Boom buster: Gallogly derides deficit, blames OU debt on construction

Gallogly Hall, OU's future biomedical engineering facility, is currently under construction on Felgar Street on the Norman campus. President Designate Jim Gallogly, who becomes president on July 1 and whose family donated money toward the facility, said there may not be enough money to complete it.

Just south of Boyd Street on the University of Oklahoma campus, between Jenkins and Asp, Gallogly Hall is currently being constructed to house a biomedical engineering program.

It was billed to be a fine facility when ground was broken in 2017, with now President Designate Jim Gallogly in attendance. Hopefully, it’ll be finished.

That air of uncertainty was put forth by Gallogly himself Tuesday during the Board of Regents meeting, where he painted a bleak financial picture for the Norman campus. Taking his first meeting since he was named David Boren’s successor in March, Gallogly lambasted the financial management of the campus, its running deficit and a debt that he said has reached about $1 billion.

“We cannot continue on the path we are today at the Norman campus,” Gallogly said. “We cannot allow expenses to exceed revenue. We cannot continue to build new building after new building, especially buildings like residence halls that are cash negative from day one.”

Gallogly Hall may not even have enough funding to be finished, the soon-to-be-president admitted.

“We have a couple of projects that are pending right now, one of which is Gallogly Hall that, at this point in time, may not have enough funding to finish,” Gallogly said. “If that’s the case, we’ll take care of our faculty first. We’ll see how that turns out. Right now, we have to see if we have enough funding to complete that building.”

Before the OU portion of Tuesday’s meeting began, regents Chair Clayton Bennett declared it a “historic day.” Quickly, Gallogly set a tone that made the occasion important for a different reason: a turn away from past practices that have led to a situation he finds unacceptable.

Since being appointed, Gallogly said he took time to meet people from the university, alumni and those connected to the university in Norman. In that same time, he began looking at the financial details.

“I consider myself a financial expert, and it’s taken me days and weeks and months to figure it all out,” he said. “But I do feel I have a good grasp of where we are today, and frankly I’m not pleased with what I have found.”

Expenses have grown about 4.5 percent more than revenues in the last five years, Gallogly said, leading to a loss of about $36 million a year for the Norman campus during that time. He continued to report that in Fiscal Year 2016-17, the Norman campus ran a $31.2 million loss.

The year before that, the loss was $24.7 million. In the current budget, which was passed by the regents on Tuesday, Gallogly, who becomes president next month, said there would be a loss of $14.5 million.

“That budget is not acceptable, and while I propose it today as a temporary budget, we will begin working on July 1 to fix it,” he told the regents.

Another looming issue is debt. The university is $900 million in the hole, he said, plus about another $100 million in synthetic debt.

Gallogly pointed directly to the building boom on campus over the last 10 years, over which time the debt doubled.

“Those of you on the Norman campus have seen cranes, bricks and mortar and stuff being built. As a result of that, we have a beautiful campus, a lot to be proud of,” Gallogly said. “But, during that period of time we’ve spent approximately $730 million, and that’s why the debt has gone up at that level.”

Fixing the situation will be Gallogly’s top priority as he enters his first year. And while it will not be easy, he said, it will not come with tuition and fee increases. Tuition and fees for the Norman campus remained at their current levels for the coming academic year after regents' approval on Tuesday.

“Frankly our inefficiencies and overspending on the Norman campus should not fall on the shoulders of our students,” he said. “They have paid increasing tuition year after year, and it is not fair to put that on their shoulders. We will work to improve our inefficiencies and begin to get our house in order.”

At the same time, Gallogly said he wants to see faculty pay raises.

“Compensation is up about 14.4 percent, but I have to tell you we have many on our faculty who have not seen a raise in years, some over 5 years,” Gallogly said. “We have not taken care of our faculty. In a period of time when our expenses have increased that much more than our revenue, that is unacceptable.”

And in the same breath, Gallogly praised the management of the OU Health Sciences Center, which is operating on a surplus. His focus will be to increase its scope of operations and make OU the primary player in Oklahoma healthcare.

“We will take steps to make our OU facilities the provider of choice in the State of Oklahoma,” Gallogly said. “We will be taking steps to expand our scope in the state. Research will grow, and we will be the provider of choice.”

And in a sign of his intent, the regents later approved raises for several of OU’s coaches. Gallogly said afterwards that those raises are deserved, just like faculty deserve their own, too.

“Well, our coaches deserve those raises because they’re winners,” he said. “They’ve done an outstanding job. We will pay those, just like our faculty deserves raises. We must improve efficiency so we can afford to do the right things going forward, by coaches, by faculty and by all the people here at the university.”

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