Tough road ahead: Oregon faces severe financial crisis

University administrators and faculty have been waiting for weeks to find out how much money the University will receive from the federal stimulus package. Gov. Ted Kulongoski may have their answer: $0.

The federal stimulus bill allocates money for a “State Stabilization Fund,” which is meant mainly to support state funding for education. Kulongoski proposed to the Oregon State Legislature that all education funding from the bill go toward K-12 and community college education, University Provost Jim Bean said in a prepared statement Friday. If the legislature passes the proposal, the Oregon University System will see no stimulus money.

Kulongoski has vowed not to tap into the Rainy Day fund to help K-12 schools, saying it would make the situation worse for the next biennium, hence his proposal to OUS.

Frances Dyke, University vice president of finance and administration, said the governor’s decision was not what the University had expected. The University will now face a $6.4-million budget cut for the remainder of the fiscal year, about $2 million more than anticipated, Dyke said.

The University had also expected to receive stimulus money during the next two years, which will also not likely happen now, she said.

A lack of funding for the next biennium will force the University to make difficult budget decisions. Dyke said, “In order to maintain quality in the University, the burden will have to shift back to the students.”

By “shift back to the students,” Dyke means a tuition increase, and a large one at that. OUS and the legislature currently have an agreed-upon tuition increase cap of 3.6 percent per year.

The increase, however, “will be higher than 3.6 percent,” said George Pernsteiner, OUS chancellor, at the Feb. 11 University Senate meeting.

Dyke said the same, but added that 30 percent of the increase will be put toward financial aid for low-income students, a model called “higher tuition, higher aid.”

Accepting more burden doesn’t sit well with students. Sophomore Leah Winslow said she pays for part of her tuition bill herself and worked last term for Disability Services to help pay her bills. “It’s painful to part with, like, $10,” she said.

Sophomore Andrea Barrow agreed. “I also pay for a lot of extra things myself,” she said, adding that she has gone shopping only two or three times this school year. She added that the tuition increase could hurt businesses around campus because students will be less willing to eat out.

“State schools are supposed to be the cheap ones,” Winslow said.

Whatever is done with the extra tuition dollars, not spending federal stimulus money on higher education goes against the language of the bill passed by Congress. It states that stimulus money should be used “in such a way as to mitigate the need to raise tuition and fees” for in-state students. It also makes higher education spending one of the stated priorities all states are asked to follow.

A lack of funding during the next biennium will force other changes as well. “If we don’t get funding, we’ll have no choice but to increase class size,” Dyke said. Class sections will likely be combined to save money, she said, but added she does not anticipate cutting faculty positions.

For the time being, Bean said the University will use reserve money and borrow some amounts to help with the $6.4-million deficit. The borrowed amounts will have to be paid back.

Higher education around the state costs about $65 million and the State of Oregon faces a deficit of $855 million more than predicted in November, according to an announcement Kulongoski’s office made Friday.

Dyke emphasized that budget decisions from the state need to be made fairly. “Education, whether we’re talking higher ed or K-12, is our future,” she said.
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