Budget cuts are coming to Oregon State University this spring, and there’s likely to be even more belt-tightening in the university’s future.
In mid-January, Provost Ed Feser and Mike Green, the university’ vice president for finance and administration, announced that OSU would have to trim $7.2 million from its budget by the end of the fiscal year on June 30 to make up for a shortfall in projected tuition revenues.
The number was raised to $7.5 million after Green and President Ed Ray decided to tack on an extra $300,000 as a hedge against additional unforeseen shortfalls.
While a few key functions — enrollment management, research and public safety — were shielded from reductions, most of OSU’s academic and administrative units were targeted for cuts.
Each of OSU’s 11 academic colleges took a hit, ranging from 0.7 percent of total allocations for Veterinary Medicine to 1.7 percent for Science. The Honors College lost 1.4 percent of its 2018-19 budget, graduate programs lost 1.7 percent, library operations lost 1.6 percent, and Ecampus and international programs lost 2 percent apiece.
On the administrative side, cuts ranged from 1.1 percent in the Office of Undergraduate Studies to 2.7 percent in the President’s Office, Provost’s Office and University Relations and Marketing. Athletics saw a 2.2 percent reduction, as did Outreach and Engagement, while Information Services took a 1.9 percent hit. Finance and Administration took a 1.7 percent cut, as did Facilities Services.
Altogether, academic unit budgets were slashed by about $4.6 million, while administrative divisions were chopped to the tune of $2.9 million.
Exactly how all those cuts will play out remains to be seen — the specifics were left to college deans and top administrators — but some details are beginning to emerge.
For example, the College of Business saved about $85,000 by cutting 11 class sections for spring term, according to OSU spokesman Steve Clark, vice president for university relations and marketing. This was achieved by combining some sections, resulting in larger class sizes. The college also consolidated some administrative functions.
His own division expects to trim $115,250 from its budget by July 1, in part by putting a hold on capital spending and equipment purchases.
Many academic and administrative units across campus are holding costs down by reducing travel and deferring purchases of supplies and equipment, and another common strategy is keeping already vacant positions unfilled.
According to Clark, nobody has lost their job to help balance the books — but job cuts are coming.
“Ultimately, beginning July 1, we will not be able to make all of the position reappointments that we otherwise would have been able to make,” he said.
“Those fewer reappointments will be the result of OSU reducing its budget by more than $12 million as a result of the need to balance higher state-mandated benefit costs, a limit on how much our board can practically increase tuition rates, and what limited additional funding the Legislature may provide Oregon’s public universities.”
The belt-tightening moves are generating substantial pushback from some quarters.
On March 15, the Coalition of Graduate Employees, a union representing more than 1,800 grad students who work for the university, sent an open letter to the campus community arguing that the budget cuts would lead to larger class sizes, more course cancellations, less investment in the arts and humanities and heavier workloads for adjunct professors and staff.
Rather than cutting academics, the union argued, OSU should find other ways to make up the shortfall — such as cutting the salaries of the highest-paid administrators, including Feser, Green and President Ed Ray.
In a March 19 op-ed piece in the Gazette-Times, a group of faculty members questioned the lack of contingency funds to make up for the tuition shortfall, a relatively small fraction of OSU’s $1.3 billion overall budget. The professors also warned about some of the same consequences as the union, including a shift toward larger classes taught by lower-paid instructors and teaching assistants.
And both groups took issue with OSU’s new “responsibility-centered management” budgeting model, calling it a flawed approach and complaining that it was adopted by the administration without adequate transparency or consultation of students, faculty and staff.
But Sherm Bloomer, the university’s budget officer, said financial pressures on OSU are likely to get worse, not better, in the foreseeable future.
After many years of steady growth, enrollment at OSU’s Corvallis campus dipped last year (although the overall number increased somewhat), leading to the shortfall in anticipated tuition revenue. Enrollment has already started to decline at other public universities in the state and across the nation as the population of graduating high school seniors begins to shrink — a development that is projected to continue.
“It’s a national demographic trend that we’re all feeling,” Bloomer said.
“We bucked it for a little while, but it’s starting to catch us.”
Meanwhile, costs for employee health insurance continue to increase, and the state is projecting double-digit increases in Public Employee Retirement System payments for years to come as lawmakers continue to grapple with the PERS crisis.
“The biggest issue is the uncertainty of state funding,” Bloomer said.
State financial support for higher education has languished for years, and the budget proposals put forth for the 2019-21 biennium do nothing to reverse that trend.
Gov. Kate Brown’s spending plan provides no additional funding for higher ed, while the legislative proposal provides for a modest increase “that won’t come close to covering benefit increases,” Bloomer said.
A pair of business tax proposals working their way through the Legislature could provide some relief for Oregon’s public universities, assuming either actually makes its way into law, but the budget wrangling in Salem almost certainly won’t be finished before July.
And the OSU Board of Trustees can’t wait that long to make major financial decisions for the coming year.
The board is scheduled to set tuition and fees for the next academic year this Friday and will vote on the 2019-20 budget at its May 31 meeting.