Trustees decide to rely on private investments

Ryan Loew

Ryan Loew

Daily Kent Stater

Kent State’s Board of Trustees acted yesterday to change the way the university gains money, relying more on private investments and less on state support.

“We’re beginning to look like a private institution if not a private business,” Administration Vice President David Creamer said. “We’re looking more like a private college because the loss of state support.”

The state of Ohio, Creamer said, encourages public universities to invest more to compensate for a lack of state provided funds.

The university will now be revising the way it gains income, increasing its reliance on traditionally riskier investments such as stocks, real estate, private equity and hedge funds.

“We’ve tried to create something that will increase our income but within a reasonable amount of risk,” he said. “I think we’ve been given the authority to do this because of the lack of state support.”

R. Douglas Cowan, chairman of the board, said the university has done what it could to cope with lacking state funds.

“We’ve cut the fat, and (the state) is now cutting into the bone,” he said.

The university hopes to gain more money with what it considers a reasonable amount of risk, President Carol Cartwright said.

“We would like to get more out of our investments,” she said. “The idea is to be able to look for a little bit more aggressive policy that has the potential to bring in more funds.”

Creamer said the university too will be increasing its investments in ventures such as stocks and real estate. The state of Ohio restricts public universities to allocating 75 percent of their investments outside of fixed incomes such as bank loans.

The percentage of university investments allowed by the state to be invested into such ventures as stock and real estate is 75 percent. The university upped its investments in those types of ventures from 15 to 40 percent yesterday.

“And we’re still a long way from the 75 percent allowed by the state,” Cartwright said.

The capital bill moves to Senate

The recent passage of the capital bill by the Ohio House of Representatives was also announced at the meeting. The bill funds any university construction projects.

Creamer said the bill should have been passed in June 2004, and since then it has decreased by 20 percent.

“We’re certainly excited about its passing,” he said. “The downside is that it’s going to be smaller. This is a $100 million loss for higher education.”

The bill, he said, is crucial to funding large construction projects such as renovating Franklin Hall.

“The bill is as we expected,” Cartwright said. “But there’s $100 million less for higher education than originally anticipated. We have significant projects in the cue that are dependent on this funding.”

The next step for the bill, she said, is the Ohio Senate, where she expects it to pass.

An audit committee is created

The board also voted to establish an audit committee to oversee university financial activities.

The audit committee, trustees said, reflects revisions of federal laws created after the Enron scandal and promotes transparency of financial reporting.

While common in many private institutions, audit committees are something new to public institutions such as Kent State.

“I think you’ll see that this is a pattern,” Creamer said. “I expect you’ll see many more (public universities) introduce this.

“You’ll have more oversight, and a board that feels it is more informed and more aware of the university,” he continued. “There’s a greater assurance that if there are problems they will be identified by the board. It’s a safety net.”

Contact administration reporter Ryan Loew at [email protected].