July 19, 2002

Contact: Bob Bruce, 503-725-5714

Sustained Quality, Access Tops Higher Education Budget Priorities

PORTLAND - Oregon's public universities are asking for improved state support for sustainability and access in their biennial budget request for 2003-2005.

The State Board of Higher Education approved the request Friday, July 19, by adopting a budget plan that seeks a state-assisted total operating budget of more than $1.9 billion for the Oregon University System during the next biennium. The plan also seeks about $1 billion in capital funds.

The proposed new biennial operating budget for the state's seven public universities requests some $262.4 million more in state general funds. Top priorities for the funding are meeting base budget commitments, including increased health care and retirement costs over the next biennium; supporting current enrollments unfunded in the current budget; meeting projected increases in student demand over the next two years, and building upon previous state investments in engineering and computer science education.

Overall, the plan requests $50.2 million in general fund base budget improvement. Of that total, $32.4 million is targeted to meet the Oregon University System's share of its employees participation in the Public Employees Retirement System. PERS has been hard-hit by declining financial markets and must levy a one-time increased assessment to employers of 4.25 percent during the coming biennium to prevent further losses. The balance of new funds, totaling $18.8 million, is earmarked to meet inflationary costs for goods and services and to fully continue new programs implemented during the current biennium, such as Oregon State University's expanded veterinary medicine program.

Other high priorities in the request include $24.5 million to support unfunded enrollment growth in 2001-2003; $25.1 million to meet growing enrollment demand, $50.8 million to increase academic support to 90 percent of peer values; $52.4 million to improve faculty and staff compensation; and $40 million to increase statewide investments in engineering and computer science education.

Another $21 million in the request seeks funding to cover $21.5 million in mandatory health care increases under statewide employee health plans managed by the Public Employees Bargaining Board. The higher costs come from PEBB's projections that health costs will increase 10 percent per year during the 2003-2005 biennium.

Unfunded enrollment growth and growing demand for higher education has caused difficult financial problems for all of Oregon's public universities. Last fall, OUS campuses enrolled a record 78,000 students. But as Oregon reduced appropriations to solve statewide financial problems, per student higher education funding dropped from about 83.7 per cent of peers to 77.5 percent. Officials say cuts of that magnitude impact the quality of programs and students' ability to complete their studies in a timely manner.

Looking to 2003-2005, OUS enrollments are projected to increase steadily. Officials believe some 82.250 students will be attending the state's public universities by Fall 2005. Thus, officials say, additional state funds are needed to sustain academic quality and maintain access.

The proposed new $40 million engineering request is designed to build upon earlier state investments aimed at doubling the number of Oregon engineering and computer science graduates by 2006. Oregon industries are expected to match the state's increased investment with some $67.5 million more in private educational gifts and grants.

For 2003-2005 the State Board is proposing a total capital budget of slightly more than $1 billion. The request seeks $575.8 million in general fund support and the balance in funding from bonds and other revenue sources, such as private gifts. Top priority is to support building modernization and improve instructional space on all the campuses.

In addition to its capital request, the Board is also seeking to put a $500 million statewide bond measure before voters in 2003. The bonds would be used to fund a one-time expense, catching up on almost 40 years of deferred maintenance on the seven public university campuses. If accepted by the Governor and the Legislature, the higher ed bond measure would be referred to Oregon voters for their approval in the November 2003 general election.

Both operating and capital requests for higher education now go to the Governor for review and consideration in building the state's 2003-2005 biennial budget that will be debated by the 2003 Oregon Legislative Assembly.

In other action Friday, the Board approved:

A pre-tax transit pass program for OUS employees. The program will enable employees to pay for specified transit plan costs -- like bus passes -- out of pre-tax earnings. The effect may lower tax liabilities for employees and campus employers.

Re-named Southern Oregon University's Siskiyou Center, a recently remodeled lifelong education building, for former SOU President and OUS Chancellor Joe Cox, and his wife, Regina. Said Cox, who is vacation in Eastern Oregon, "Regina and I are honored and humbled by this kind act by Southern. It obviously means a great deal to us. Southern has a special place in our hearts and always will. Lifelong education has played a significant part in our careers, and we're very proud to have our name associated with this wonderful facility."

Plans to purchase a private residence at 1383 Oregon Street, Ashland, for SOU. Subject to final review and approval by OUS officials, the $344,550 building will be used to provide additional space for student housing.

A streamlined plan for interinstitutional student exchange that assess an application fee at the time of initial transfer, but eliminates any fee for transfer back if it occurs within a 12-month period.

Oregon State University's request to establish a new program leading to a B.S. degree in recreational leadership and tourism at the Cascades Campus in Bend. The offering becomes effective in Fall 2002, and authorized

Portland State University to confer an honorary degree to Portland businessman Norm Daniels, president and chief operating officer of G.I. Joe's Sports and Auto. The degree, to be presented in October, will acknowledge Daniels' community activities throughout the state and philanthropic support of PSU.

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