OUS puts forth restructuring solution

Due to the current economic climate and the continuing decrease in state funding for higher education, the possible restructuring of the Oregon University System has sparked heated debate since the release of the Frohnmayer report last November. However, at its meeting this month, the State Board of Higher Education voted on what could be a possible solution: a restructuring proposal that would change the legal status of the OUS from a state agency to that of a public university system.

If passed, the legislative concept—which will be introduced to the next governor and legislature—would grant the OUS more freedom and flexibility in areas such as setting tuition, budgeting, spending, purchasing insurance and risk management coverage.

“In essence, this proposal will give OUS greater control over its revenue and expenditures,” said Jay Kenton, OUS vice chancellor for finance and administration, in an e-mail. “Today the state establishes about 55 percent of our costs and only provides 15 percent of our total revenues.”

According to the board’s July meeting summary, the proposal reflects the structure of Oregon’s community colleges, which operate as special districts established by legislature, meaning they do not face the same restrictions a state agency.

Commenting on those restrictions, OUS Director of Communications Diane Saunders said that K–12 schools and community colleges are given block grant budgets and are given the freedom to allocate funds as needed.

“For higher education we have thousands of line items [in our budget] that the state has a say in and can micro-manage,” she said.

According Kenton, the OUS tuition will still be approved by the board. However, the legislative concept would require campuses to have a participatory process that would involve students in setting tuition.

Currently, the universities within the OUS need state permission before spending the money generated from tuition revenues.

“We had to go to the legislature to ask to spend the money [students] gave,” said board President Paul Kelly.

In addition, the state often “sweeps” university reserves and uses any extra tuition money for other state agencies, according to Saunders.

Over the years, higher education institutions in Oregon have experienced increased enrollment growth. This summer, universities such as Portland State have experienced a record number of students enrolling in courses. According to Saunders, OUS enrollment growth is projected to increase by about 5 percent this fall. However, state funding has not matched the growing demand facing OUS universities.

Last month, after Governor Ted Kulongoski implemented 9 percent across-the-board agency and education cuts, the OUS passed a reduction plan of $31.6 million and an average 6.2 percent tuition increase for the 2010–11 academic year, according to the board’s June meeting summary.

“Although [the OUS] does not like to raise tuition, if the state cuts back then you end up with students not having the quality of education that they deserve,” Saunders said.

If the restructuring proposal is passed, the OUS would be better equipped to deal with the number of students, she said. In addition, universities could provide more course sections and student support services, as well as hire more instructors with more competitive salaries.

In exchange for more autonomy, a compact with the state would require the OUS to provide measurable education and research outcomes in areas such as enrollment, affordability, the number of employable graduates and the number of degrees awarded.

“[The compact] is a form of accountability,” Kelly said.

According to Kenton, though only one performance compact would be submitted by the OUS, it would be based on differing contributions from each of the universities in the system.

The legislative concept also proposes to give the board the authority to establish local governing boards for its institutions in order to better meet its goals.

In the e-mail, Kenton said that the legislative concept is being forwarded from the OUS to the governor. If approved, both the governor and the board would sponsor it.

The legislation will be drafted so that, if passed, July 1, 2011 would be the effective date of the change, he said.

Tuition and fee rates for 2010–11 academic year
Tuition and fee rates for the 2010–11 academic year were approved last month by the board at its June meeting. According to the meeting summary, all OUS campuses have now included programmatic resource fees into the base tuition to “increase transparency of actual student cost, and to have resource fees covered by financial aid awards.”

The following charts show only annual rates for 15 credit hours for resident undergraduate students.

                                2010–11 Tuition    2009–10 Tuition    % Increase
Portland State          $5,648                  $5,321                     6.1%
OUS Average          $5,802                   $5,358                     6.5%

                               2010–11 Tuition and Fees    2009–10 Tuition and Fees    % Increase
Portland State        $7,130                                    $6,764                                      5.4%
OUS Average         $7,082                                    $6,601                                      6.2%