1. Introduction
2. Capital Construction
3. Governor's Recommended Budget
4. Chancellor's Office Reorganization
5. Funding Levels & History
6. Resource Allocation Model

The State Board of Higher Education understands that achieving all of Oregon's goals for postsecondary education cannot occur in a single or even two biennia. Thus the Board's budget priorities and Working Group initiatives are based on a multi-biennial approach, working with Oregon policymakers and others to gain agreement on current and future goals. Sustained investments in higher education over a period of time can have a great impact in the state through a consistent rebuilding and investment plan that meets the needs of Oregonians and our economy.

The Board-adopted budget priorities included in the Governor's Recommended Budget (GRB) reflect a determination to advance postsecondary education in Oregon in a balanced and responsible manner.

Access
• Delivery & Productivity
• Enrollment
• Deferred Maintenance

Affordability
• Oregon Opportunity Grant Growth
• Moderating Tuition Increases
• Fee Remissions

Excellence
• Faculty Recruitment & Retention
• Undergraduate & Graduate Instruction

Economic Development
• ETIC Investments
• Tech Transfer & Commercialization
• Capital Construction

Access Priorities

The higher education budget priorities for 2005-07 include initiatives that will move students quickly and seamlessly from one education sector to the next, including funding for a joint K-12, community college, and OUS data system, and development of a Statewide Oregon Transfer Module. Deferred maintenance projects will invest in and protect the safety and stability of campus facilities, ensuring the full use of these valuable state-owned assets for current and future generations of students and Oregon communities.

• The GRB will enable OUS universities to maintain enrollment of more than 80,000 students per year in 2005-2007.
• $2.2 million is included in the GRB for a data transfer process that supports student academic credit movement between high schools, 2-year colleges, and 4-year postsecondary institutions.
• The budget makes a substantial investment in university facilities, including new construction in Medford to support dual enrollment between Southern Oregon University and Rogue Community College, as well as funding for significant repair and maintenance at each campus to improve access and safety for students and the campus communities.

Affordability Priorities

Keeping tuition increases at levels lower than those experienced in 2003-2005 and helping our low- and moderate-income Oregonians afford a college education are key components of the OUS budget priorities.

• The budget allows universities to keep tuition revenue increases below those seen in the last two biennia, averaging no more than 7% the first year and 5% in the second year across the System.
• The GRB doubles the Oregon Opportunity Grant to $91.6 million, which will improve the affordability of college for Oregonians, and provide a level of stability to the campuses in their support of students' financial aid needs (in the OSAC budget).
• The proposal to phase out the limitation on fee remissions addresses the affordability gap for Oregon's most economically disadvantaged students, created by stagnating aid and increasing tuition rates over the last few biennia

OUS Funding Per Student FTE Education and General Programs


1999-2001: Student share of costs = 41%, State = 51%, Other = 8%
2001-2003: Student share of costs = 46%, State = 46%, Other = 8%
2003-2005: Student share of costs = 55%, State = 36%, Other = 8%
2005-2007: Student share of costs = 56%, State = 35%, Other = 9%

This share-of-costs chart includes Other Funds Limited that supports the Education and General operating budget. It excludes OSU Statewide Public Service Programs and non-limited funding for self-supporting services and sponsored research.

Excellence Priorities

The GRB addresses excellence in public higher education through investments in retaining the excellent faculty within the System, and in preventing further erosion in core programs and services.

• The importance of recruiting and retaining top faculty is demonstrated by a $1 million investment in the GRB and through the elimination of the salary freeze for all state employees. This will assist campuses in retaining top faculty who have contributed significantly to student success, academic excellence, and graduates' job readiness, and who bring millions of dollars annually into the state through grant funding of critical research and economic development initiatives.
• Excellence is exemplified in the high quality undergraduate and graduate instruction provided to campuses. The GRB includes $545.5 million for instruction and targeted programs to ensure academic excellence and job-ready graduates who can support Oregon's workforce needs.

Economic Development Priorities

These economic proposals make strategic investments to support Oregon’s knowledge economy, they create jobs, and build stronger public-private partnerships through the scientific and research breakthroughs occurring on OUS campuses.

• The GRB invests in the commercialization of the intellectual capital developed by our campus research enterprise (in Oregon Economic and Community Development Department budget). This creates new companies, new jobs, and new market niches for Oregon that help sustain a strong, diverse economy.
• The $21.7 million ETIC portion of the OUS General Fund budget will enable OUS and its industry partners to continue meeting the state's goals of making engineering and technology education a strategic resource that supports our economy and largest industry sector, and creates opportunities for all Oregonians.
• More than 3,000 jobs will be created across the state through the funding of deferred maintenance and capital construction projects on all seven campuses (estimated 9 jobs per $1 million on $355.4 million capital construction budget.

