Interinstitutional Faculty Senate Meeting

April 4, 2003, at the State Capitol (Hearing Room 343)

Present: Elizabeth Boretz (EOU), Mina Carson (OSU History), Duncan Carter (PSU Liberal Arts and Sciences), Bill Danley (SOU Special Education), Elaine Deutschman (OIT Mathematics), Dan Edge (OSU Fisheries & Wildlife), Peter Gilkey (UO Mathematics), Marye Hefty (OIT Communications), Solveig Holmquist (WOU Creative Arts/Music), Jim Lundy (OSU Transportation Engineering), Robert Mercer (PSU Liberal Arts and Sciences), Steve Teich (OHSU Library), Jim Tooke (EOU Mathematics Education), Bob Turner (WOU Biology), Craig Wollner (PSU Social Science), and Robert Zimmerman (UO Physics)

Absent: Scott Burns (PSU Geology), Nels Carlson (OHSU School of Medicine), James Earl (UO English), Dick Fairley (OHSU Computer Science and Engineering), and Marc Levy (SOU Psychology),

I. Opening Remarks by Bill Danley

A. Shared that Alan Bates and Lynn Hannon have expressed that the time is ripe for Oregon initiating a sales tax.

B. Mentioned that we need to express the message that if Oregon is going to have an economic recovery, then higher education will drive this.

C. Stressed that according to the Governor’s budget, higher education funding at in Oregon is at 72% of our peer institutions (the 80% deal is dead). This funding level puts us squarely at the bottom of other states, such as Mississippi and Alabama.

D. Explained that the legislature is asking for 2 through 10 percent budget cut projections, which for higher education will either mean firing professors and cutting programs or limiting student access.

E. Stressed that we need to argue for more revenue (a sales tax).

II. Lunch Discussion with Representative Vic Backlund (Republican, Education Chair), Senator Ryan Deckert (Democrat, Revenue Chair), Representative Susan Morgan (Republican, Ways and Means and Sub-Committee on Education Chair), and Senator Frank Morse (Republican, Joint Ways and Means)

A. Opening Remarks by Senator Ryan Deckert (Democrat, Revenue Chair)

1. Started by stating that in the last biennium, Oregon led the country in cuts to education.

2. Expressed that other states are hurting financially, but that Oregon is hurting more than others because we are more dependent than any other state on income tax.

3. Outlined that when the new budget comes out in 10 days, the people of this state have three options:

a. Pass the budget that the Ways and Means Committee produces

b. Look at tax revenues and deductions, including limits on the mortgage home interest deduction and a beer and wine tax (because we have the lowest beer and wine tax in the country)

c. Reform the way we tax ourselves

4. Noted that there is a growing commitment within the legislature to no referrals. “We are just going to have to do it.”

5. Mentioned that we may go to option 3. Right now there is a 40% chance.

B. Opening Remarks by Representative Vic Backlund (Republican, Education Chair)

1. Expressed that when the budget figures come out, there may be many shocked people, and then we can look at revenue generation, but not until the budget comes out.

2. Have asked agency heads to determine what could happen with 30% cuts.

3. Stressed the need to prioritize core functions.

4. Mentioned that he believes that decisions will be made “in the building” by relying on leadership and not going out to the people.

5. Stated PERS as a priority issue in the legislature.

C. Opening Remarks by Senator Frank Morse (Republican, Joint Ways and Means)

1. Explained that he has spent a lifetime in business, and his involvement in the Joint Ways and Means Committee has shown him that the process is fundamentally flawed. “It is a process of show and tell and hide and seek.”

2. Expressed the question: “How do we reform systems to make them work better?”

3. Shared that he would like to see amendments to the kicker to build a revenue fund.

4. Mentioned that the May 15 forecast will be worse than predicted, and he wants to look at tax expenditures.

D. Opening Remarks by Susan Morgan (Republican, Ways and Means and Sub-Committee on Education Chair)

1. Explained that we are in a falling revenue session. The legislators’ approach to this session is different. They are working with agencies to hear their missions and then prioritize their services based on 10 to 30% budget cuts. The process is exhausting and depressing.

2. Expressed that we are in a “defibrillator” budget. We can only have a revenue discussion after this prioritization takes place.

3. Stated that she believes there will not be a tax or revenue issue passed by the legislature -- it will be referred to the electorate for a vote

4. doesn’t believe the tax vote will be made “in the building” led by the legislators. The people in the State of Oregon need to understand what is happening and need to be part of the process. “The issue is trust.” They need to understand that we are being reasonable.

E. Legislature and IFS Group Discussion.

1. Mina Carson (OSU History)—Challenged Morgan’s assertion that the problem is “public understanding.” Instead stressed that the problem is a lack of civic understanding among the voters about the services we receive. How can civic understanding be incorporated into the legislative process?

2. Senator Morse—Responded that Town Hall Meetings need to occur when the budget comes out.

3. Representative Morgan—Stated that people don’t understand. We don’t have any dialogue. Twenty-five percent of the people in the state have children in school. Private sector people are hurting in this state.

