Oregon State Board of Higher Education
Emergency Teleconference Meeting of Regular Board
Eugene Chancellor's Office Conference Room
111 Susan Campbell Hall, University of Oregon

November 19, 2001


An emergency meeting of the State Board of Higher Education was called to order by Chair VanLuvanee at 4:02 p.m.


On roll call, the following Board members answered present:

Mr. Roger Bassett
Mr. Tom Imeson
Ms. Leslie Lehmann
Mr. Jim Lussier
Dr. Geri Richmond
Ms. Erin Watari (joined after roll call)
Mr. Jim Willis
Ms. Phyllis Wustenberg
Mr. Tim Young
Mr. Don VanLuvanee

Absent: Mr Bill Williams (prior commitment)

Chancellor's Office Staff present: Chancellor Joe Cox, Tom Anderes, Bob Bruce, Shirley Clark, Bob Dryden, Nancy Goldschmidt, Grattan Kerans, Marilyn Lanier, Diane Sawyer, Loren Stubbert, Alayne Switzer, Diane Vines

Others present: Ron Adams, OSU; Pauline Austin; Peter Bloom; Greg Bolt, Oregonian; Michael Cihak, WOU; Martha Anne Dow, OIT, Thayne Dutson, OSU; Theresa Hogue; John Liebhardt, Oregon Daily Emerald; Mark McCambridge, OSU; Jock Mills, OSU; John Minahan, WOU; Jason Moore, Bulletin; John Moseley, UO; Sherry Perry, WOU; Paul Risser, OSU; Hal Salwasser, OSU; Darin Silbernagel, WOU; Tim White, OSU; Doug Yates, OIT; Betty Youngblood, WOU

Site locations: Room 111, Susan Campbell Hall, University of Oregon, Eugene; Room 511, Urban Center Building, Portland State University, Portland; Government Relations Conference Room (Suite 126), Public Service Building, 255 Capitol Street NE, Salem


Mr. VanLuvanee explained that the purpose of this meeting is to revise the reduction proposal which was presented to the Board at the November 16, 2001, special meeting. The Chancellor's Office staff has drafted a proposal based upon feedback from Board members and conversations with legislators. Mr. VanLuvanee explained that this proposal reduces the cuts to statewide programs at the early stages of the process and further differentiates research. However, he pointed out that this proposal continues to protect instruction to the greatest possible extent since instruction was the most fundamental of the Governor's concerns. He explained that the revised proposal also addresses the issue of equity between institutions.

Mr. VanLuvanee stated that the proposal also attempts to protect the new investment initiatives and continue the Cascades Campus, considering the legislative priority and the importance to the residents of Central Oregon. He noted that the Board has already made commitments to the Cascades Campus and it would not be beneficial to back out of that commitment. The proposal attempts to protect undergraduate and graduate access, and some perceived equity throughout, while keeping in mind the legislative priorities and intents. He stated that any proposal the Board brings to the legislature should be politically palpable and broadly acceptable because not to do so is to invite the legislature to rewrite and revise the entire budget.

Vice Chancellor Anderes explained that this proposal focuses on issues that were raised at the November 16, 2001, special Board meeting. In those cases where there was no consensus, the principles and priorities of the Board were applied. He explained that statewide public service programs, research, the Cascades Campus, the two engineering initiatives, (top-tier and ETIC) and instruction all were altered to some degree. The proposal makes changes that take place at the four percent, six percent and eight percent increments with minor changes at the ten percent level. He recommended significant reductions throughout the increments in the top tier engineering program. He noted that major reductions of the Cascades Campus would not be beneficial and, based on the Board position and legislative and gubernatorial support at the last session, elimination of the program would not be a viable option.

Addressing the issue of top tier engineering, Vice Chancellor Anderes explained that the proposal is for a 65 percent reduction at the four percent level which would provide continued support, albeit limited. He stated that additional cuts at the four percent level will also betaken out of ETIC dollars. He emphasized that the proposal for reductions in the engineering programs is not a reflection on the value of the programs, but, rather, is because those programs received the greatest increases in the last session.

