May 19, 2003

IFS Report of Oregon University System Board Meeting 5/15-16/ 03

Bill Danley

The OUS Board meeting this month was held at one of the OSU Extension Centers near Canby . It was a beautiful setting, but as usual these days, the news was not good.

May Revenue Forecast - On the day before the meeting, we learned that the May revenue forecast revealed a total of nearly $690 million less money available for the state budgets than we had predicted only a few weeks ago. Although we are all tempted to blame the economist for nine successive very erroneous forecasts (all forecasts have been dramatically too optimistic), it is important to realize that the volatility of our state’s income is an artifact of an over dependence on personal income tax, a revenue source that is unpredictable and has wide variations. If our predictions of revenue are in the least bit pessimistic (if we predict that we will receive less than we actually do), then we have to deal with a variety of problems, including the kicker which then returns money to the taxpayers and makes budget balancing even more difficult than it already is.

Grattan Kerans, the OUS lobbyist, says that the last 21 months have included the “largest reduction in general fund in 70 years”, and refers to it as a “rolling depression”. He says in terms of public services we have not seen a reduction of this size since the Second World War. Although the Governor now is willing to consider a new tax in the form of a beer and wine tax and temporary suspension of various tax credits, many in the legislative leadership are saying that a permanent revision of the Oregon tax structure is called for (sales tax).

Student Presentation - The student presentation at the Board was made by the new student body president at the University of Oregon. The students are concerned with the OUS emphasis on quality, saying that we have to balance quality, access, and affordability. OUS is saying to the legislature that if we receive less than 72% funding of our peer institutions, we will have to reduce the number of students who can attend in order to maintain any standard of quality. This “line in the sand” is intended to emphasize to the legislature and the public that we can no longer withstand cuts without cuts in access and affordability. The students say that we should have a “line in the sand” for access and affordability as well.

Commitment to Quality - OUS has been working closely with the community colleges and with the K-12 board to maintain quality, and passed a Joint Boards Commitment to Quality statement, indexing the maintenance of at least the enrollment-funding level of 02-03 (72% of our peers, and 72% of the RAM model), including a statement that “...if a campus determines that it can enroll additional students beyond the limits of the enrollment-to-funding relationship, the institutions will take the necessary measures to assure that the quality of the student experience and the level of campus performance are maintained.”

Access, affordability, and quality - The Board discussed at length (in the Strategic Planning Committee meeting and the full Board meeting) the relationship between access, affordability, and quality, which they refer to as the “hydraulics” of the relationship (if one goes up, the others must go down). “When state funding shrinks, the balance is lost..”, and this is what has been happening on a regular basis.

Mission Differentiation - Mission Differentiation and K-12 preparation for college are two topics for future Board discussions. The future discussions of mission differentiation might include the role of the regional universities and the specialized functions of institutions like OHSU, OIT, OSU, and other specific roles. For SOU, this might involve a discussion of whether the regional universities unnecessarily duplicate services already offered elsewhere, or whether budget cuts might threaten “mission collapse” in some places.

The Budget and Finance Committee - Their Thursday meeting and their later report to the full Board, included dismal reports of the new revenue forecast and the differentiation between the Co-Chair’s proposed budget and the Governor’s budget for 2003-05, which are still far apart. The major difference for OUS is that the Co-Chair’s proposed reductions include a $30 million cut to fee remissions (financial aid to particular groups of students) and $22 million cut to undergraduate instruction where the Governor’s budget proposes no cuts in fee remissions and small cuts in undergraduate instruction. The bottom line cut to OUS from the Co-Chairs is $75 million compared to $37 million from the Governor (prior to the latest reduction in revenue forecast).

Also in the Budget and Finance Committee, it was estimated that OUS could deliver a “quality” education to 118, 211 students system wide at a funding level of 72% of our peer institutions. To give you an idea of how tuition affects enrollment, a 10% reduction of resident tuition at the 72% funding level would mean that we would lose 6,000 students, and a 15% reduction would mean a loss of 9,000 students system-wide. Similar reductions would occur with cuts in state funding, which are almost certain to occur, possibly in conjunction with tuition changes.

Nominating Committee - For next year, Jim Lussier was nominated to serve again as Board President, Leslie Lehman to serve again as Vice-President, and Don Von Luvanee the Chair of the Budget Committee.

Searches - OSU presidential search is nearing completion, EOU presidential search just getting under way, and SOU Provost search is completed.