4. Senator Morse—Explained that the issue of PERS if left unresolved will preclude any reasonable revenue discussion.

5. Peter Gilkey (UO)—Asked for feedback on the Higher Education Efficiency Bill (Senate Bill 437)

6. Representative Vic Backlund expressed his support of the bill, which he sees as removing administrative roadblocks to allow institutions to become more independent.

7. Senator Morse—Stated that the State Board of Higher Education is incapable of providing effective governance not because of the people but because of how it is set up.

8. Bob Turner (WOU)—Stated that he has been in four third-world countries during the last few years and he sees two similarities between these countries and Oregon:

a. A separation between the “haves” and the “have nots.”

b. A state that does not support infrastructure. He sees the solution as education. This is Dr. Turner’s main reason for wanting a small group to make a revenue decision.

9. Senator Morgan—Morgan responded that any revenue decision made in the legislature can be referred to the voters if enough signatures are collected within 90 days, and that this would likely happen if the legislature acted

10. in-house.Representative Backlund—Added that after the citizens see the magnitude of the cuts, it is conceivable that we can propose enhancements.

11. Steve Teich (OHSU)—Used Measure 28 to explain his support for Dr. Turner’s point to have the legislature make a revenue enhancement decision without going to the public.

12. Senator Morse—Expressed that we are eroding the financial integrity of this state. The public needs to understand that where we are going we cannot go.

13. Robert Mercer (PSU)—Mentioned that in Oregon we don’t seem to have shared values.

14. Bill Danley (SOU and IFS President)—Asked the legislative guests if there is anything IFS can do. Vic Backlund (with verbal support from Frank Morse) stressed the need for us to establish a face-to-face relationship with our legislators.

15. Bill Danley—Stated that we support revenue growth.

16. Craig Wollner (PSU)—Expressed his deep resentment for the way the issue of PERS has been demagogued. He has no problem revising PERS in a reasonable way; however, the ramifications of changes need to be considered.

III. IFS Senator Meeting with Individual Legislative Representatives

A. From 1:30 to 3:00 IFS Senators met with their legislative representatives within the State Capitol

IV. Grattan Kerans, OUS Director of Government Relations

A. Explained that to finance current budget, the state is $1.9 billion short. The governor’s recommended budget calls to spend more than we have. To close the $1.9 billion, current service level is dead as a concept.

B. Explained that the budget will not recognize $1 billion in salary COLA (not a dime above what we have now).

C. Stated that we are still $500 to $600 million short, leaving $100 million in reserve. In the governor’s recommended budget, the legislature wants $400 million.

D. Explained that 11% has already been taken out of the governor’s recommended budget this biennium, and we stand to lose another 10%.

E. Noted that the K-12 recommended budget is $600 million less than when started this biennium.

F. Stated that on Monday the university presidents are meeting with the legislature to discuss the impact of 2, 4, 6, 8, and 10% cuts.

G. Expressed that as a state we have a miserable budget. We are facing horrible cuts. There is no way out. We can’t pass most of these budgets at these cut levels, and we don’t have the 3/5 majority to modify tax credits and exceptions. Right now taxing beer and wine is the only viable option.

H. Summarized the bottom line—budgets will fall short with no consensus about how to add revenue into the system.

I. Explained that a 10% cut to higher education would result in 12 thousand students not supported (at funding at the 72% level).

J. Stated Oregon is going down faster than other states. We will admit students in this environment, but they will not be able to get classes, and the process will become jammed. Then, during the second year of the biennium, enrollment will have to go down. Will need to decrease the number of in-state students served.

K. Stated no talk of financial exigency.

L. Discussed the “good news”--$500 million one-time 10-year authority to sell bonds for general maintenance ($50 million per sale). This is a significant package that is supported by leadership.

M. Outlined the two-piece efficiency bill, which includes Senate Bill 437 and SJR 7. SJR 7 changes the matching fund requirements for capital support projects.

V. Mylia Christensen, PEBB Administrator

A. Provided PEBB background. The largest employer-sponsored plan in Oregon. More than $340 million in annual premium for plan year 2003. PEBB has 110, 000 members. From 1999 to 2002 the PEBB employee out-of pocket expenses have doubled.

B. Shared a study that compared PEBB benefits with nine other Oregon benefit markets and found PEBB provides a higher level of benefits. PEBB was in the middle of the group for prescription drug coverage.

C. Explained that PEBB is in the middle of the annual review process, and this year they are working without knowing the state budget or collective bargaining.

D. Announced that in May, PEBB will share their best thinking at that point through stakeholder meeting. PEBB will face options:

1. Status quo

2. Perturbation of status quo

3. No funding

4. Going to the marketplace and asking for proposals from new vendors

E. Stated that PEBB has a June 17 deadline to get the final recommendations to the board and then start early enrollment in October.

F. Concluded with the PEBB 2007 vision process, which includes a delivery system centered on evidence-based medicine.

VI. Mark Nelson, AOF Lobbyist

A. Began with a review of last year’s budget downfall. He sees the co-chair’s budget as being the floor. There is no current service level any more.

B. Shared that AOF is working with the Ways and Means Committee to hopefully get an agreement that OUS schools can have the flexibility to give raises and step increase funding during the state freeze if the schools can find the funding.

