Contacts:
Contact: Di Saunders, Office: 503-725-5714; Cell: 971-219-6869
PORTLAND, July 9, 2010 – The State Board of Higher Education (the “Board”) met today at Portland State University to review and approve the 2011-2013 biennial budget request, new governance proposals, and recommendations from the Central Oregon higher education group, among other items considered by the Board.
Biennial Budget Request
Jay Kenton, OUS vice chancellor for finance and administration, summarized the OUS 2011-2013 biennial operating budget request. He delineated three types of requests submitted to the Governor and the Legislature which include (1) the operating budget for Current Service Level (CSL) and new state General Fund requests called Policy Option Packages (POPs); (2) capital budget requests; and (3) legislative concepts for other statutory changes. The General Fund request for the CSL is an increase from the current budget of $820.8 million to $916.7 million, plus an additional $48.5 million in POPs for: enrollment growth ($29.4 million from state), ETIC Sustainable Engineering ($12 million), EOU Regional Services Institute ($300,000), Forest Harvest Tax (extends current tax), Product Design Collaborative ($2.24 million), and Metals and Manufacturing Collaborative ($4.5 million); Certificates of Participation ($8.18 million in “Other Funds”); $20.7 million for faculty salaries funded by the campuses (not state funds) to the extent possible; as well as the 10 and 25 percent reduction options required by state law; for a total request of $144.2 million (with $48.5 million of this state General Fund request and the remainder “Other Funds” from campuses). The emphasis of the budget recommendation is a block grant of state funding for student success (base budget plus enrollment growth funding) and for economic development in areas targeted through the Academic Strategies Committee (ASC). Board president Paul Kelly noted that the Board recognizes the financial difficulties faced by the state. Thus, only six POPs will be General Fund requests, and the remaining priorities will be shown to illustrate the types of opportunities for improving student success and economic revitalization, and to see what types of current resources the campuses can provide to begin to address these priorities, with the understanding that they cannot cover the full need identified through the ASC. Kelly said that the campuses will monitor progress in student success areas, such as retention, graduation, services to Veterans, and diversity; and the campuses and the Chancellor’s office will seek funds from non-state sources to support the POPs that were approved by the board but which cannot be included in the budget request because of the current state fiscal environment. The Board approved the biennial budget request as outlined in today’s meeting.
Capital Construction Request
OUS associate vice chancellor for facilities and capital construction, Bob Simonton, reviewed the 2011-2013 capital construction budget request. Capital priorities are ranked by a combination of factors, including the master plan, board priorities, cost savings, critical need, campus priorities, “finishing what we’ve started” and use of leveraged dollars. Simonton said that capital repair remains a critical issue for OUS, with continuing high levels of campus deferred maintenance, now at $640 million, although this increase has stabilized due to significant investments by the 2009 Legislature. He said that OUS is a large organization with a need to re-invest in its existing facilities, not because it has not maintained them but because a large number are wearing out simultaneously. OUS spends about 30% less than its peers on operations and maintenance of its facilities. Simonton presented the 2011-2013 capital project priorities, which total a state General Fund investment of $44.25 million; XI-G and XI-F bonds totaling $826.7 million; Lottery bonds of $134 million; and State Energy loans, Seismic upgrade funds, Certificates of Deposit and other funds totaling $539.2 million; for an overall project total of $1.5 billion. Capital program objectives for the upcoming biennium include (1) reinvestment in order to keep existing facilities operational, (2) excellence that will modify existing facilities for program needs, and (3) access through the addition of new facilities for enrollment growth.
Simonton summarized campus priorities which include: EOU, $13.2 million for deferred maintenance on Quinn Coliseum; OIT, $30 million for Portland Consolidation Campus; OSU, $17 million for deferred maintenance on Withycombe Hall, $56 million for new Business Education building, $64 million for classroom building and Snell demolition, and deferred maintenance of $107 million on 4 buildings and street improvements; PSU, $83 million to renovate Neuberger Hall and $35 million for additions and renovations to School of Business; SOU, $21 million in deferred maintenance of the Science Building and $4 million for the Theatre Arts Building; UO, $10.7 million in deferred maintenance on Chapman Hall, $100 million for expansion of Architecture and Allied Arts building, and $13.4 million in deferred maintenance on Condon Hall; WOU, $11 million in deferred maintenance for Todd Hall. After some discussion, the Board approved the 2011-2013 capital budget request as outlined. (For more details go to: http://www.ous.edu/state_board/meeting/index.php.)
Governance Proposal
Chancellor George Pernsteiner introduced the OUS governance proposal by laying out the need for change based on demographic, economic, educational and other changes that have occurred in the 80 years since the OUS was created, and which is outlined in the Chancellor’s paper, “Considerations for Change.” He noted that the continued erosion of state support for higher education has not been accompanied by parallel reductions in state controls over university operations. The costs and inefficiencies inherent in the current legal status of the OUS as a state agency are many, and thus the OUS is seeking the flexibility to operate more effectively to enable the universities to be more successful in educating Oregonians. Pernsteiner noted that Oregon’s community colleges operate as special districts established by the legislature and do not work under the restrictions of a state agency as the OUS does.
