Press Release


Contact: Di Saunders – Office, 503-725-5714; Cell, 503-807-5539

Higher Ed Board approves 2007-2009 university system budget proposal

Governor Kulongoski attends meeting to voice support for Oregon Opportunity Grant "Shared Responsibility Model"

PORTLAND, July 14 – The State Board of Higher Education (the “Board”) and its committees met yesterday and today at Portland State University, reviewing operating and capital construction proposed budgets for 2007-2009, the proposed Shared Responsibility Model for need-based aid in Oregon, and the sale of the Westmoreland housing complex at the University of Oregon, among other action and report items considered by the Board.

Budget Proposal     Jay Kenton, vice chancellor for finance and administration for OUS, presented the proposed 2007-2009 budget. Kenton noted that Oregonians are the state’s most important assets and that they need educational opportunities to achieve their full potential, and should be coveted as one of Oregon’s strategic advantages in the quickly changing global economy. He noted that public higher education and its faculties and graduates represent the State’s knowledge assets, and provide a competitive advantage that develop new technologies, companies and jobs for Oregon. Higher education is an investment, not a cost, which improves the state’s available resources, as college graduates pay 78% more in taxes than those with a high school diploma. Kenton said that higher education will be required for 80% of high wage jobs in the future, and prepares Oregonians for top level jobs that attract and retain companies and jobs. Greater educational attainment also creates healthier citizens who volunteer, vote more, send their children to college at higher rates, and reduce the amount of state financial support required for public assistance programs.

Kenton summarized the higher education realities facing the OUS today, including: inadequate funding for operations and student aid; costs that are growing faster than revenues, with enrollments projected to increase by 4,000 students in the next biennium; significantly drawn down reserves, making campuses vulnerable to economic fluctuations; $600 million in deferred maintenance; and faculty salaries that lag peers, making it difficult for OUS to attract and retain top faculty, which impacts external grant support, students choosing OUS for graduate study, and companies locating in Oregon. To meet these realities the OUS proposed budget is asking for 3 items: (1) $188 million in additional base budget funding to rebuild quality levels, maintain affordable tuition, serve growing enrollments, support the regional campuses, stop the growth of deferred maintenance, and provide sustainable funding; (2) $68 million in policy package funding to address critical statewide needs, engage partners and create synergies that benefit students and the State; and (3) statutory changes to manage revenues and expenses in a more responsible manner, and sustain the environment needed for knowledge creation, leading to innovations, companies and jobs.

In summary, Kenton proposed that the total state General Fund request for 2007-2013 be $988 million, up from $732 million in the current biennium. He added that the OUS should seek endorsement from the Board of partner agencies’ budget items, including the Oregon Opportunity Grant changes from the Oregon Student Assistance Commission; program/project portions that support students and address workforce shortage areas in the budgets of the community colleges, OHSU, and the Department of Education; and items being sought by the Oregon Innovation Council. Kenton stressed that the OUS is at a crossroads: without significant reinvestment of state funds, OUS will have to choose among a set of less than desirable alternatives, including: tuition growth above the projected change in median family income; enrollment restrictions; and structural changes to the system campuses. To avoid these alternatives, Kenton said that the OUS wants to engage in a new partnership with Oregon that will help us protect and develop Oregon’s most valuable assets: Oregonians, and the faculties and facilities on our campuses. This level of state investment in higher education will have a direct impact on the standard of living of Oregonians. The Board approved the $988 million budget request proposal, the proposed statutory changes, the required 10% reduction plan, and the Other Funds budget request, as proposed, to take forward to the Governor and Legislature.

Oregon Opportunity Grant     Tim Nesbitt, Board member and co-chair of the Access and Affordability Working Group (AAWG), summarized the new “Shared Responsibility Model” for need-based aid for Oregon students. He said that after the large investment by the legislature in 2005 in the Oregon Opportunity Grant (OOG), legislators wanted to know when they would be “done” with investments in aid program in terms of reaching “affordability” for all students in Oregon who wish to attend postsecondary education. The other focus of this effort was to get back to the concept of students being able to work their way through college. In the past students could work part-time and cover their tuition costs; today a student in Oregon would have to work almost 50 hours a week to cover these costs, a situation which would make it impossible to also attend college. Nesbitt said that the AAWG worked with a cross-sector group and specialists to create a new model that helps students and parents understand the cost of college to them up-front based on their ability to pay.

Nancy Goldschmidt, lead staff of the AAWG, said that the Shared Responsibility model starts with the contribution of the student, which is about 50% of full costs, as the primary beneficiary of the education although society also benefits from more highly educated citizens. Students will make their contribution, $7,500 of about a $14,850 total cost (includes tuition, room and board) through some combination of working part-time, borrowing, and any savings or scholarships that they might receive. For a very low income family ($9,000 per year), the family would have no contribution outside of the student’s; the federal government would provide about $4,000 in Pell grants; and the Oregon Opportunity Grant would provide about $3,350. As income increases, while the students’ contribution remains the same, the families’ contribution increases, and the federal and state contribution decreases. While the current OOG does not serve students with family incomes above about $35,000 a year, the new model will provide assistance to families up to about $60,000.

