January 14, 2004

University Community:

The Senate Budget Committee members, and perhaps many of you, have been very disturbed by the effects of the severe budget reductions on the University and on the education of our students. We have been regularly briefed on the situation as it has evolved by Provost Moseley and Associate Vice President Dyke. Although we would normally provide the University with a full report of our activities this year in May, the current circumstances dictate that we give you an "interim report" now; hence, this letter.

First, let's look at some facts to put our current situation into perspective:

• 1. UO's State appropriation has declined from $139 million in the past biennium to an estimated $121 million in the current biennium, assuming we receive no further disappropriations. This amount is $5 million less than the state funding we received in the 1989-91 biennium, when we had about 2000 fewer students. Combined with inflation and enrollment growth, this appropriation shortfall is the reason tuition has had to increase substantially over this period.
• 2. The tuition increases have not made up for state appropriation decreases, and certainly have not been due to increased expenditures. On an inflation-adjusted basis, UO's educational expenditure per student has decreased by 11% just since 1998!
• 3. The Legislature imposed a salary freeze on all state employees, and our already lean operation also faces required administrative cost reductions. The Oregon Department of Administrative Services (DAS) will monitor both salaries and administrative costs. These policies create particularly severe problems for UO, given the low levels of our salaries relative to our peers and given our plans to improve our standing relative to peer institutions.

• 1. If Measure 30 fails on February 3, it is estimated that UO will lose an additional approximately $2.5 million in state appropriations, perhaps more. This amount is beyond what we can manage without programmatic reductions, tuition increases, or some combination of the two. Programmatic reductions at this time essentially mean cuts in class availability, with a concomitant reduction in the number of faculty and staff. Given the already stretched nature of our class offerings and of our faculty, such cuts would result in many students not being able to get classes needed for graduation in a timely manner. The cuts would both extend graduation times and reduce retention. The alternative, tuition increases, would allow adequate numbers of classes to be offered, but would probably result in some loss in enrollment. With continued large tuition increases, we risk changing the nature of our university.

  It is very important that faculty and staff fully inform themselves, their friends, and acquaintances of the effects of Measure 30. These effects extend well beyond higher education to other state services that many of us also consider vital.

• 2. If OUS has to return approximately $14 million in implied "PERS savings" to the state general fund in January 2005, as is currently required by legislative act, the impact on UO will be an additional cut of approximately $4.5 million. This payment could require even more draconian measures than the ones that will be required if Measure 30 fails. Faculty probably can do nothing about this legislation at this time, but the administration is seeking opportunities to reverse this unprecedented "tax" on tuition.

Although the near term looks bleak, we have heard potentially good news. Governor Kulongoski has publicly committed to improving the situation for higher education. As evidence of this commitment, he is strengthening the State Board of Higher Education, appointing former Governor Neil Goldschmidt, who is expected to chair the new board, and six other exceptionally well-connected and qualified members, including our own colleague, chemistry professor Geri Richmond. In his recent speeches on higher education he has set the following four priorities: access, excellence, economic development, and reinvestment. These priorities in combination set the stage for a brighter future.

The Senate Budget Committee hopes that by the time it issues its annual report in May the state of affairs will have improved significantly. This improvement will clearly be the case if Measure 30 passes, if a means is found to avoid the "tuition tax," and if the new State Board of Higher Education is working actively to improve the situation for higher education in the coming biennium.

Sincerely,

Senate Budget Committee
Lynn R. Kahle, Chair
Professor of Business Administration