Regarding Cascades Campus, Vice Chancellor Anderes explained that the proposal is for a reduction of five percent and to reduce it further would limit whatever opportunity it has for success. To eliminate the program completely would go against a number of the positions that the Board has already taken during the session. He explained that small school allocations have not been changed primarily because they are being considered as part of the instructional priority.

At the six percent increment, Vice Chancellor Anderes stated that top tier engineering is deferred although there will be continued funding for ETIC. He explained that there may also be alternative sources of funding for engineering.

Vice Chancellor Anderes pointed out that, should the Board be directed to cut the budget by ten percent, the budget would have to be reassessed. Therefore, this proposal doesn't focus on the ten percent level. He explained that the proposed reductions are as equitable as possible while maintaining the Board's priorities. He pointed out that, when they look at engineering as a source for reduction, it has a differential impact from the preliminary plan that disproportionately affects OIT, OSU and to some extent PSU and UO, since they all share in ETIC and top tier dollars. When funding for engineering is reduced, those campuses have will have higher reductions than in the preliminary plan. Chancellor Cox added that, with respect to top tier, the proposal is to defer the project until funding can be reinstated in hopes that the proposal would be acceptable to the executive and legislative branches.

Dr. Dow pointed out that fifty percent of OIT's focus has been on engineering and asked about the ETIC shares. Chancellor Cox stated that he would talk to the presidents individually regarding ETIC goals. He noted that a response from OIT might be different than from another campus and rather than impose one solution, he would rather meet with each campus individually after the special session has allocated funding.

Dr. Dow noted that OIT recently submitted Requests for Proposals (RFP) and asked whether they should be rescinded. Mr. VanLuvanee advised OIT to proceed with the RFP process.

Dr. Richmond asked why funding for central services was reinstated at some of the levels. Vice Chancellor Anderes explained that it hasn't been added back, but this proposal combines debt service, capital construction and funds that cannot be reduced with central services.

Vice Chancellor Anderes noted that all of the institutions have identified the range of five to six percent reduction as a point at which they begin to eliminate various programs. Regarding faculty salaries, he stated that most of the universities have taken a position on the increases for this year, but are holding back on the second year of the biennium to see what happens at the legislative level. Ms. Lehmann suggested that we should be clear that a six percent level of cuts would probably mean tuition increases. Chancellor Cox cautioned that, although there will be significant programmatic impacts at the four to six percent levels, there is strong opposition to raising tuition. However, he recognized that, at some point, the Board would be remiss if it didn't present potential tuition increases as a reality.

Ms. Wustenberg expressed concern regarding future industry support for engineering. Vice Chancellor Anderes felt that the industry would be understanding of the situation. He noted that the top tier program was a component based on significant outside funding and some of that funding could be lost in this proposal, but there may be other sources of revenues to fund these programs. Ms. Wustenberg reiterated that resident undergraduate enrollment is a priority but felt that, at some point, quality will deteriorate if campuses continue to accept students above current capacity levels.

Chancellor Cox asked for Board support to present this proposal for discussion with the Governor and asked either for a resolution or a vote. He noted that he is not asking the Board to approve the exact amounts, but the concept.

President Risser argued that OSU has a proportionately higher cut than other universities and asked why OSU should support this proposal. Chancellor Cox noted that the Governor imposed the protection of the undergraduate core continuing mission and the Board was directed to focus on non-instructional programs particularly in the targeted resources. He pointed out that, in the original budget session, OSU received more of the targeted new money than any other single institution, primarily because of the new funds allocated for engineering, Cascades Campus and the statewide programs, and the Board has since been directed to reduce those areas. He noted that there is a perceived equity to this proposal and there is no way to scale back the targeted new programs without impacting differentially OSU and, to some extent, OIT.

