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Higher Ed Board approves budget reductions for public universities

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

PORTLAND, October 8, 2010 – The State Board of Higher Education (the “Board”) met today at Portland State University to review budget reductions mandated by the state, the financial condition of the Oregon University System, approval of sustainability initiatives, and strategies to improve contracting with Minority, Women and Emerging Small Businesses (MWESB), among other items considered by the Board.

Budget Reductions
Jan Lewis, OUS assistant vice chancellor for budget operations, reported that over the last three months, the Oregon University System budget has been reduced by $52.2 million, with the entire amount hitting the budget in the second year of the biennium. This represents a decrease of 12.4% in the state General Fund budget for OUS for the 2010-11 fiscal year. OUS was also asked to absorb the shortfalls in the Oregon Opportunity Grant budget, operated by the Oregon Student Assistance Commission, amounting to $4.3 million for FY2011. Lewis said that besides the two budget reductions already taken in this biennium, there remains a concern that future revenue forecasts could call for additional cuts to the OUS budget by the state. Lewis reminded the Board that the first budget reduction presented to the Board in June 2010 totaled $31,617,152, and the September 2010 reduction which is being presented at this meeting totals $20,614,127. The campus reduction allocations have been applied proportionately to each campus based on the original budget distribution of the FY2011 allocation. Lewis noted that the record enrollment has helped campuses to some extent manage the cuts, but that OUS will need to seek additional Other Funds limitation from the Legislative Emergency Board in December to be able to spend the current tuition revenues paid by the current students enrolled at the institutions for instruction and support services they are expecting based on the tuition they paid.

After some discussion, the Board approved the allocation of the September Allotment Reductions to the 2010-11 Annual Operating Budget; and authorized the Chancellor or designee to seek additional Other Funds limitation at the December 14, 2010 Legislative Emergency Board meeting. More specific reduction amounts for universities are on page 76 of the board docket at: /sites/default/files/state_board/meeting/dockets/ddoc101008.pdf.

Financial Statement Analysis
OUS controller, Michael Green, provided a financial statement analysis to the Board to provide a better understanding of OUS’s financial condition as of June 30, 2010. Summarizing the components that are included in the analysis, Green noted the following: that OUS enrollment for Full-Time Equivalent (FTE) students increased 6.6% in FY 2009; state support for OUS is 19% of total adjusted expenses; OUS institutions spend less on student services, administration, and physical plant than their peers; despite a challenging environment, OUS faculty generate more grant and contract revenue than their peers; generally OUS’ peer institutions are financially stronger as evidenced by higher state funding, higher primary reserves, and lower debt burden ratios; Eastern Oregon University and  Southern Oregon University are lagging behind other OUS institutions in increasing self-generated revenues, primarily as a consequence of lower growth in net tuition and fee revenues and auxiliary enterprises revenues; and FY 2010 was a financially strong year with a significant increase in reserves as reflected in unrestricted net assets.

MWESB Contracting
OUS associate vice chancellor for programs and planning, Bob Simonton, and OUS director of contracting and purchasing, Hillary Bounds, updated the Board regarding ongoing efforts to increase participation of Minority, Women, and Emerging Small Businesses (MWESB) in OUS construction and purchasing projects. Simonton said that social equity is a large part of sustainability practices in OUS construction. Bounds summarized areas that OUS is working to expand with MWESBs, including better data collection, a more complete database of firms, and campus-based reports on use of MWESB firms. OUS is working on revising its General Conditions so that contractors must provide information on use of MWESB subcontractors. Bounds said that OUS has completed a number of outreach sessions and more are planned for MWESB companies to provide information on how they can get on the OUS retainer list and to bid on contracts. RFP policies and practices are also being reviewed and changed to set requirements for contractors, and OUS is working on ways to increase communication with MWESB communities and finding better ways to disseminate information about business opportunities, including developing a new website. Bounds said that other changes must include modifications to existing OARs, aspirational goals and good faith efforts, apprenticeship programs, working with diversity managers/liaisons, and use of disparity studies that are commissioned by public entities.

John Jackley from the Portland Development Commission shared what they are doing to ensure equity in contracting, which may be a helpful model for OUS as it works to improve its efforts. PDC has focused on three main areas: construction, workforce diversity and apprenticeships; and they have both a 20% aspirational goal for MWESB (which they exceeded by reaching 35%) and hard requirements that have been developed in association with minority construction organizations and chambers. Jackley said that commitment from leadership is also very important, as well as working closely with the local expertise in the minority contracting community and proving that your organization is an inclusive and welcoming place. Several representatives from the National Association of Minority Contractors of Oregon (NAMCO), including Faye Burch, Maurice Rahming, Howell Shaw, and James Posey, shared with the Board the steps that OUS should take if it wants to improve its track record in MWESB contracting, which is currently not adequate.

