Report on Board Meeting 20 September 2002
Elaine Deutschman
The Board's executive committee met at Portland State in its usual between-regular-meetings
session (all non-student Board members were in attendance as well). Action
items included a lease extension for a PSU housing unit, the acceptance
of the recommendation that the executive committee assume the audit responsibilities
for OUS and the authorization for refunding certain bonds and reissuing
them at a substantially lower interest rate (saving about $5M over the
life of the bonds).
Only the change in audit responsibilities required much discussion,
as there are legal ramifications. The Board is responsible for ensuring
OUS managers are performing their duties regarding financial reporting,
developing internal controls and complying with laws and regulations and
ethics. The Finance and Budget Committee previously performed this oversight
but more stringent procedures prompted the internal audit office of OUS
to suggest the executive committee assume these duties as they meet more
regularly and have higher visibility. The internal audit office prepares
reports semi-annually for the Board. When needed, the Secretary of State's
Audits Division handles external auditing (selects an outside firm). New
charters and procedures were discussed and agreed on.
Two discussion items dominated the meeting: the 2001 2003 budget reductions
and the report of the strategic planning ad hoc group. Chancellor Jarvis
summarized the effects on OUS of the legislature's 5th special session
and outlined the response process (now underway).
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Beyond the $50M (6%) cuts already taken since the end of 2001 legislature,
the following additional reductions ($27.1) have been imposed:
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$ 1,112,500 to engineering
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$ 775,639 to graduate cell values
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$23,443,064 to education and general budget
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$ 1,940,842 to ag experiment programs
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$ 1,340,397 to extension service
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$ 190,684 to forestry research
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Cuts to engineering and graduate cell values will not be restored even
if the income tax surcharge is passed in January. Other reductions would
be reversed if the levy passes.
Dr. Jarvis noted there are 4 prongs to the OUS response:
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a) how to allocate the reductions by institution;
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b) development of reduction and revenue plans;
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c) impacts on tuition; and
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d) development of affordability plans for students how to help the neediest
students.
Two principles would guide the reductions by institution:
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a) specific legislative mandates would be met; and
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b) the equity of further reductions will be considered in light of the
distribution of cuts already taken, the comparative size of additional
cuts, the lateness in the budget cycle and the need for an offset by increasing
tuition.
Reductions already taken range from 2.7% at UO to 8.9% at SOU; most are
in the 5% - 6% range. Jarvis interjected that further cuts to the Cascades
campus were a recipe for disaster for a start-up. Board President Lussier
noted that expenses must be cut now if the income tax surcharge fails,
all the cuts can't be taken in the last quarter of the fiscal year. He
also said it's important that the total cuts to OUS be kept before the
public not just the latest $27.1M but the previous $50M as well (13.8%
cut from 1999 2001 biennium).
The chancellor stated there will be a tuition increase to make up only
the additional $27.1M in cuts (the original $50M is water under the bridge);
he suggested a surcharge for winter and spring terms if the tax levy doesn't
pass. Tuition-increase proposals must be accompanied by affordability plans
to minimize effects of tuition increases for neediest students.
Allocation of the cuts began in a meeting among the institution presidents
and the chancellor following the Board meeting. The size of each institution's
reduction is to be transmitted to the institutions by today (Sept. 24th)
and proposals to absorb those cuts through reductions and revenue enhancements
are due back by Sept. 30th. The chancellor's office will develop an OUS
plan that will then be reviewed by the presidents on Oct. 2nd. Recommendations
will go to the Board at its Oct. 18th meeting.
Director Bassett gave the report of the preliminary work of the strategic
planning work group that has been meeting by video conferencing on a regular
basis since the July workshop on strategic planning. Five assumptions underlie
their initial recommendations:
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OUS will need to serve greater numbers of students
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In collaboration with the state, OUS has an obligation to provide affordable
higher education
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Solutions to access and affordability choices require participation by
multiple providers (OUS, CC, independents etc.)
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State funding will not likely support a fully-funded RAM
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State's budget realities argue for greater independence for OUS in accessing
other revenue.
With these in mind, a vision for the system will be developed that is mission-based
as reflected in ORS 351 & 352 and that affirms the commitment to sustain
an affordable public university system. The vision will outline 10 goals
to be met by 2010 in the areas of access and excellence of learning, excellence
in research and scholarship and excellence in service to Oregon's communities.
The presidents' vision statements will be incorporated in the system statement.
In order to accomplish many of the goals, more flexibility is needed
for the system, according to the work group. Among the initiatives:
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greater campus flexibility to provide financial aid, tied to tuition setting
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re-align enrollment level and funding to distribute enrollment among campuses
equitably
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establish or expand academic programs according to market demand
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eliminate expenditure limits on non-state fund
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eliminate restrictions when bonding does not create a general fund obligation
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retain interest earnings on all funds
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buy, hold and sell property
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streamline IT and telecom purchases and contracts
Several of these initiatives will require changing current legislation.
Chancellor Jarvis characterized these initiatives as a way for OUS to fill
the resource gap between needs and student tuition/state support.
In addition to the flexibility initiatives, mission differentiation,
governance issues, public finance issues and enrollment management, affordability,
tuition/financial aid must be considered in OUS' partnership with Oregon,
Director Bassett said.