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Senate Bill 242

In 2011, Oregon’s Legislature passed Senate Bill 242, an historic package of governance reforms for the university system, allowing OUS the flexibility it needs to operate in a changing environment, while being held accountable for performance.  In a time of increased enrollment demand and shifting demographics, these changes will provide the catalyst to more effectively deliver educational opportunity, protect tuition for uses that benefit students, educate more students, and invest in programs and research that strengthen and grow Oregon’s economyPSU campus.  

Current Status

The Oregon University System and its campus are currently engaged in an implementation strategy for all components of SB 242. At its October 2012 meeting, the Oregon State Board of Higher Education received and discussed an update on the system’s progress associated with the bill’s goals and outcomes. This report is available in the Board docket items here, and highlights of successful components as of this date include the following:

  • The expenditure limitation has been eliminated for non-state funded projects. Only those capital projects funded from State appropriations or State General obligation bonds require Legislative approval now (limitation). All other capital projects do not require Legislative approval, saving time and resulting in other efficiencies in the planning and construction processes, including helping with donor commitments.
  • OUS is is no longer dependent on the Department of Justice for legal services, and has established a new structure for legal services, including in-house counsel, outside counsel, communication/accountability, and reporting to the Board.  
  • OUS has fewer restrictions and mandates from DAS and the Legislature.
  • The tuition setting process has been improved, though more work is needed on limiting increases for resident undergraduate students.
  • Implementation of a Risk Management function for the system is process, resulting in heightened risk awareness on campuses which will save money and improve operations long-term.
  • OUS has reduced state assessments; the system is no longer subject to DAS Budget and Management, Facilities, Director, Controller, and Enterprise Security assessments.
  • OUS now retains 100% of the investment earnings on its tuition cash balances, and has been successful in implementing an internal bank and stratified investment program for maximum earnings. Retaining these earnings allows OUS to further invest in student financial aid, instruction, support services, and other vital campus operations which direct serve students and the campus community, including helping with affordability.
  • SB 242 directed the State Board of Higher Education to establish committees to evaluate the optional retirement plan described in ORS 243,800 and three options for group health and welfare insurance benefit plans.  Information on these labor management committees and their preliminary reports is available here

SB 242 Key Provisions    

The critical need to educate more Oregonians to meet community and workforce demands prompted the State Board of Higher Education in 2010 to seek governance changes for the OUS to allow the system to better fulfill its statewide mission while meeting the demands of our competitive, global economy. For information on the full package of reforms which was passed in 2011 in Senate Bill 242, see the text of the bill here.  Below is a summary of some of the key provisions of the Bill for OUS.  Most of the following provisions of SB 242 became operative on January 1, 2012 or July 1, 2012:

  • Instead of its previous state agency status, the OUS is now a Public University System, consisting of the Office of the Chancellor, the seven OUS institutions and related offices and activities. The State Board of Higher Education continues to carry out its duties, and OUS remains an instrumentality of the state and a governmental body;
  • OUS is not subject to the requirement to seek expenditure limitations to spend other available moneys including tuition and fees collected; this will improve campuses’ ability to plan longer term, knowing what available revenues will be within any given biennium;
  • OUS has the ability to maintain all interest earnings in the Oregon University System Fund (which in the past went back to the state general fund pool), including earnings on tuition revenues; these will remain with the individual campuses to increase affordability by exclusively funding need-based student financial aid;
  • Students are more broadly involved on university-based committees which develop tuition rate proposals sent to the Board for review and approval each year;
  • Accountability is increased, with a new achievement compact with the state that will provide measurable education outcomes, on which funding will be based;
  • The state budget process will now use a simplified “block grant” budgeting approach which is driven by outcomes and accountability, a move from a compliance-focused to an achievement-focused system. SB 242 allows OUS to make changes to decrease costs, including enabling it to: purchase lower cost risk insurance rather than being in the state pool; explore healthcare options more aligned with university employees’ needs with a labor-management group; eliminate certain assessments from the Department of Administrative Services; retain its own legal services, no longer using Department of Justice attorneys and services; and overall enables the universities to function more effectively;
  • OUS is no longer required to seek legislative authority on capital construction projects that exclusively use private donor/external funding;
  • SB 242 created a Higher Education Coordinating Commission to help coordinate efforts between community colleges and OUS that encourage student success – and to develop a strategic plan for achieving these.

OUS continues to follow public records/meetings laws just as other public bodies do today, and continues to pay assessments for and be engaged with: Secretary of State for audits, archives and administrative rules; Ethics Commission; Central Government – for Legislature and Governor’s Office; Minority, Women-Owned and Emerging Small Business; and Treasury for banking services.

Archived Documents and Background

Documents on the proposed governance changes in the 2011 legislative session included the following:



Sample of Editorial Support of OUS Proposal