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Higher Ed Board approves legislative proposals, approves bond issuance that will create 2,000 jobs in Oregon


Contact Di Saunders, Cell: 971-219-6869; Office: 503-725-5714 .

PORTLAND, March 5, 2010 – The State Board of Higher Education (the “Board”) and two of its Committees – Finance & Administration and Academic Strategies – met today at Portland State University to discuss legislative proposals, the development of an “internal bank,” the approval of the issuance of capital bonds, and the campuses’ athletics report, among other items discussed by the Board.

Chancellor’s Report      George Pernsteiner, OUS chancellor, noted that Oregon was one of 17 states who this week signed the Complete College America Compact. The goal of the Compact is to focus on increasing the number of degree holders and improve overall performance. Pernsteiner noted that Oregon’s involvement in this effort is aligned with the Board’s strategic vision, and is inclusive of the various initiatives on which the Board committees are currently focused. He thanked the Governor and his Office for their leadership on this effort. The chancellor noted that OUS and the state’s community colleges are in a period of record enrollment which is expected to continue. Community college enrollment will also mean many more transfer students entering the OUS, which is a positive indicator of the collaboration between the state’s 2- and 4-year colleges. While the new enrollment is presenting demands that stretch the campus, facilities, advising, financial aid, and all administrative aspects of university operations, the OUS needs to keep enrolling students because it’s in Oregon’s interest, and the state cannot afford to skimp on the quality of education for students. Pernsteiner did note that stretching resources in this way is not sustainable. In fact, for 2011-13, state agencies were recently told to plan for a 25% reduction in state support, driven by the shortfall in state resources, by the state’s slow recovery, and by the expected elimination of federal stimulus dollars which have underpinned the viability of state services this biennium. He noted that the Board can target investments for initiatives to continue OUS’s trajectory of success in getting more students into and through college.

Legislative Proposals     Jay Kenton, OUS vice chancellor for finance and administration, presented concepts for legislative changes for the Board’s consideration for submission in the 2011-2013 Legislative process. In summary the concepts include: a placeholder concept for governance changes and other flexibility proposals which would give OUS greater control over costs; a specific proposal to retain 100% of investment income from cash balances, including tuition, to use to support students and campus operations rather than having these funds returned to the state; ability to contract for all of OUS insurance coverage as a more cost-effective way to obtain insurance, rather than the current system of going through the Department of Administrative Services (DAS); obtain biennial funding for prospective faculty salary increases/step-increases to have a comparable salary increase system to what classified staff receive; obtain biennial funding for enrollment growth, similar to what K-12 receives; have revenue bonding authority; ability to authorize one or more OUS institutions to retain state-certified police officers; and exempt OUS from power companies first right of refusal for any renewable energy projects. After some discussion on the various proposals, the Board approved the legislative concepts as outlined in detail in the board docket, and for submission to DAS and the Governor.

Bonds’ Approval     Jay Kenton presented a resolution for the sale of bonds to finance new construction and repair of existing structures on several of the OUS campuses.  It was noted that with the issuance of these bonds, besides ensuring access for students and repair and upgrading of current university facilities, it will also support new and retained jobs for Oregonians. In fact, using standard ratios, the more than $234 million in bonds will provide approximately 2,000 jobs for Oregonians across the state. With the Board’s approval of the bond issuance, Governor Kulongoski said, “The approval of these bonds is a win-win for Oregon. It not only ensures that we have quality, safe facilities in which to educate Oregon’s next generation workforce and ensure access for more Oregon students, it also provides much needed jobs for Oregonians in Klamath Falls, Corvallis, Portland, Eugene, and Monmouth, and the surrounding areas. These projects are exactly what we need to get Oregonians back to work in well-paying jobs and help fuel our economy going forward.”

The Board approved the request to the State Treasurer to issue $185,825,657 of Article XI-F(1) bonds, and $48,756,500 of Article XI-G bonds at an April 2010 bond sale; for a total request of $234,582,157, to fund 21 individual capital projects on five OUS campuses: Oregon Institute of Technology; Oregon State University; Portland State University; University of Oregon; and Western Oregon University. For details on capital projects, go to: /sites/default/files/state_board/meeting/dockets/ddoc100305.pdf, beginning on page 67.

Internal Bank     Michael Green, OUS associate vice chancellor for finance and administration and controller, summarized the Internal Bank proposal. He said that over the last several years, OUS has been working with the Legislature, the State Treasurer, Department of Justice, financial advisors, bond counsel, and key financial managers with the System to improve OUS treasury management practices through the establishment of an Internal Bank. The purpose of the Internal Bank – which is a separate accounting and operating entity that holds and invests all System operating cash balances and manages the long-term debt portfolio – is to facilitate the System’s long-term financial stability through effective asset/liability management, and optimize OUS’s capacity to access capital markets in the amounts needed at reasonable prices. After Board discussion, the staff recommendation to approve the Internal Bank Policy, and the accompanying Debt Policy, and Interest Rate Risk Policy, was approved by the Board; and the Board approved the repeal of Internal Management Directives 6.300, 6.305, 6.306, 6.310, and 6.315.

Athletics Report     Michael Green summarized the fiscal status of OUS intercollegiate athletics as of June 30, 2009. He noted that the Board’s financial principles and policies that guide accountability include: the working capital balance of the athletics department is to be positive at year-end; the use of institutional funds (tuition and fees) to support the athletics budget is permissible, but should be minimized; and the use of State General Fund dollars to support athletics is limited to funding salaries of the coaches at the small campuses (EOU, OIT, SOU, and WOU) and applicable physical plant costs. All campuses except Oregon State University and the University of Oregon had positive ending working capital balances. OSU’s deficit for this period totals $5.9 million; and UO’s deficit totals $642,000. After some discussion, the Board accepted OSU’s report and their deficit reduction plan, and asked them to return to the Chancellor with greater detail on the plan to eliminate the deficit, and bring their Athletic Department into compliance with Board policies.

In other action and discussion at the meeting, the Board and/or its Committees:

  • Approved the staff recommendation that the Residence Hall Emergency Reserve Fund be transferred to the Internal Bank to allow for the Reserve to be temporarily used to supplement the Interest Rate Reserve of the Internal Bank, should the need arise, and to reflect other changes made subsequent to the adoption of the policy.
  • Adopted a resolution regarding the protection of classified information by Oregon State University for the U.S. Department of Defense.
  • Authorized OSU to award honorary doctorates to Mr. Frits Bolkestein and Dr. Donald Pettit at its 2010 commencement.
  • Authorized SOU to award an honorary doctorate to Ms. Ann Curry at its 2010 commencement.
  • Authorized PSU to award on honorary doctorate to Marian Wright Edelman at its 2010 commencement.
  • Adopted the revised OUS Research Council charge, thereby rescinding the original charge.
  • Heard reports from the Interinstitutional Faculty Senate; the Oregon Student Association; and Committees of the Board including Academic Strategies, Finance and Administration; and Governance.


Oregon University System (OUS) comprises seven distinguished public universities, reaching more than one million people each year through on-campus classes, statewide public services and lifelong learning. For additional information, go to www.ous.edu.

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