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Historic higher ed legislation passed in Senate and House by overwhelming majority

SB 242 increases universities flexibility to meet student needs, increases accountability for statewide goals

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

PORTLAND, June 29, 2011 – Today a historic higher education bill, Senate Bill 242, completed its passage through the Oregon Legislature. The bill, which was passed by the Senate on June 17, by the House on June 27, and received Senate concurrence today, creates the Higher Education Coordinating Commission, and redefines the Oregon University System (OUS) as a public university system, rather than a state agency. The change allows the OUS more authority, accountability, and ability to manage its operations and responsibilities for the benefit of students and Oregonians. With these authorities also come a new performance funding compact with the state for achieving higher education and economic related outcomes, and greater student affordability through use of interest earnings on tuition for financial aid.

Paul Kelly, president of the State Board of Higher Education, said, "On behalf of my fellow board members and the entire OUS, I extend my sincere and enthusiastic thanks to our legislators for their historic action. Many have worked hard over the last year to develop this new blueprint for further higher education reform in Oregon. This is the most positive, comprehensive package of changes to higher education in the last 80 years, and will directly benefit students and the state. For example, it will ensure that student-paid tuition stays on the campus where it can be used to fund student instruction, financial aid and critical services that help students stay in college and graduate. SB 242 also gives campuses the tools they need to better control costs and revenues, and to plan more effectively, knowing what resources will be available. It is a new beginning that will challenge us to build a stronger public university system for Oregonians.”  

The State Board of Higher Education and OUS leadership worked with the Legislative Higher Education Working Group, led by Senator Mark Hass and Representative Tobias Read, over the last year to develop and support the policy and structural reforms embedded in SB 242. The Board and OUS also worked with many engaged stakeholders, including the Oregon Student Association, the business community, OUS faculty, and others to form the policies enacted by the legislation, such as the approach to tuition setting and use of tuition interest earnings.

Chancellor of the OUS, George Pernsteiner, said, “The passage of SB 242 will give OUS the tools it needs to continue the momentum gained over the last biennium. With record enrollment, record retention rates, and degrees at an all time high, the OUS can keep serving students with quality instruction and support throughout 2011-13.”  However, Pernsteiner noted that, due to a 2011-2013 budget which down almost $115 million or 14% from the current biennium, universities are still facing significant cuts in some cases, with faculty and staff layoffs and other operating reductions, at the same time as more students are enrolling for the upcoming Fall. “Higher education will continue to face significant financial challenges,” added Pernsteiner. Student enrollment will likely reach 100,000 this Fall, a new record for the OUS, and an increase of more than 30,000 students in the last 10 years.

Key components of SB 242 include (most components of SB 242 are effective on January 1, 2012): 

  • Creates a Higher Education Coordinating Commission that will develop state goals and accountability measures for all of postsecondary education in Oregon – community colleges and OUS – and a strategic plan for achieving these;
  • Changes OUS from a state agency to a Public University System, consisting of the Office of the Chancellor, the seven OUS institutions and related offices and activities. The State Board of Higher Education will continue to carry out its duties, and OUS will remain an instrumentality of the state and a governmental body;
  • Tuition revenues can be fully utilized to fund student instruction and support services, as well as university operations, and not be subject to "expenditure limitations" which hamper the campuses' ability to spend the tuition students have paid without returning to the legislature for authority; this will improve campuses ability to plan longer term knowing what available revenues will be within any given biennium;
  • Tuition revenues in campus reserves will no longer be able to be utilized by the state to fund other agencies;
  • Affordability is increased, with interest earned on tuition revenues remaining on campus to fund additional student financial aid rather than being returned to the state;
  • Students are more broadly involved on university-based committees which develop tuition rate proposals sent to the Board of Higher Education for approval each year;
  • Accountability is increased, with a new performance compact that will provide measurable education and research outcomes, on which funding will be based;
  • Adopts a simplified “block grant” budgeting approach – rather than the thousands of line items which currently make up the OUS budget – which is driven by outcomes and accountability, and moves from a compliance focused system to one focused on achievement;
  • Decreases costs for OUS, including enabling it to:  purchase lower cost risk insurance rather than being in the state pool; explore healthcare options with a labor-management group; eliminate certain assessments levied by the Department of Administrative Services; retain its own legal services, no longer using Department of Justice attorneys and services; and overall enables the universities to function more effectively as education institutions rather than within the pool of other state agencies; and
  • Eliminates the need to seek legislative authority on capital construction projects that exclusively use private donor/external funding.

OUS will continue to follow public records/meetings laws just as other public bodies do today. Besides public records, OUS will also continue to pay assessments for and be engaged with: Secretary of State for audits, archives and administrative rules; Ethics Commission; Central Government – for Legislature and Governor’s Office; Minority, Women-Owned and Emerging Small Business; and Treasury for banking services. 

The Oregon University System comprises seven distinguished public universities and one branch campus, reaching more than one million people each year through on-campus classes, statewide public services and lifelong learning. The Oregon State Board of Higher Education, the statutory governing board of OUS, is composed of twelve members appointed by the Governor and confirmed by the Oregon State Senate. For additional information, go to www.ous.edu