The board, chancellor and presidents discussed how the OUS can ensure that it moves quickly and effectively forward to address the issues surrounding MWESB utilization. This included adopting goals, analyzing best practices, changing RFP language which asserts requirements for contractors including apprenticeships, ensuring community involvement in development of new policies and procedures, looking at retainer agreements and ensuring these are inclusive, and determining what campuses are doing now and how practices can be improved. The chancellor charged Bob Simonton and Hillary Bounds to work with the campuses to develop a new framework, while also looking to resolution from the Department of Justice in terms of the parameters of what we can legally include in RFPs and in policy, with a focus on contracting and subcontracting to start with, and then moving to other important areas such as apprenticeships. The board and the chancellor thanked Jim Francesconi for raising this issue with the Board and organizing the expert panel from PDC and NAMCO to help the Board understand the many aspects of MWESB contracting.

Sustainability Report
David Yaden, chair of the Board’s Sustainability Initiatives Subcommittee, summarized the proposed recommendations of the group, which will sunset as the work plan has been completed. The recommendations include: making university presidents accountable for an OUS sustainability policy covering all aspects of university life; providing adequate resources for system-wide coordination and collaboration around sustainability, beginning with a website; creating a Sustainability Incentive Fund to match what students now do themselves through self-imposed fees on their own campuses to support sustainability in teaching, outreach, and innovation; funding graduate students in sustainability; and supporting participation in the Association for the Advancement of Sustainability in Higher Education (AASHE) Sustainability Tracking and Assessment Rating System. Yaden noted that not all of these proposals can be funded at this time but that they should remain high on the Board’s priority list. The Board approved the Sustainability Initiatives Subcommittee Report, and adopted the Policy on Sustainability, as outlined in the docket.

In other action and discussion at the meetings, the Board and/or its committees:

  • Reappointed WOU president John Minahan with a one year contract extension, through June 30, 2012.
  • Approved the Internal Audit October 2010 Progress Report, as presented by Patricia Snopkowski, OUS chief auditor.
  • Accepted the Annual Report on Investments as of June 30, 2010, as presented by Michael Green, OUS controller.
  • Adopted the Internal Funding Program policy and procedure as outlined in the docket.
  • Adopted the amendments to the Internal Bank Policy as outlined in the docket.
  • Approved the use of a special procurement process for the Oregon Sustainability Center (OSC) as provided in OAR 580-63-020(7)(a) to contract with Gerding Edlen Development Company to oversee the schematic design work (with the requirement that they competitively procure the services of a general contractor) and to ultimately design and build the OSC. This process is expected to result in cost savings or otherwise promote the public interest as a competitive process was used to select this team; the Portland Development Commission RFP and amendments thereto contemplated that all, or part, of the same team used to perform the feasibility study could be retained to perform Phase 2 of the project; the Development Team has garnered significant knowledge in performing Phase 1 work that will result in cost savings in Phase 2; and the schematic design contract will require the Development Team to competitively select a General Contractor, thereby ensuring competition for this key piece of the work.
  • Repealed current IMD 1.01., 1.015, 1.020, 1.023, 1.040, 1.042, 1.043, 1.045, 1.050, 1.055, 1.102, 1.103, 1.120, 1.123, 1.127, 1.140, 1.141, 1.142, 1.150, and 1.155; repealed current Board policies on Evaluation of the Chancellor, Evaluation of Chief Administrators, Executive  Management, Delegation of Approval of Routine Items to Chancellor, and Presidential Search Process; and approved, as included in the docket, the Policy on Executive Leadership and Management, the IMD on Executive Searches, Appointments, and Management, and the IMD on Contracts/Notices of Appointment for Chancellor and Institution Presidents.
  • Discussed best management practices with respect to oversight of Oregon’s boards and commissions as required by a budget note to the Department of Administrative Services from the 2005-2007 Oregon Legislative Assembly.
  • Accepted the final Senate Bill 442 report.
  • Heard an update on the 2010-2012 Work Plan and Timeline for the Academic Strategies Committee of the Board by Jim Francesconi, committee chair and board vice president.
  • Heard reports from the Interinstitutional Faculty Senate; and the Oregon Student Association.

Oregon University System (OUS) 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.

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