Oregon University System

CENTRAL OREGON BRANCH CAMPUS: REVIEW OF PROPOSALS AND RECOMMENDATIONS-EXECUTIVE SUMMARY

Background

Citizens of Central Oregon have had public postsecondary education opportunities for 50 years, from Central Oregon Community College (COCC) and access to a limited number of higher education programs through consortial arrangements. In recent years, additional access has been provided through the Central Oregon University Center (COUC), which brokers a number of baccalaureate and graduate Oregon University System (OUS) programs to the area. Two Oregon independent colleges have also provided programs. However, there is demonstrable and growing need for expanded higher education services in Central Oregon.

Following a joint meeting of the Oregon State Board of Higher Education (OSBHE) and the Board of the Central Oregon Community College in July 1998 that led to further work on a long-term vision and strategic plan to expand higher education services in Central Oregon, in January 1999, Chancellor Cox established the Central Oregon Regional Advisory Board (CORAB). CORAB's charge was to advise on the vision, mission, structure, and overall direction of postsecondary education in the region. In December 1999, CORAB proposed to the OSBHE the development of a capstone university in Bend. Then, in January 2000, Governor Kitzhaber indicated his support for planned expansion of higher education access in Central Oregon. Consequently, OUS staff and consultants analyzed four models for delivery of expanded higher education services:

When subjected to financial analysis, the branch campus model was chosen because it provided the most cost-effective approach; it offered academic and marketing advantages (e.g., accreditation and brand-name recognition) as well as relative ease of implementation. The OSBHE endorsed the branch campus model at the June 16, 2000, meeting, and subsequently approved the inclusion of an additional state funds request in the 2001-2003 OUS biennial budget request (which is included in Governor Kitzhaber's recommended budget to the 2001 legislature).

RFP Process

A Request for Proposals (RFP) for an OUS branch campus in Central Oregon was issued in September 2000. Major areas to be addressed in the proposal included:

Proposals would be evaluated primarily on:

The Proposals

Two OUS institutions-Oregon State University (OSU) and the University of Oregon (UO)-expended extraordinary amounts of creative effort; involved dozens of key administrators, faculty, and staff members in time-consuming planning activities; and held multiple hearings and focus-group meetings in Central Oregon in order to seek input and produce exemplary lead institution proposals. Their partner OUS campuses, particularly Eastern Oregon University (EOU) and Oregon Institute of Technology (OIT), worked closely with the lead institutions to ensure that program brokering (pioneered by COUC) would continue and that partnerships would rise to a new level of integration. COCC leadership, faculty, and staff participated in consultation and program articulation activity with both institutions.

OSU envisions the branch as "a 21st-Century University," a leading-edge model of a learning community integrated with COCC and other partners, including OSU Extension. It projects an expansive, ambitious role in providing baccalaureate and graduate programs, cultural enrichment, economic vitality, close community identification, and innovative research and scholarship. Its proposed administrative structure positions it to evolve toward stand-alone status at some future time. The chief elements of the plan follow. OSU proposes to offer a diverse mix of core and professional programs from the first biennium forward, relying primarily on resident OSU faculty and secondarily on COCC faculty adjuncts. Partner institution relationships would continue, rounding out the curricular offerings to students. EOU and OIT not only play major program roles but also participate on transition leadership and implementation teams, along with COCC representatives. Citizens throughout the Central Oregon region would be served through the Regional Learning Network - the collaboration of expertise, facilities, infrastructure, and programs of OSU, its statewide services and its partners, to provide formal and informal learning experiences. Student services would be provided through a combination of collaboration with COCC, on-line options from the home campus, and outsourcing. Outreach efforts to the community that are enrollment related include expanding successful programs (e.g., SMILE, which works with K-12 students) already in place in Central Oregon. OSU would establish an advisory board to ensure the community connection to the branch.

