The fees that Ohio State students began paying this quarter for construction of the new Ohio Union are higher than the amounts the university presented to students when the fee was initially proposed.
Over the next 20 years, students will pay roughly 75 percent of the cost for the $118.8 million project. That figure doesn’t include millions of dollars in interest on bonds the university is selling to finance the project.
Starting in the fall, the Union facility fee for full-time undergraduate students is expected to be $51 per quarter. The fee is projected to rise to $63 by 2015 and go up about $1 a year after that until it reaches $78 in 2030, when the bonds are paid off, according to 2009 Board of Trustees documents.
The Board of Trustees must approve each annual fee, and Bill Schwartz, fiscal officer for Student Life, said it’s possible the fees could end up being lower. He said the interest rate on $66 million in bonds to be sold in the fall might have a significant effect on the student fee.
“We have been realistic and accurate about the student fee throughout the process,” Union Director Tracy Stuck said in an e-mail.
The $51 fee and the $63 fee are “within the range” Union officials have been quoting since the fee was first proposed in 2004, Stuck said.
If so, it’s at the very highest end of the ranges that have been discussed over the years.
In an interview with The Lantern published Feb. 16, 2004, Stuck said “the fee could be between $15 and $45.”
On March 3, 2004, former Vice President of Student Affairs Bill Hall told the Undergraduate Student Government that the fee would be $45 per quarter.
On May 28, 2004, the Council of Graduate Students (CGS) discussed a resolution supporting the Union and the fee and it included a fee range from $30 to $45 per quarter.
In June 2004, the Board of Trustees approved a fee of between $20 and $55 per quarter in fiscal-year 2008 dollars.
In an interview with The Lantern published June 1, 2004, former CGS President Briggs Cormier said, “Even more troublesome is the fact that the fee discussed at our February council meeting was significantly lower than the fee that was discussed with the Board of Trustees at their May meeting.”
Cormier said that when Stuck and Heather McGinnis, associate director of the Ohio Union, talked to the council, they said the fee was going to be $15 to $20.
“And then, lo and behold, when they start talking publicly, it’s a $30 to $45 fee,” Cormier said in 2004.
Although all these estimates were less than $63 a quarter, Kurt Foriska, associate director of the Union, said officials at that time were going by 2004 dollars. But documents show that this is incorrect. Presentations in 2003 and 2004 were listed in 2008 dollars.
To calculate fees, the Union has been using an inflation rate of 3.5 percent and will continue to use that rate, said Dave Wiseley, associate director of the Union.
Inflation between 2004 and 2009 averaged 2.7 percent, and the rate so far in 2010 is 2.3 percent, according to the U.S. Inflation Calculator.
Although Union officials say they have always included inflation in their discussions of the fee, Board of Trustees (BOT) documents from June 2009 paint a different picture.
The documents on the BOT website say nothing about the fee being adjusted for inflation. In addition, the documents state the fee will start at $50 in autumn 2010 — $1 less than what Union officials now are recommending to the board.
The documents go on to say:
“Each year thereafter, for the next four years, the fee would increase by $3. Therefore the fee will be $53 in Autumn 2011, $56 in Autumn 2012, $59 in Autumn 2013, and $62 in Autumn 2014. The fee would be fully phased in at that point, with increases needed only to keep up with renewal and replacement funding (probably about $1/year).”
Wiseley said Union officials have been forthright about the fee from the beginning.
“The fee is well within the range that has always been communicated, even prior to adjusting for inflation,” he said in an e-mail.
However, in three sets of presentations The Lantern received from the Union, officials did not indicate that the fee would continue to be adjusted for inflation over the years.
For example, in a presentation by Stuck in 2003, one slide said the “fee could range from $15 to $45 per student per quarter (What students could pay based on inflation for 2008).” So, inflation was already factored into the projected fees in this case.
In May 2004, when recommending to BOT committees, one slide states only, “However, a mandatory fee of somewhere between $30 and $45 per quarter in FY (fiscal-year) 2008 dollars will be needed to help finance the project.”
In a 2008 presentation, a slide said, “We don’t know yet how much the fee will be, but it will be somewhere between $45 and $65 per quarter.” This marked the first time Union officials said the fee might be $63 or higher.
When President E. Gordon Gee was told that the fee will be $63 in 2015 during his April visit to The Lantern, he said, “Is that all it is — $63 a quarter? That is an incredible bargain. I can’t believe that — I would think it would be higher than that.”
Gee also joked, “We’re leaving money on the table.”
He said he didn’t know why Union and OSU officials gave differing amounts for the fee over the years.
“First of all, I wasn’t here, and if I had been here, I probably would have said $45, too, because that’s probably what they thought it was going to be, given the range of cost issues occurring at that time,” Gee said. “Ultimately it’s somewhat higher.”
Gee also said that because the fee will be incrementally increased over the years, the fee “probably is about $45 if you average it out, so they’re probably right on target.”
However, if the BOT approves each year the projections outlined in its 2009 documents, the average fee for an undergraduate between 2010 and 2030 is roughly $70 per quarter.
Part of the reason the fee is high is because the building is costing more than original estimates. In 2004, the board approved a $100 million project, and in 2006, a $117,384,000 project. On March 31, 2010, OSU opened a Union that cost $118.8 million.
In addition to $3.6 million in donations, the Union will be paid for with $11.5 million from university central funds, $6.5 million from the Ohio Union Local Funds and $6.8 million from the university’s Coca-Cola sponsorship.
OSU signed a new contract with Coca-Cola in 2008. The first contract was signed in 1998, according to Xen Riggs, assistant vice president of Student Life. During this first contract, Coca-Cola allocated $1 million for a new Union.
Riggs said that new contract allocates $5.8 million to the Union and gives Coca-Cola exclusive pouring rights on campus.
Another $4.2 million from Coke has been placed in a long-term reserve “as a hedge against the unknowns inherent in a project this size,” Schwartz said.
In 2030 when the Union is paid off, students will still have a fee to pay.
But students in the past were enthusiastic about a new Union and weren’t concerned about any fee, Riggs said.
The students supported the fee “as long as you, the university, go out to fundraise as much as possible to kind of minimize that,” Riggs said.
Although the university raised $3.6 million in gifts and donations, it had a much loftier goal for donations when the project was first discussed in 2004: $10 million to $15 million.
“Students are the ones who pushed it,” Riggs said, “particularly the Undergraduate Student Government. All three (governments) had very strong resolutions” in favor of the Union and fee.
But the Council of Graduate Students passed this resolution on May 28, 2004:
“BE IT THEREFORE RESOLVED that the Council of Graduate Students does not support rebuilding the Ohio Union if there is any student fee associated with the project.”
The res
olution also asked the OSU administration to move forward with the project only if the university could pay for it “without further financial burden on students.”
USG approved the fee, but no one knows the details of what it endorsed.
Anna Yonas, a USG officer, said USG passed a resolution on Feb. 18, 2004. Yonas was unable to find a vote total.
Meghan Slanina, vice president of the Inter-Professional Council, said in an e-mail that IPC officials packed their boxes to move to the new union and do not have access to their records.
Gee was unsure about the graduate student resolution.
“I guess that’s the nature of a democracy — not everyone’s in agreement,” Gee said. “I think we can all agree this is a fine facility … important to this institution.”
