Governor Kulongoski’s Budget for Higher Education

 

Summary[1]

 

It is the best of times.  It is the worst of times.

 

Despite the fact that the state faces a $1 billion shortfall over the next biennium, the Governor’s budget provides a strong foundation for Oregon’s public university system and particularly for students seeking access to higher education in Oregon.  Yet, universities will face a number of challenging reductions in essential services over the next biennium.

 

High points include:

 

·      Affordability:  The Governor doubled the funding for Oregon Opportunity Grants up to $91 million for needy Oregon students.

 

·      Access:  Through the use of bonds, lottery resources, and other funds, the Governor significantly increased capital funding for aging and ailing campus buildings across the entire system – over $300 million.  There are also investments and placeholders for a number of new buildings, including a joint venture between SOU and Rogue Community College.

 

·      Academic Excellence:  The budget includes $1 million in additional funds for faculty salaries, and lifts the salary freeze adopted last session.

 

·      Economic Development:  The Economic and Community Development budget includes $7 million for the Oregon Nanoscience and Microtechnologies Institute (ONAMI) and $2 million for a “gap” fund that will help commercialize university inventions.

 

The budget also carries a number of low points, including:

 

·      A decrease in “real funding.”  Although the actual number of general fund dollars allocated for higher education increases by approximately 2% over the current biennium, due to cost increases, the budget results in an overall reduction of 5.6% for campuses to deliver the level of essential services they are currently charged to deliver.

 

·      Significant reductions for Statewide Public Service Programs.  The statewide public service programs at OSU – the Agricultural Experiment Station, Forest Research Laboratory, and Extension Service – also face up to 7.7% reductions over their current essential budget levels.  The Governor’s budget document indicates the reductions to the statewide service programs “will limit the ability of the three programs to conduct research and provide services to citizens.”

 

·      No funding for enrollment Growth.  The budget includes no additional funding for higher education to meet growing enrollment demand by the baby boom echo.

 

 

Education and General

 

The budget for the Department of Higher Education is 2.1 percent more than the budget adopted for the 2003-05 biennium.  In real terms, however, the budget results in a 5.6% reduction at the campus level.  When reductions to the Oregon University System are figured into the equation, the reduction is over 6%.

 

Tuition and fees:  The budget assumes annual tuition and fee increases of approximately 5% for each year in the biennium.  An additional 2% in the first year might be added to offset reductions in funding.

 

Salaries:  The budget includes $1 million in general funds for increased faculty compensation.  These funds would be in addition to the $130 million available statewide for all state employee salaries.  The budget eliminates language adopted last session that imposed a salary freeze on state employees, including faculty.

 

Cascades Branch Campus:  Targeted funding for the Cascades campus is not reduced.

 

 

Capital Funding

 

The budget provides funding for 10 deferred maintenance projects through $102.3 million from bond sales and other revenues.  An additional $20 million is provided through Certificates of Participation (COPs) to support upgrades in telecommunications and information systems infrastructure.  Specific projects at OSU include:

·      $15 million of the COP funds are targeted for OSU telecommunications;

·      $55 million for the construction of a replacement heat plant/cogeneration facility; and

·      $6.1 million to restructure Education Hall, ultimately resulting in the removal of its chain link wrapper

 

Additional capital construction projects include placeholder funding for a new education building at UO and 25 other projects funded by Article 11F bonds that primarily involve housing, parking, dining, and other auxiliary services facilities.

 

The recommended budget includes funding for development of a PreK-16 data system, and $11.8 million for a new building involving SOU and Rogue Community College.

 

 

Scholarships and Financial Aid

 

Oregon Opportunity Grants:  The significant highlight in the budget is the proposal to double the funding for the Oregon Opportunity Grant to $91.6 million.  The budget also includes increasing the eligibility standards for the grants to 75% of median family income for dependent students, and to 35% of median family for single dependent students.  The size of the grants would remain constant – meeting approximately 11% of a student’s educational costs.  The budget document notes that the Oregon Student Assistance Commission and the State Board of Higher educations are will continue efforts to redesign of the Opportunity Grant, resulting in different eligibility criteria and award levels.

 

Tuition Remissions:  The budget phases-out a legislatively imposed cap on fee remissions over a two-biennium period.  During the 05-07 biennium the 8% cap would be increased to 10% and would be eliminated in the 07-09 biennium.  The cap on graduate fee remissions would be eliminated in the 05-07 biennium.  Caps on fee remissions have decreased the ability of campuses to provide financial assistance and scholarships (in the form of tuition and fee remissions) primarily for students in need.  The remissions are also used to recruit and retain students and to meet diversity goals.

 

Statewide Public Service Programs – Experiment Station, Forest Research Lab, Extension

 

The Governor’s budget reduces funding from .6 to 2.2 percent from the 03-05 budget, resulting in an average real decrease of nearly 8%.  The budget document notes:  “ . . . the reductions will limit the ability of the three programs to conduct research and provide services to citizens.” 

 

Economic Development Projects

 

The Economic and Community Development budget includes $9 million in Lottery Funds for commercialized research and the innovation economy.  Some $7 million of this is designated for ONAMI