Governor Kulongoski visited the Board meeting, expressing his support for the Shared Responsibility Model, and his appreciation to the Board and the AAWG for their leadership in developing a new need-based model which will bring greater affordability for Oregonians. The Board voted unanimously to endorse the Shared Responsibility Model, the funding for which is part of the OSAC budget.

Capital Construction     Bob Simonton, OUS director of capital construction, provided a review of the 2007-2013 capital construction budget request. He noted that the combined OUS facilities represent 1,172 buildings, $3.4 billion in replacement value, and 50% of state-owned facilities. A high fraction of these buildings are in poor condition, with maintenance under-funded by national standards. Simonton said that recommended investments were ranked by a combination of factors, including the capital construction master plan, board priorities, cost savings, demonstrated need, campus priority, use of leverage dollars (such as donor funds), and to “finish what we’ve started.” Funding for both new construction and deferred maintenance is made up of a combination of state General Funds, various bonds, energy loans, gifts and grants, and student fees. The total requested funding in all of those areas for 2007-2013 is $2.8 billion, which includes $150 million in state General Funds. This includes 18 projects in the Educational and General funds category for classrooms, labs, central plants, and faculty and administration offices; 22 self-supporting projects in areas such as housing, parking, conference centers and athletics; 2 student building fee projects requested and paid by students; and 5 system-wide programs including 15 deferred maintenance projects.

The top 16 ranked projects in the area of Education and General for 2007-2009 include: at UO, Condon Hall addition and alterations, and the Integrative Science Complex Phase 2; at PSU, the Science Research & Teaching Center and Hazardous Waste Facility, the Graduate School of Social Work and Student Recreational Center, and the Community College Partnership Program; at WOU, Business, Math, Computer Science Facility; at OIT, the Center for Health Professions, and the Village for Sustainable Living Instruction and Applied Research; at SOU, Theatre Arts Expansion and Remodel, and Sciences Renovation and Additions with OHSU Nursing; at OSU, Pauling Research & Education Building, Student Learning Center, Mouse Model Organism Facility, and the Expedition Support Center; and at EOU, Eastern Oregon Regional Information Center (#9), Hermiston University Center/BMCC Partnership. Additional projects in deferred maintenance and seismic upgrades and mitigation at each campus total a $176 million request. Simonton summarized by noting that this request is to address a huge enterprise facing simultaneous need for reinvestment to remain competitive and operational. The Board approved the 2007-2013 capital construction budget request to present to the Governor and Legislature.

Westmoreland     OUS Chancellor George Pernsteiner reviewed the recommendation to the Board to approve the sale of the Westmoreland apartments in Eugene utilized by University of Oregon as student housing since the early 1960s; and asked UO President Dave Frohnmayer to summarize the process. President Frohnmayer said that in November 2005 the Board authorized the UO to undertake actions towards the sale of the property, which houses 187 UO students currently, with the remaining 217 units vacant. Since late last year, UO has worked with current student residents to help mitigate any negative effects the sale might have on them, and thus no students will be displaced by the sale. This has included providing financial grants and waiving move-in fees for students who had moved out but wished to return to Westmoreland, and providing financial assistance to residents who wish to stay at the Westmoreland under the new owner to cover differences in the current rent and any increases through June 2008. For the 7 children of UO students using the Westmoreland childcare facility, UO has increased capacity at another UO childcare facility to accommodate them. UO estimates that it will provide $500,000 in mitigation efforts to assist students and their families with this transition. Board President Henry Lorenzen noted that there have been several opportunities for public input on the sale, including board meetings and three special hearings, providing 10 hours for input from affected students, local leaders, and community members; these sessions moved the UO to provide additional mitigation help to Westmoreland residents.

Pernsteiner said that the sale price of $18.45 million will be used by UO to retire $10.2 million in housing debt obligations (saving $1.1 million per year), mitigate effects on Westmoreland residents for two years, and provide the opportunity to purchase two other properties. Income from the sale, retirement of the debt, and the funds now paid in lease on the Romania property if the property should be purchased, would all go to the UO housing auxiliary to improve housing for all students now and in the future. Chancellor Pernsteiner said that he believes the Westmoreland sale is well conceived and has considerable merit, despite the criticism from some of the campus community, and it fits the UO’s long term vision to best serve its current and future students. After hearing additional testimony, the Board approved UO’s request to sell the Westmoreland property to Michael O’Connell, Sr. UO will provide follow up reports to the Board in 2007 and 2008 on the outcomes of the mitigation plan on students and use of freed up funds for housing.

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


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