Mr. Imeson stated that this isn't so much a matter of equity between the institutions, but whether the Board is committing to programs that are sustainable given what is known about the economy. He expressed reservations about proceeding with the Cascades Campus at a time when we have a level of uncertainty, noting that this is a long term financial obligation of the System.

Responding to a request from Mr. Imeson to prioritize engineering, Cascades Campus and statewide programs, President Risser argued that it should be a statewide question and not just within OSU. He noted that a high portion of investment in Central Oregon is already committed and to eliminate a vast investment after legislatures made such a huge statement doesn't seem prudent. Chancellor Cox noted that there is a committed twenty year contract on the building as well as faculty contracts and other commitments, and to withdraw would not provide a savings until the next biennium. Mr. VanLuvanee stated that the Board has made a commitment and can either spend the dollars in legal fees or in providing a program.

Mr. Imeson said he wouldn't support this proposal. He asked when all of the obligations were made. Chancellor Cox responded that, last summer, the Board signed an agreement with Central Oregon Community College to construct a building. He noted that there are several other contract agreements with significant financial obligations. If the Board were to withdraw support, they would not be able to recover the full amount of the budget. Ms. Wustenberg said that the Board didn't make the decision in isolation by pointing out that the Board had a partner in the legislature who expressed the importance of this special program and allocated the funds. Mr. Imeson argued that the Board needs to determine its priorities and proceed with those priorities. He stated that, by supporting this program, we are adding to the base cost of the System. While he approves of the aspiration, he expressed concern with the timing. He stated that the System will continue to face the consequences of that expansion. Dr. Richmond agreed with Mr. Imeson, specifically as it pertains to the long term impact of cuts to smaller institutions, particularly OIT.

Chancellor Cox noted that a resolution had to be made today. Mr. VanLuvanee reminded everyone that the funds allocated by the legislature for the Cascades Campus were dedicated dollars that could not be spent on other programs, and by not supporting Cascades, the System would lose the $7.3 million. Mr. Lussier noted that the Cascades Campus represents an innovative approach and that, when the decision was made to support the campus, no one anticipated these shortfalls. He stated that the very small amount of money that would be saved by pulling support for the program would constitute short term benefits that would amount to the loss of long term gains. Mr. Bassett cautioned that, unless the Board is better able to articulate its priorities in simpler terms, the legislature will determine its own priorities and the Board's advice would be rendered ineffective.

Ms. Wustenberg moved and Mr. Lussier seconded to authorize the Chancellor to submit this proposal to the executive branch on Wednesday, November 21, 2001.

On roll call vote, the following voted in favor: Directors Lussier, Watari, Wustenberg and VanLuvanee. Those voting no: Directors Bassett, Imeson, Lehmann, Richmond, Willis and Young. The vote was four in favor and six opposed. Motion failed.

Chancellor Cox asked the Board how it wished to proceed. Mr. VanLuvanee asked those opposing to provide suggestions on how to resolve the dilemma before them. Ms. Watari suggested staff put forth two budgets, one with Cascades and one without.

Chancellor Cox stated that staff would put together two proposals, one with and one without Cascades, and the Board could indicate its preference by returning a vote. He noted that the Governor's deadline for submission of proposals was November 16, 2001, but they received an extension to provide the information by the afternoon of Wednesday, November 21, 2001.

Board Secretary Vines clarified that two budgets will be drafted and distributed to Board members by early afternoon, November 20, 2001, and Board members will have an opportunity to respond. Mr. VanLuvanee suggested that Board members vote on one of the two proposed budgets. Board Secretary Vines noted that a formal vote of the Board must be submitted to the Board Secretary's office and the results will be tabulated and distributed back to Board members. She noted that full instructions will be included in the information sent to Board members. [It was later determined that a formal vote was not necessary and Board members were asked to submit their recommendations instead.]


Mr. VanLuvanee adjourned the meeting at 5:10 p.m.

Diane Vines
Secretary of the Board

Don VanLuvanee
President of the Board