The Chancellor said that the recommendations of the Governance and Policy Committee of the Board outline a new compact between the OUS and the state that commits the universities to provide the state with measurable education and research outcomes (e.g., enrollment of Oregonians, degrees, employable graduates, externally funded research, affordability, workforce enhancement, and other goals) in exchange for funding and flexibility. The level of appropriations and the targets would be developed each biennium but the overall framework would remain the same: affordability for Oregonians, more graduates, research investments, and flexible operations for the OUS. The result of the Committee’s deliberations is that the public nature of the OUS must be maintained but that the legal status of the System must be changed from that of a state agency to one that more closely resembling a statewide community college district. He noted that OUS would continue to be governed by the State Board of Higher Education but the Board would have authority, should it elect to exercise it, to establish local governing boards for some or all of its institutions, delegating power to them as deemed appropriate, in order to better meet the four main goals of the Board (raising the education level of Oregonians, offering high quality instruction, conducting innovative research to improve Oregon’s economy, and supporting vital communities across the state). All current powers and responsibilities of the Board would be retained, including tuition setting authority with a participatory campus process, as well as establishing need-based financial aid standards. Pernsteiner said that changes will be sought in legislation needed to implement the recommendations of the Governance Committee, and create a more vital and flexible University System better able to increase the number of Oregonians educated, to undertake the research needed to spark innovations that improve the state’s economy, and provide the sustainable prosperity that Oregon desperately needs.
After some discussion, the Board approved a legislative concept that changes the legal status of the OUS from that of a state agency to that of a public university system and provides the Board with the authority outlined in the legislative concepts; and that staff, working with the Governance and Policy Committee, develop and negotiate a compact with the state government with measurable outcomes for the level of appropriations that constitute state investment in 2011; and that the Board authorize an ongoing, participative public process with citizens, state officials and groups throughout Oregon regarding the education, research, and service activities and programs of the OUS and its institutions in order to ensure that the OUS is meeting state needs and can help ensure that Oregonians understand the value of its public university system.
Central Oregon Report
Kirk Schueler, Board member and chair of the Higher Education Assessment Team (HEAT) for Central Oregon, provided a summary of the recommendations for leveraging the partnership between Oregon State University-Cascades and Central Oregon Community College (COCC) to expand higher education access and success for students in the region. Schueler summarized the HEAT charge, which was to determine the current and future higher education needs of Central Oregon, and to examine the best options to meet those needs. HEAT met with education, civic and other groups from March-June 2010 in 16 different meetings and forums to get feedback and input on the proposal. The long-term recommendation from HEAT is to have a stand-alone 4-year university and stand-alone community college in 20-30 years, or sooner, in order to meet population, enrollment and economic growth in Central Oregon. Short- and mid-term recommendations include (1) creating a “University College” in a partnership between OSU-Cascades and COCC that will provide a 4-year experience to students who wish to take that pathway, will help to improve retention and graduation rates, and will include residential and campus life options for students. Eventually, this would include building a new facility at OSU-Cascades to handle increased enrollment, University College cohorts, and new programs; (2) extend access to higher education through expansion of satellite campuses in Central Oregon which offer certificates and degrees aligned with regional workforce and economic needs; (3) enhance the “2+2” collaboration between COCC and OSU-Cascades and create a student-focused, administratively efficient structure which provides seamless transitions for students, and develops shared services such as admissions, registration, etc; and to simplify program offerings by having OSU-Cascades be the lead entity on campus, assuming UO’s current program offerings and faculty; (4) provide educational pathways and opportunities in the region between K-12 and postsecondary education which create and foster a college-going culture and increases in the number of Central Oregon students who attend and succeed in college; and (5) strengthen the regional economy by aligning workforce and community needs with higher education programs. After some discussion, the Board accepted the HEAT report, and approved recommendations 1, 2, 3, and 4, and asked that the long-term vision and recommendation 5 be forwarded to the Academic Strategies Committee for further discussion and review, and for the ASC to then forward additional recommendations to the full Board.
Life Sciences Complex
Jay Kenton and campus representatives provided an update and sought authority to proceed with the OHSU/OUS Life Sciences collaborative complex project to be constructed in Portland’s South Waterfront district. The project, which was approved by the Board in the 2009-2011 Capital Budget, includes educational and research facilities for biosciences and medical, dental, pharmacy, nursing, and other health sciences-related areas. Project partners include OHSU, PSU, and OSU, and the complex will also house private-sector organizations such as the Oregon Translational Research and Drug Development Institute (ORTRADI) and the Oregon Biosciences Alliance (OBA), among other partners. Project costs will total $160-190 million, which will be funded by OUS and OHSU bonds and gifts, and land/transit from Tri-Met. Kenton noted that bioscience and health-related research at OUS, OHSU and private hospitals in Oregon has grown by 35-40% since 2002, and that bioscience company growth has also been significant, providing jobs and increasing sales for Oregon companies. The Board passed the following recommendations regarding the Complex: approved OUS to enter into a long-term tenancy and execute a ground lease with OHSU for the building site; approved the Life Sciences Center Complex steering committee to enter into agreements with TriMet for further development of site transit access, and to enter into contracts for design and construction; and authorized the vice chancellor or designee to seek interim funding from the OUS Central Bank or Commercial Paper program to cover OUS’s share of project costs prior to the Spring 2011 bond sale.
In other action and discussion at the meetings, the Board and/or its committees: