annualized basis (savings) are 20 million dollars right now," Gallogly said. "That's very positive, but we're really in the early stages of reviewing some of the groups. We have meeting after meeting, and so a lot of the numbers aren't finalized. We have more work to do."