UO envisions the branch as "a college of the University of Oregon" through which it will meet "primary educational needs" of the Central Oregon community, by combining resources of the community college with those of the University, and provide opportunities for application and professional development relevant to the region's developing economic strengths. The UO plan is a coherent, focused, and traditional liberal arts college model, closely mirroring the educational philosophy of the home campus. The UO administrative structure is headed by a vice provost/dean and three associate vice provosts; several administrative positions will be jointly shared with COCC. The major elements of UO's proposal include providing liberal arts and sciences majors, with partner institutions filling out the curriculum with more applied and professional offerings. UO would closely integrate COCC faculty adjuncts, community adjuncts, and UO faculty brought to Central Oregon for a term or two, moving to add resident UO faculty as enrollments grow. UO has identified several "market niches" in its recruitment plan and suggested approaches to attract enrollment, including scholarships enabled by a significant gift. Student services would be provided through a combination of collaboration and integration with COCC services and on-line options from the home campus. Outreach strategies include application for grants such as GEAR UP and expansion of UO's TRIO grant. Various enrichment programs would be brought to the community (e.g., concerts, lectures) beyond those programs, events and facilities UO already has in place. UO proposes an advisory board to ensure the community connection to the branch.

External Evaluation of Proposals

The high quality of both proposals, embodied in the visions projected for the mission of this historic new entity, as well as in the details of the organizational arrangements, has drawn much favorable comment from reviewers. CORAB members, COCC board members and leadership, and Central Oregon residents have all commented that their region would be well-served by either university serving as branch manager.

Because of the pivotal role CORAB has played in this whole process, some members' comments are highlighted:

Although CORAB discussed the strengths and weakness of the two proposals at several meetings, they did not formally vote, acknowledging repeatedly that the selection of the branch manager was the sole responsibility of the Board of Higher Education.

Critical input regarding the features of both proposals was also received from the COCC Board and from COCC leadership, faculty, and staff. In the body of this report, feedback from CORAB, the COCC Board, and representatives of COCC is organized into perceived strengths and weaknesses of organizational structure and leadership, academic strategy, student services, and financial plan.

Additional input was given in the form of newspaper editorials, Op-Ed pieces and letters to the editor in newspapers, and letters and e-mail to OSBHE members and the Chancellor. Many of the concerns and praise voiced by other groups were echoed by these writers- commitment to the region, mix of program offerings, integration into the community, and leadership to move the new enterprise forward.

OUS Staff Observations/Conclusions

Observations and conclusions are drawn from each of the major sections of the OUS staff analysis. These observations and conclusions, along with critical feedback from key stakeholder groups in Central Oregon, form the basis for the staff recommendations to the Oregon State Board of Higher Education.

Evaluation Criteria Related to "Applicant Capacity" and "Estimated Impacts"

On the criterion of "applicant capacity" to meet responsibilities and take risks as well as benefit from opportunities of operating a 21st century branch campus model, staff conclude that both lead universities have this capacity and have developed plans that are flexible and scalable as future circumstances may require.

The criterion of "estimated impacts" of the choice of lead institution is difficult to address. The more important consideration in starting a branch campus is the merits of the proposal in terms of match with what is in Central Oregon's best interests.

The Plans: Overall Conceptualization

The proposals present a choice between UO's arts and sciences college that is closely integrated with COCC and whose partners provide more applied programs, on the one hand, and, on the other, OSU's broader and bolder "new university" model that extends further and more deeply into the Central Oregon region. Staff believe the OSU design is a more innovative response to the disparate higher education needs of a geographically large and complex region as we understand them.

Organizational Structure: Leadership and Management

The proposed administrative structures follow from the distinctive designs of the proposals. The UO structure fits the college model and reflects its more fundamental integration with COCC. The OSU structure fits a new university model by assuming a name and administrative titles suggestive of the direction of development of the branch. Staff conclude, however, that it is premature to designate the branch as a (separate) university per se and that positions/titles should reflect prevailing national practice regarding branch campuses. Our advice to the OSBHE is to fully support the robust development of the branch in the initial five-year period and defer decisions about the implied stand-alone status of the future of the branch to follow an evaluation five years after its implementation as approved in OSBHE actions on June 16, 2000. In addition, staff strongly recommend that a full-time interim chief executive officer be appointed and on the job at the branch by September 2001 in order to confront the substantial and immediate responsibilities of initiating a new model.

Academic Affairs

Regarding the curricular plans, staff conclude that the breadth and balance of programs proposed by OSU better serves the interests of greater Central Oregon, has more potential for attracting students, and better matches the regional economy. In addition, distance education strategies must be developed to meet access needs in the wider region. For the OSU plan, these strategies, including creative use of technologies, are key to implementing the Regional Learning Network which is advantageously based in large part on OSU's existing infrastructure. Regarding the faculty plans, OUS staff believe that while the UO plan lends to greater involvement of COCC faculty in the early years (and less continuous presence of UO [Eugene] faculty), this does not send to the community and to prospective students as strong a signal of commitment to the branch as the OSU plan does by transferring OSU (Corvallis) faculty and hiring new resident faculty for the branch faster. Students will be attracted to an environment and campus culture that includes the regular presence and availability of higher education faculty.