Page Top

The Governor's Recommended Budget (GRB) for capital construction addresses the importance of investing in protecting and maintaining Oregon's campus facilities. It acknowledges the State Board's goals for student access to quality postsecondary educational opportunities and experiences by providing state-of-the-art facilities that can accommodate enrollment growth while maintaining a high quality instructional environment. The projects contained in the OUS Capital Construction budget will serve not only Oregon students, but will also serve to stimulate Oregon's economy through job creation. An estimated 3,000-plus jobs will be created in Oregon through these capital construction projects over the life of the projects (using an industry standard of 9 jobs per million dollars).

OUS campus buildings and property represent 50% of all state-owned facilities, have a $3 billion replacement value, and a $600 million deferred maintenance backlog. This huge enterprise is facing the challenge of managing enrollment growth and reinvestment in aging facilities, many constructed 30 – 40 years ago or more. New buildings and deferred maintenance efforts are accomplished primarily through campus-supported funds. During the past 10 years, about 18% of the total capital budget has come from general funds.

The State Board of Higher Education reviewed and prioritized capital construction projects weighing each against the principles of preserving current assets, finishing what has been started, partnering for the future and leveraging donor contributions and interests, and avoiding a crisis (e.g., a heating plant shutting down). Each project was examined to determine if it met one or more of the Board's overriding objectives of: Access, Affordability, Excellence, and Economic Development.

The GRB for OUS Capital Construction projects for 2005-2007 totals more than $300 million. This includes a combination of General Funds, lottery and State Energy Loan Program bonding, as well as private funding sources. The Governor has proposed $17.2 million in General Funds, which represents an increase of 50% over General Fund bonding provided in the 2003-2005 biennium. The Budget includes funding for Capital repair ($23.6 million); deferred maintenance projects ($47.3 million); the OSU Power Plant ($55 million); the Southern Oregon University collaborative project with Rogue Community College to construct an educational building in Medford ($11.8 million); as well as self-supported projects by campuses ($149.1 million); and gift-funded projects ($68 million).

Click here for more detailed information on OUS Capital Construction and Deferred Maintenance Projects.

Page Top

The Governor's Recommended Budget (GRB) for the 2005-2007 biennium includes $685.4 million in General Fund support for the State Board of Higher Education's key initiatives for postsecondary education focused on the goals of Access, Affordability, Excellence, and Economic Development; and support for operating, capital construction and debt service. This amount reflects a 2.1% increase over the 2003-2005 General Fund budget, although it is a 5% reduction from the Essential Budget Level.

The Total Budget for OUS in the 2005-2007 GRB for the Oregon University System is $4.5 billion, with $685.4 million in State General Funds. The budget also includes $1.4 billion in Other Funds Limited (including nearly $1 billion in tuition and fees and $337 million in capital funding). Another $2.4 billion in Non-Limited Funds from gifts, grants, contracts and self-support activities is included, although these funds generally cannot be used for instruction or general campus support.

• The Education and General portion of the GRB (funds used for campuses and Chancellor's Office, and excluding Statewide Public Service Programs, capital construction and debt service) is $549 million, an increase of $4.6 million or 1.1% over the 2003-2005 biennium. This amount is not sufficient to carry forward the current level of programs from the 2003-2005 biennium.
• The GRB for Statewide public services programs provided through Oregon State University, e.g., Agriculture Experiment Station, the Extension Service and Forest Research Laboratory totaled $89 million in General Fund, a reduction of 1.3% from the 2003-05 Legislatively Approved Budget, and a 7.7% reduction from the Essential Budget Level.
• In February 2001, the State Board of Higher Education approved the selection of Oregon State University to manage a new branch campus in Bend – called OSU Cascades Campus – in close collaboration with other OUS partner institutions and other private universities offering programs in that region. Funding for 2005-2007 is proposed at $6.8 million, which is the 2003-2005 funding level of $6.7 million plus inflation.
• Three targeted programs contribute to the support of the Regional Universities (EOU, OIT, SOU and WOU) campuses with small enrollment bases to assist these institutions in underwriting core operational and management support requirements: 1) Statewide Access, which provides additional state support in recognition of the technology education mission of OIT; 2) Small School Support Adjustment for campuses with enrollment less than 7,500 FTE; and 3) Regional Access Funds which provide core program support for regional institutions with small enrollment bases to ensure geographic access to public higher education by all Oregonians. The GRB proposes $26.5 million to support regional campuses, which is the 2003-2005 amount adjusted for inflation.
• Targeted Programs generally provide funding to support priority policy decisions, those areas not reached through per-student cell funding, or those areas in need of enhanced funding due to extraordinarily high program costs or other factors. Targeted Programs are mission-based rather than enrollment driven and make up about 30% of state funding. Funding for targeted programs supports two major mission functions: research and public service. In addition to the Regional Campus support above, key targeted programs totaling $237.1 million include campus public service programs, land grant activities, state-supported research centers, engineering program support, Chancellor's Office, Central Services, system-wide expenses, capital construction, and debt service.

