Tuesday, May 23, 2017

Iowa State review suggests savings in keeping flight services: Report comes after Steven Leath's use questioned

If Iowa State University uses its twin-engine aircraft at the rate it expects to — based on history and projected changes to its flight services program — keeping the plane and its support services makes financial and operational sense, according to a review of ISU Flight Services.

A draft of the review, initiated after former ISU President Steven Leath came under fire for questionable use of university aircraft, involved a cost comparison of maintaining Iowa State’s Beechcraft King Air 350 versus using alternative charter services. The university’s total estimated cost of maintaining and using the King Air in the upcoming budget year is $565,405 compared with a charter cost average estimate of $598,304, according to the review. That amounts to projected savings of $32,899, “while maintaining flexible access to ISU users.”

Lawmakers, regents, members of the public and Leath himself called for changes to and a review of Iowa State Flight Services in light of the public nature of the university and questions about how Leath was using the institution’s taxpayer-supported resources. The review, made public Tuesday, couched its assertion that keeping ISU Flight Services operational makes sense with the phrase “at least for the time being.”

“Assuming adequate demand for flight service operations is maintained,” according to the report’s author Miles Lackey, chief financial officer and chief of staff at Iowa State.

Lackey, in the review, noted the university could achieve “significant savings and even access advantages” with a new fixed-based operator taking over this spring at the Ames Municipal Airport, which houses ISU Flight Services. And he suggested shifting oversight and financial responsibilities associated with ISU Flight Services to the ISU Athletic Department as athletics demand “appears to be growing and constitutes the majority of its use.”

The report further supports such a shift in oversight by noting the plane was purchased in 2014 with $2.9 million in unrestricted athletics department funds being held and managed by the ISU Foundation. After the purchase, the university upgraded the plane using $595,568 from the same pool.

The athletic department also is a self-supporting enterprise, helping “reduce public confusion as to the source of funds being used to operate the plane.” And athletics administration will be best positioned to evaluate the prudence of certain flight service uses, according to the report.

The Board of Regents in October ordered an audit of ISU Flight Services and Leath’s use of both the King Air and an ISU-owned single-engine Cirrus SR22 after news reports raised questions about when and how Leath was using the aircraft.

Leath, who since has left for the presidency at Auburn University, is a certified pilot and was the primary user of the Cirrus, which he admitted to flying on several occasions for trips that blended both professional and personal business. On one occasion in July 2015, Leath while flying the Cirrus experienced a hard landing, costing the university more than $17,000 in damage and related expenses.

Leath reimbursed the university for those expenses and also paid back tens of thousands more for additional trips in question.

The requested audit found Leath was involved in 95 percent of the Cirrus’ 76 trips since its purchase in 2014 — 52 of which listed a “business purpose” as “proficiency/training or certification in the Cirrus.”

Of the 302 trips involving the King Air since its purchase in 2014, the audit found nearly as many were billed to the president’s office as to the athletic department — 79 compared with 84, respectively.

Since Leath was hired in 2012, ISU Flight Services expenses more than doubled — swelling from $393,783 in the 2012 budget year to $880,584 in 2016, according to the audit. Fuel costs increased from $86,537 to $148,949.

In addition to paying back the university, Leath vowed not to fly the Cirrus again and committed to sell it — calling into question the value of keeping ISU Flight Services.

The Cirrus, which the university purchased for $470,000 using discretionary foundation funds, has gone out for bid, but the university has not completed any transaction.

According to the review of ISU Flight Services made public Tuesday, changes to Iowa State’s plane use going forward will reduce overall costs.

Between July 2016 and February 2017, the flight service reported total use of its King Air at about 213 hours — 69 percent of which involved the athletics department. Use from other departments and affiliates accounted for about 67 hours.

Through the remainder of the fiscal year, which ends June 30, athletics projected using at least another 62 hours, according to the report. Other departments’ expectations were “significantly lower than the 66.7 hours experienced in the first half of the year.”

Accordingly, Lackey projected 275 flight hours — or 72,875 nautical miles traveled — for the full 2017 budget year and 208 flight hours — amounting to 55,120 nautical miles — for the upcoming 2018 budget year.

A preliminary analysis of flight services fixed costs indicates potential savings of $150,729 from 2017 to 2018, “due largely to the retirement of one employee and other reductions to non-essential cost categories.”

Variable costs, like fuel and maintenance, also are projected to fall by $78,131 “due largely to a decrease in total flight hours flown,” according to the report.

When weighing the pros and cons of keeping ISU Flight Services, Lackey in the report suggests the more general aviation flight hours ISU requires, “the more financial sense it makes for the institution to operate flight services.”

If, for example, Iowa State only amassed 160 flight hours next year, it would project spending $84,000 more than if it used separate charter services. If ISU held to its 275 flight hours, it would save $150,000, according to the report.

“The break-even point (in terms of flight-hour utilization), is approximately 190 hours,” according to the report. “Anything below 190 hours, ISU loses money by self-operating; any utilization above that amount would appear to save the institution money. Historically, (ISU Flight Services) has been above this 190-hour break-even threshold.”

Original article can be found here:   http://www.thegazette.com

1 comment:

  1. Since Leath was hired in 2012, ISU Flight Services expenses more than DOUBLED — swelling from $393,783 in the 2012 budget year to $880,584 in 2016! Leath earns half-million dollars in salary, plus bonuses annually. And loves to spend other people's money! Taxpayers dollars that is! Money from our tables for his personal flights in expensive aircraft owned by the universities. Show me where he volunteers his personal time and spend his personal funds for anything! He's egotistical.


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