It’s been nearly three months since OU President-designate James Gallogly was announced as OU’s 14th president. In that time, Gallogly said he’s been thoroughly reviewing the financial status of the university — and he’s not content.
Gallogly delivered a highly critical report on the university’s financial management in the last decade while presiding over his first regents meeting, in which he called the current fiscal situation “unacceptable.” Outgoing OU President David Boren was not in attendance at the meeting, despite the fact that Gallogly will not succeed Boren until July 1.
Gallogly began his presidential responsibilities at the regents’ June meeting. In the meeting, Gallogly proposed a budget that will not increase tuition — the first time in several years that OU will not raise tuition.
“I consider myself a financial expert, and it’s taken me days and weeks and months to sort it all,” Gallogly said. “But I do feel that we have a very good grasp of where we’re at today, and frankly, I’m not pleased with what I found. In the last five years, our operating revenues are up 18.8 percent. Unfortunately, our operating expenses are up more: 23.3 percent.”
Gallogly said OU is in nearly $1 billion worth of debt and that expenses have grown at a rate of nearly $36 million faster than revenues over the last five years. Ken Rodgers, an analyst with Standard and Poor’s financial services company, co-authored a report in October of 2017 regarding OU’s financial situation. He said Gallogly’s estimation of a debt of $1 billion was “right on the mark.”
“We have to consider any debt that the university indicates it may issue over a two-year time horizon,” Rodgers said. “They had indicated they anticipated issuing $25 million of additional debt late in 2017.”
Gallogly attributes this debt to a “building campaign” that has taken course over the last ten years that he says will stop with his administration.
“Those of you who have been on the Norman campus have seen a lot of stuff being built on campus during this period of time,” Gallogly said. “And as a result of that, we have a beautiful campus with a lot to be proud of. But, during that period of time, we spent approximately $730 million, and that’s why the debt has gone up on that level.”
When reached by The Daily, Boren said it would not be appropriate for him to comment on Gallogly’s report.
Rodgers said part of the reason the university received an AA+ rating from Standard and Poor’s was due to the fact the leadership of the university has remained stable for more than two decades. However, Rodgers said the majority of flagship universities have an AAA rating or higher, and OU was downgraded from AAA- to AA+ in Rodgers’ October 2016 report.
“Our expectation, I think, is that the rating is stable, meaning that we don't anticipate the rating would be lowered over that two-year time horizon,” Rodgers said. “It's possible, if the university were to issue a lot more additional finance and it's available resources hadn't improved commensurately, that that could further pressure the rating.”
But additional finance does not seem to be the order of the day in Gallogly’s administration — instead, Gallogly said he believes these types of problems can be avoided in the future with discipline. Gallogly said most importantly he wants to keep the tuition rate flat and begin compensating faculty members more, which he said is overdue.
“I have not proposed increasing tuition. That would be a normal thing that someone like me would suggest at a moment like this, but frankly, our inefficiencies on the Norman campus and our overspending on the Norman campus should not fall on our students,” Gallogly said. “So we will not do that to them — they have paid increasing tuition year after year and it’s not fair to put that on their shoulders.”
Gallogly acknowledged compensation for faculty has gone up in recent years, but said many faculty members have still waited as many as five years for a raise. Gallogly said starting on July 1, he and his team will begin scrutinizing the budget and finding ways to be more fiscally efficient, a plan he shared with the Board of Regents at a retreat before the June 19 meeting.
Though Gallogly told The Daily on March 26 that he did not believe the university required a “turnaround situation” and that he plans to build on Boren’s successes going forward, his financial report appears to reflect a turn in a different direction. However, Gallogly said he was optimistic about what the university can accomplish during his tenure.
“We will get our house in order, and this will be hard but important work. But, while we’re implementing this plan, we will also be taking the University of Oklahoma to another level,” Gallogly said. “When I took this job, I said to you, ‘We have the opportunity to make this university even greater. We have a solid foundation. We have a beautiful campus. And we can build on that.’”