C. Explained that no COLA is $291 million (K-12 and state employees).

D. Shared the significant PERS changes being discussed:

1. 8% cap saves $100 million each year

2. Mortality table changes save $352 over 2 years

3. 8 to 12 thousand more will retire over and above what is normal for this year.

E. Mentioned that 20 to 30 tax option bills out there, and the polls show they will not pass right now.

F. Mentioned that there is talk of a 1-year budget for higher education.

G. Stated that the “big, big issue” is PERS. There is the employer bill (which limites the amount employers put into PERS and which effectively kills the money match (currently the most beneficial formula for all PERS retirees) and would put us back on the full formula, which depends on the highest paid years in service among other things, and which in recent years has not been as good as the money match. This will be devastating to Tier 1 and 2. Right behind this issue is the 8% cap.

Saturday, April 5, Willamette Valley Vineyards Board Room

Absent: Scott Burns (PSU Geology), Nels Carlson (OHSU School of Medicine), James Earl (UO English), Dick Fairley (OHSU Computer Science and Engineering), and Marc Levy (SOU Psychology)

I. Debrief of Friday’s Legislative Meetings

A. Thanked Jim Lundy for his excellent work setting up this meeting.

B. Mentioned having IFS representation at Vic Backlund’s education sessions.

C. Discussed the PEBB’s push toward evidence-based medicine.

D. Formed a committee (Elaine Deutschman, Bob Turner, and Craig Wollner) to draft a resolution sharing IFS concerns about PEBB. This resolution will be voted on during the June meeting.

II. Academic Council Report and OUS March Special Meeting of the Board of Higher Education Report

A. See Peter Gilkey’s Academic Council summary on the IFS Web site.

B. Reviewed the five recommendations of the Board of Higher Education

1. The Board directs the Chancellor to recalibrate the base Quality Funding Index from the present 80 percent level to the 72 percent level. Further, the board directs the Chancellor to seek the commitment of intent, the by the Governor and the Legislature, to restore the base to at least the 90 percent level over the course of the next four biennia.

2. The Board ratifies as a permanent tuition rate, the temporary surcharges previously approved in December 2002 and January 2003. The Board directs staff to prepare the necessary Oregon Administrative Rule changes to reflect this tuition rate.

3. The Board directs the Chancellor to prepare a formal tuition and enrollment plan to consider for approval by the Board at the April meeting. The plans should include the tuition level required by each campus as reflected in the recommendations of the presidents.

4. The Board approves the priorities and reduction scenarios as presented in the OUS Reductions Alternatives document.

5. The Board, anticipating that the scenario reductions will be enforced, directs the Chancellor to prepare, with input from each institution, enrollment management plans that articulate how each institution and the System will be able to assure the Board that quality is being maintained, and that Board standards are being met.

C. Discussed as a group the importance of quality. The quality funding index is what helps us maintain quality but this index is not quality itself. How do we express the value of education? How do we share the differences between education and training?

III. Campus Reports

A. According to the provost, PSU is okay financially for the rest of this year (with no major cuts). One division was facing a $12.5-million shortfall, which is now $9.5 million through fund juggling. A concern is that cuts will be made by not replacing those who retire (instead of looking at unproductive programs). In choosing the dean for a new school, two candidates dropped out because of the state situation.

OIT has hired a new provost who will start in July. The chancellor raised the president’s salary 22%. Faculty members are pushing for a 2% raise, but the president doesn’t think this is possible.
The EOU president resigned effective July 31. Some believe he saw the union vote as a referendum on his presidency. Enrollment is up and funding is down.
WOU has given 27 pink slips to classified staff. Tuition will take a 20% jump next year (worst-case scenario). Contract negotiations are this spring.
OSU is searching for a new president. There is a sincere concern on campus about how students are being squeezed out with fees and tuition increases. State-wide services “have tanked.” This includes major cuts to extension services, agricultural research, and the agricultural experimentation station. The OSU 2007 redesign is continuing. The OSU foundation is undertaking a $400 million capital campaign. With a goal to increase diversity, OSU is looking a new admissions policy for Fall 2004.
At OHSU the new medical school dean resigned. The hospital side of OHSU is hurting financially. The president is discussing cuts to outreach. OHSU is looking to become a preferred provider organization.
SOU lost 20+ employees as a result of the budget situation. The new library has been dedicated.
At UO the topics in the senate include the financial picture, a $650 million fundraising campaign, and some local issues.

IV. Eugene Meeting Agenda

Chancellor Jarvis has agreed to speak to IFS on Saturday at the June meeting.

V. IFS/AAUP/AOF Meeting on May 3

Discussed the need for IFS members and other faculty to attend this meeting.

VII. OUS Grant to IFS; Presidential Issue

A. IFS has received a $5,000 grant from the Chancellor’s office for a total of $10,000 per year to support IFS business.

B. IFS members again asked Bill Danley if he would remain as president of IFS until December (when Peter Gilkey from UO will take over). At the recommendation of IFS members, Bill Danley has agreed to serve his IFS presidency through December.