Oregon State Board of Higher Education
Teleconference Briefing of Regular Board
Eugene Chancellor's Office Conference Room
358 Susan Campbell Hall, University of Oregon
November 9, 2001
CALL TO ORDER
Chair VanLuvanee called the meeting to order at 2:01 p.m.
On roll call, the following Board members answered present:
Mr. Roger Bassett
Ms. Leslie Lehmann (joined after roll was taken)
Mr. Jim Lussier
Dr. Geri Richmond
Ms. Erin Watari
Mr. Bill Williams
Mr. Jim Willis
Ms. Phyllis Wustenberg
Mr. Tim Young
Mr. Don VanLuvanee
Absent: Mr. Tom Imeson (business conflict)
Chancellor's Staff Present: Chancellor Joe Cox, Tom Anderes, Bob Bruce, Bob Dryden, Grattan Kerans, Ben Rawlins, Paula Rustan, Diane Sawyer, Marcia Stuart, Loren Stubbert, Alayne Switzer, Diane Vines, Marv Wigle
Others Present: Martha Anne Dow (OIT), Steve Bender, Salem, Frances Dyke (UO), Dave Frohnmayer (UO), Janie Har, Oregonian, Theresa Hogue, Corvallis Gazette Times, Sara Hopkins-Powell (SOU), Lee Lindsey (EOU), Eric Martin, Oregon Daily Emerald, George Pernsteiner (PSU), Michael Redding (UO), Paul Risser (OSU), Les Ruark, Darin Silbernagel (WOU), Doug Yates (OIT), Elizabeth Zinser (SOU)
Site locations: Room 358, 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
BRIEFING ON BUDGET REDUCTION SCENARIO
Board Secretary Vines noted that the only item on the agenda was a briefing on the budget reduction scenario.
Vice Chancellor Anderes explained that this meeting was called in response to a request by the Board to receive preliminary information on the Governor's request to provide reduction plans in increments of two to ten percent to address projected deficits both for this biennium and next biennium. He referred to a document recently sent to Board members outlining some of the issues. The document provides the process and strategy developed to present a proposal to the Governor.
Vice Chancellor Anderes reviewed the 2001-2003 budget reduction plan stressing that each institution will work through the process and identify the implications of the reductions at the two to ten percent levels, but also look at what could be done at the System level to create a strategy that will have a different implication for the campuses. He explained that one of the primary goals of the Board was to protect instructional support and that the basic foundation for driving the decisions in these documents was to protect maintenance of access to undergraduates. He noted that the issue of access as a primary Board priority continues as part of this strategy. He noted that this particular goal was also a major priority of the Governor.
Vice Chancellor Anderes pointed out that limiting impact on instruction and undergraduates necessitates a greater reduction impact on some other programs. He noted that emphasis on maintaining access and limiting the impact on instruction meant focusing on targeted programs. He said several programs were analyzed, both individually and as they relate to each of the campuses, and the Chancellor's Office then determined where to make the most reasonable deductions at the highest possible level without impacting instruction. He briefly discussed the risk factors involved at the different levels and noted that the major targeted programs were public services, research programs and statewide public services.
Vice Chancellor Anderes went on to address cuts in centralized services, which includes the Chancellor's office and systemwide expenses that impact campuses to varying degrees. In the targeted programs, reductions of the small school allocation were limited by defining them similarly to instructional cells. Referring to the Cascades Campus, he argued it would not be prudent to reduce it's budget during this crucial initiation period, arguing that reductions prohibit the program's success. He stated that, had it been a continuing program with a solid base in terms of enrollment and other programs, it would have received more scrutiny. Addressing the engineering enhancements, he recognized they were a strong priority of the Board and legislature, yet they will still need to consider reduction of ETIC funds at the six percent level.
Vice Chancellor Anderes stated that the focus on targeted programs presents a balanced approach and limits impact on instruction such that there are no reductions in instruction until the six percent increment. He explained that the first $48 million was taken only from targeted programs and the reduction of undergraduate instruction only amounts to about one percent at the six percent level. He stated that nonresident subsidies were reduced at higher levels, not because the programs weren't important, but were reduced in order to maintain the goal of retaining resident undergraduates. He stated that reductions in administrative costs and central services were substantial, especially in the Chancellor's Office. Other areas of significant reduction include the OCECS systemwide expenses and RAM reserve. He stated that performance funding will be continued, noting that there was a strong emphasis by the Board to provide a mechanism to leverage performance in particular indicators on undergraduate education, access and other areas.
Vice Chancellor Anderes pointed out that the proposal also avoids reductions in the funding required for deferred maintenance and capital construction. He stated that it would be an obvious area for reduction and that this is frequently used as such, but given the status of the System's capital renewal programs, a conscious decision was made not to reduce in that area.
Vice Chancellor Anderes stated that the proposal attempts to place reasonable levels of reduction across the institutions in order to remain equitable although the cuts were not across-the-board. He opined that they are within a range that makes sense for the institutions, specifically as it relates to the impacts of the targeted programs. He noted that the statewide programs were hit at a disproportionate rate and were a major component of targeted programs.