Student Affairs and Services

Both proposals are persuasively student centered and replete with strategies like dual admission/enrollment and coordinated or integrated services with COCC to ensure that students will be well-served and their needs met in ways that approach seamlessness. This is especially challenging to achieve with multiple providers on site. Staff believe that recruitment plans for the first year of the branch must focus intensely on K-14 pipeline programs and marketing to the Central Oregon region. As recognized in both proposals, the current lack of affordable housing for students in Bend presents a major planning challenge. OSU's ubiquity in Central Oregon through its statewide services, its promising concept of the Regional Learning Network, and its several established outreach programs to K-12 students give it the decided edge in terms of broad outreach to constituencies, including prospective students.

Commitment and Community Relationships

Both OSU and UO have strong track records in their relationships with community colleges and extensive experience in assisting students with transfer. Both are integrally involved in providing degree programs through the Central Oregon University Center. UO has a particularly close relationship with COCC, undoubtedly enhanced through joint work in developing the branch proposal. OSU has extensive networks and investments throughout the vast region related to its land grant services and activities; feedback from community members acknowledged their reliance on these services, as well as OSU's cultural fit with the region. Although the two institutions' records differ substantially in focus and scope of involvements, both have a strong foundation that would serve them well in the branch manager role. Staff conclude that OSU's integral connections to the communities of Central Oregon give it the advantage in building the long-term support necessary to sustain the branch.

Financial Plan

OUS staff conclude that either institution is fully capable of carrying out the financial responsibilities associated with the branch campus with appropriate modification to its financial plan. Each financial plan represents the varied academic program offerings, projected enrollment levels, staffing level choices, organizational structures, and administrative support requirements of the respective proposal. Each institution proposed distinctively different approaches to these considerations which heavily influenced the specifics of the financial plan. Both reflect some assumptions and management decisions that are substantially different than those used in the Strategy cost model. These generally relate to revenue management policies. Of significance is the cost model and RFP intent for General Fund monies and tuition related to all enrollment activity through OUS programs to be under the oversight of the branch campus, with appropriate compensation to the various partner institutions. This and other fiscal policy issues must be clearly addressed in the implementation plan for the new branch campus.

Staff Recommendations to the Board

Staff recommends that the Board:

1. Commend and thank all parties thereto for their engagement in the proposal development and evaluation process:

2. Assign the branch campus management responsibility to Oregon State University.

3. Direct Oregon State University to work with Chancellor's staff to develop an implementation plan by April 1, 2001, for the Chancellor's approval, to include, but not be limited to:

COMMITTEE ACTION:

BOARD ACTION:

IMPACT OF THE GOVERNOR'S PROPOSED BUDGET ON OUS: CONNECTING BOARD PRIORITIES AND POLICIES WITH BUDGET DECISIONS

The table on the following page summarizes the projected impacts that the Governor's 2001-03 Recommended Budget for OUS will have on the campuses. Please note that these impacts are to OUS's current service level--or the funds necessary to continue current operations at current enrollment levels--and do not take into account enrollment growth or targeted programs.

(Note: A hard copy of the table that accompanies this document, "Implementing the 2001-03 Governor's Recommended Budget - Campus Reports on Projected Reductions-Losses," is on file in the Board's office)

Background

The context within which the OUS budget is developed involves legitimate public needs arrayed against limited state resources. Within this context, the Governor has proposed a thoughtful budget based on specific public policies. OUS recognizes and accepts its responsibility to mitigate-to the best of its ability-the impact of the current proposal on students, recognizing as part of this process that 1) state funding for general education in Oregon's public universities is significantly below the average of similar universities across the nation, and 2) Oregon students and their families currently pay a much higher proportion of college costs than students and families in other states.

Board Priorities

In its deliberations on the agency request budget (approved in July 2000), the Board developed four budget priorities intended, in part, to sustain critical support while moving OUS funding closer to parity with higher education industry standards and reestablishing a more equitable funding relationship between the state and its students.

Although the Governor's strategy does not comport with the Board's priorities, it is compatible in many areas with Board policy as expressed in the agency request budget.

OUS Mission

In order to understand the impact of the Governor's proposal, it is important to understand the mission of OUS and the way state funds are allocated to the campuses.