Page Top

In 2003, the State Board of Higher Education reviewed the functions of the Chancellor's Office and as a result transferred some functions to OUS campuses. With this new governance structure, the Chancellor's Office will focus on the development and implementation of policy and advocacy for postsecondary education in Oregon. The Chancellor's Office will retain management reporting and control systems, planning and analysis, communications and government relations, and fulfillment of statutory functions. More than $3 million in savings from that reorganization has been used to increase affordability for students and lessen the impact of Measure 30 budget reductions on the campuses.

While campuses have been provided with greater autonomy and flexibility, they will be required to continue to operate under closely monitored control measures that ensure accountability by the State Board. Among the functions transferred to campuses in 2004 are Information Technology Services, now managed by OSU; the operation of the Southwestern Oregon University Center, now managed by EOU; and the Oregon Center for Advanced Technology Education (OCATE), now managed by PSU. A newly-formed Provosts' Council, made up of academic vice presidents of the OUS campuses, replaces a function formerly carried out by the Academic Affairs division of the Chancellor's Office, which was eliminated during the restructuring. The Provosts' Council is charged with carrying out due diligence and formal review of new academic degree and certificate program requests and makes recommendations to the Board.

Page Top

The state provides funding to OUS through State General Funds and Lottery Funds. State General Funds support the Education and General operating budget (along with tuition and fees and other minor sources of revenue), the OSU Statewide Public Service Programs, debt service, and capital construction. State lottery revenues also support debt service on capital construction projects, and the Sports Action Lottery funds support athletic programs and scholarships for graduate students.

2003-2005 Funding Levels

Approximately $679 million in State General Fund was originally appropriated to OUS via legislative appropriations for the 2003-2005 biennium, including $11.5 million in capital funding for building repairs and renovations, reflecting a reduction of $62.7 million from the previous biennium. Other Funds Limited Revenue projections increased by $251.5 million, due mainly to increases in tuition and fee revenues based on enrollment growth and tuition rate increases. An additional reduction in state funding of $7.5 million in the Education and General Program was implemented in May 2004 upon passage of Measure 30 in February 2004, which repealed the tax surcharge enacted by the Legislature in 2003. Other Funds Revenue Projections have decreased, reflecting slower growth in student enrollment and in tuition increases than previously anticipated.

More than 50% of OUS funding comes from Non-Limited funding sources that are not subject to expenditure limitation by the Legislature. A portion of these funds are from unrestricted sources dedicated to Self-Support Programs, such as dormitories, food services, student centers, bookstores, and parking. Incidental Fees, Health Fees, Building Fees, and housing charges provide partial support for these programs.

The remaining Non-Limited Funds are from restricted sources that are identified for specific purposes, including gifts, federal and private grants and contracts, student financial aid and student loan programs. Non-Limited Funds are not available to support the general instructional operating budget.

Page Top

The Resource Allocation Model (RAM) outlined below and adopted in 1999, replaced a complicated cost-reimbursement process that had more than 250 separate funding calculations and pooled all funds under the control of the State Board of Higher Education. Supporting the State Board of Higher Education's direction of a student-centered approach, each campus retains all tuition and other campus-based revenue under the RAM. In addition, each campus is allocated State General Fund support reflecting their actual student enrollment based on per student FTE funded through "cells". Funding is also based on targeted programs that are mission based, e.g., research and public service.

Per-Student "Cell" Funding

The RAM uses course CIP codes (Classification of Instructional Programs) as defined by NCES (National Center for Education Statistics) to assign values by discipline. Funding values are identified in 12 "cells": four levels of instruction, based on program type, by low, medium, and high cost. Each cell represents the average state share of cost for one FTE student. The number of FTE students in each cell drives the projected state revenue needed to fund programs. Click here for more information on cell funding.

Every four years the Oregon University System reviews the RAM, including a re-evaluation of the CIPs and data for the RAM's enrollment driven component. Current review efforts are underway to re-evaluate the RAM given the decline in state support and increased reliance on tuition and fees to fund campus operations, revalue and, if necessary, redistribute the CIPs, and account for the role of tuition and state support in the revenue calculations for Education and General funds.

Page Top