Dr. Richmond questioned whether the Board should support with similar strength several of the targeted programs in addition to funding the model fully. She stated that the fourth priority was the additional branch campus as well as engineering, and yet the proposal does not reflect those priorities at the higher percentages. She noted that there are new programs being launched on every campus and that they also need their fair share of funding. She said that, unless there was some consensus of the Board that the priorities have changed, it would be difficult for her to approve the proposal at the higher percentages, although she is comfortable with them at the lower percentages. She also disapproved of the proposal to cut research at the same levels as campus public services and asked whether the Chancellor's office viewed them at the same level of importance. Vice Chancellor Anderes referred back to the original budget discussion when the Governor made his recommendation on reductions, and to what the Board had supported then. Dr. Richmond noted that research is required of faculty at the campuses in order to achieve tenure and continue their work. She argued that research and public services are different issues and these cuts send the statement that research is as important as campus public services.
Chancellor Cox noted that the Board had its priorities and that the legislative and executive branches of government had established different priorities. He stated that, in some ways, this proposal was drafted in response to those other two sets of priorities. He noted that public services ranked very high and, in the last session, the Ways and Means Committee restored almost all funding for public services and priority was given to engineering and the Cascades Campus. He recognized the importance of the Board's priorities, but noted that the other priorities have to be addressed since, ultimately, it is a legislative decision. He stated that they have chosen to accept the actions of the legislature subsequent to the development of the budget and that it was not a decision made in isolation by the Chancellor's Office to support public service areas at the expense of research.
Mr. Bassett reiterated Dr. Richmond's point, arguing that the other branches of government may be engaged in rethinking what they did as well, therefore he was not convinced that what they did before the deficit would carry as much weight. Mr. Bassett questioned whether the Governor or the legislature would lock into their own priorities stronger than the priorities of the Board. Mr. Young agreed that if anybody is making decisions in the sole interest of the University System, it should be the Board. He went on to state that they shouldn't allow perceived legislative or gubernatorial priorities to influence their decision-making process, especially if those priorities haven't been solidified.
Don VanLuvanee cautioned about being critical of what the Chancellor's Office has done, noting that this is a starting point for review and changes can be made. Chancellor Cox pointed out that the proposal reflects the principles that were the collective work of the chief academic and chief finance officers of the institutions in terms of complying with the Governor's directive, and in being as consistent as possible in terms of Board priorities but accepting the fact that this is what the Governor has asked of them.
Ms. Wustenberg asked at what point does the number of students lower the cell value. Vice Chancellor Anderes explained that the goal is to maintain the cell value at 81 percent level and institutions have the opportunity to take on additional enrollments that go beyond budget, but funding would have to be through tuition dollars in order to maintain the cell value. The purpose of this approach is to address the autonomy and flexibility issue rather than lowering the cell values and allow the question of quality to fall back to institutions for the level of funding that is provided. Ms. Wustenberg expressed concern with spending money to advertise for more students and asked at what point does advertising become counterproductive. Vice Chancellor Anderes noted that growth and demand are tremendous and recognized that, if growth continues unabated, the System won't be able to keep up with the demand.
Ms. Lehmann expressed concern that access may compromise quality. Chancellor Cox explained that academic programs have been protected as much as possible.
Vice Chancellor Anderes noted that the three core missions are instruction, research, and public service, but ultimately the goal was to focus on instruction. He stated that it would be possible to change the budget with regard to research, but to do so would have implications elsewhere. He pointed out that the challenge is to find a balance. He explained that there would be a reduction in engineering but a continuation of growth based on what they believe they are hearing from the Board, the legislature and the Governor. He opined that this proposal would be certain to be approved by the legislature. He noted that the Board's number one priority was current services and fully funding the RAM, and neither one of those were fully met by the Governor.
Mr. Young stated that it is important that the Board recognize the importance of research and the economic activity that it generates. He stated that the Board should shield research from being cut at the twenty percent level. Dr. Richmond noted that the Board does support engineering and the Cascade Campus, but questioned why they are protected more than instructional funds at the eight and ten percent levels and questioned the higher values. Vice Chancellor Anderes pointed out that at some point the engineering program can no longer be sustained within the eight year plan.
Ms. Lehmann cautioned that it would be a mistake to chip away at programs to the point where they are no longer quality programs. Chancellor Cox reminded the Board that it was engineering that drove the legislative session in the belief that engineering and high technology are the future of the state's economy. He cautioned that diluting the value of the legislature's top priority would be interpreted negatively.
Mr. Young asked whether the expansion of the veterinary program is reflected in these figures. Vice Chancellor Anderes explained that the veterinary program is not part of this exercise but is being reduced the same as all other professional programs.
Mr. VanLuvanee asked that members express their concerns regarding this proposal and ask the Chancellor's Office to advise. Chancellor Cox stated that research, engineering and the Cascades Campus will be reconsidered in terms of the protection they were afforded at the eight and ten percent levels.
Chancellor Cox noted that Measure 5 resulted in significant programmatic cuts that sent messages of instability across the state and it took a decade to recover from that, therefore, the provosts and the chief financial officers want to avoid, wherever possible, significant program cuts.
Dr. Richmond asked for some sense of what the reduction of the graduate programs would be, pointing out that many of the graduate students are funded by outside grants. She expressed concern about limiting access to nontraditional students returning to school for retraining due to lost jobs. Mr. Young requested that the Board be sent information on the tuition policies and how that is impacting the revenue scheme for the different universities.
Chancellor Cox noted that the institutions have worked cooperatively and made compromises to come up with this proposal. He asked Board members to provide the Chancellor's Office with their questions or concerns by the early part of next week. Mr. VanLuvanee asked that Chancellor Cox provide a summary by Tuesday.
There being no further discussion, Mr. VanLuvanee adjourned the meeting at 3:10 p.m.