Public higher education in Oregon has been charged in statute with a three-part mission:

In reality, these three components of the mission are profoundly interrelated, often through faculty at the department level. So, despite the fact that research and public service dollars are segregated as targeted programs in the OUS RAM, they are generally not separable from instruction dollars when allocated to the schools and departments by the institutions. Consequently, cuts in research or public service funding at the RAM level result in cuts in instruction at the campus level. Even when allocated to discrete research or public service programs, reductions in these funds represent a significant loss of instructional opportunities, particularly for graduate students.

The OUS Budget Model

The OUS budget model is comprised of two major components: an enrollment-driven peer-based set of cells that comprise nearly 70% of the General Fund; and a set of targeted programs that are primarily linked to funding for research, public service, Centralized Services, engineering-related programs, small school stabilization, and performance.

Model to Project Funding-Not to Allocate Funding

The enrollment-driven cells are based largely on the actual average costs of academic disciplines of peer universities. The linkage to actual peer and OUS expenditures offers as reasonable a benchmark as is available when assessing student/state funding commitments and program quality. The simplicity of the model was intended to offer the universities, Board members, legislators, and others a clearer means of projecting the state's share of the funding required for programs. Further, the universities were given the capacity to use the aggregate of tuition and General Fund resources to address campus and Board priorities. In short, the OUS RAM is used to project required funding, but it is not intended to be used by the campuses for allocating General Fund by discipline.

Each university allocates tuition and General Fund based on objectives they wish to achieve and not on how the revenue is generated. There are different approaches used by each university to instruct students. Factors such as faculty salaries, part-time/full-time faculty mix, direct and indirect operating costs, numbers of students/numbers of sections, etc., contribute to differences in cost.

An example illustrating the difference between universities in how they choose to allocate General Fund and tuition resources reflects how the model is used to project but not to allocate funding.

Example: The cell value for an upper division undergraduate program in psychology is $3,811. University A has 30 students in the program. University B has 300 students. Each receives General Fund based on student credit hours. University A's 30 students (90 SCH) generates $7,622 in state support (2 FTE students x $3,811), while University B's 300 students generate $76,220 (20 FTE students x $3,811).

How will the General Fund be allocated by each institution? Economy of scale might allow the larger program (University B) to be taught by one faculty member with the General Fund absorbing much of the cost. If the smaller program (University A) utilizes senior faculty, however, it would require a greater proportion of tuition to supplement the General Fund.

The basic point is that General Fund revenues will be consistent with the number of student credit hours taught and with the cell values, but program costs will vary, thus requiring that both tuition and General Fund revenues be reallocated by the institutions to fully fund specific program budgets.

Similarly, it is difficult to make policy decisions based on the cells within the model. If the amount of state support provided for a discipline within a cell is altered, it is necessary to either set up new single discipline cells or reassess the average cost of the existing cells (which impacts the peer-based costs for all disciplines in the cell).

There is an additional concern that cell values may be manipulated simply to shift the cost to the student, rather than to reflect sound policy decisions. To effect change, policy objectives that suggest an important unmet demand-such as teacher education-or cell values that fall below actual costs (architecture, music) should drive additional state General Fund dollars through the existing targeted program structure.

In addition, as part of the implementation of the RAM, the Chancellor's Office has committed to a periodic, comprehensive review of the cell matrix, with more limited, selective reviews occurring as needed.

Managing the Impact

Perhaps the ultimate question that the Board and state need to address is "What is the appropriate state funding commitment to OUS in ensuring Board and statewide higher education priorities are successfully achieved?"

OUS currently has at its disposal three basic options it can pursue to manage the impact of the Governor's proposal.

Board Priorities: Discuss whether to reassert Board priorities and recommend that the Governor redirect funding accordingly.

Addbacks: Discuss potential addbacks, emphasizing the return on investment to be realized, and what the addbacks will do for the students in view of the cuts and for Oregon in terms of maintaining or enhancing its competitiveness.

Tuition: Discuss reasonable and acceptable tuition parameters and options, considering affordability, competition from peer institutions, elasticity of demand, campus-specific impacts, etc.

These options will be discussed at the February 16 meeting of the Committee of the Whole. The table on the following pages is included for reference. It provides a graphic comparison of the Board's priorities and the Governor's recommended policy packages.

(No Board action required)

(Note: A hard copy of the table that accompanies this document, "Highlights of Governor's Budget Recommendations," is on file in the Board's office.)