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"More Better Faster"
Oregon's newly appointed Board of Higher Education grapples with a legacy of disinvestment

By Pamela Burdman
Ashland, Oregon

It was the regular meeting of Oregon's State Board of Higher Education, but other than the poor lighting in the room and the PowerPoint presentations, the circumstances were anything but regular.

Richard Jarvis, chancellor of the seven-campus Oregon University System, was noticeably absent. Occupying his seat was Jon Yunker, the state's former budget director. To Yunker's left in the board chair's seat was a new face-not the man who had been appointed early in the year to lead the system into a brighter future, not even another crony of the governor. In a highly unusual occurrence, the man gaveling the meeting was the governor.

Welcome to the latest episode of "Reinventing Higher Education," by Governor Ted Kulongoski, a Democrat. Kulongoski set higher education as his number one priority, with the energy and direction to come from his hand-picked board president, former governor Neil Goldschmidt. As engineer of the "Oregon Comeback," Goldschmidt had an unrivaled reputation in the state as a change agent. But a month before the board meeting, he shocked the Oregon public when he resigned, admitting to having had repeated sexual relations with a 14-year-old Portland neighbor during the 1970s.

Oregon Governor Ted Kulongoski believes the state's economy and quality of life depend on an affordable, accessible higher education system.
(Photo by Steve Johnson, Black Star, for CrossTalk)
The departure of the ex-governor, a commanding presence in Oregon politics for 30 years, left many wondering whether Kulongoski's initiatives could thrive without a powerful champion-and worrying that the power vacuum would equal a free hand for campus presidents. Caught flat-footed, Kulongoski appointed himself acting board president, a non-voting role. A sign of the imperiled status of his higher education agenda, the stopgap move was, at the same time, a testament to his commitment.

"We've gotten this belief that postsecondary education is a luxury, that it isn't something the state has to do," Kulongoski told the board. "That has to change. I don't think there's anything more important. This has to be a long-term investment in Oregon's future in ten, 15, 20 years. Our stable economy and quality of life is dependent on our institutions of higher education."

The governor and his newly appointed board made it clear that their plans would not be extinguished by controversy or false starts. The announcement that former OUS official George Pernsteiner would become executive vice chancellor-a post temporarily filled by Yunker-elicited outright jubilation. But the buoyant mood seemed incongruous to anyone familiar with the magnitude of problems confronting the system.

Former Oregon Budget Director Jon Yunker served as executive vice chancellor of the Oregon University System from April to July.
(Photo by Steve Johnson, Black Star, for CrossTalk)
Beneath the optimism was a realization that the board had barely begun to tackle a legacy of disinvestment. Four years ago, the state was paying 51 percent of instructional costs at the four-year public universities. By last year, that share had fallen to 36 percent. And with the failure in February of Measure 30, a ballot referendum on a tax package passed by the state legislature, the system was forced to shave an additional $7.5 million of the $347 million originally appropriated for the biennium. The system's overall budget for the period, including tuition revenue, federal grants and other income sources, is $2.3 billion.

"Higher education actually took, on a percentage basis, the worst hits of all the state agencies," said University of Oregon provost John Moseley. "The state investment per student has gone down by around 30 percent, and tuition has gone up by around 30 percent."

To change that arithmetic, Goldschmidt had set a feverish pace. A series of new working groups were convening once or twice a month. The motto of one group that was focused on streamlining K-16, and chaired by Chemeketa Community College president Gretchen Schuette, seemed to set the tempo: "More Better Faster."

"I'm getting killed this year," noted Peter Gilkey, a University of Oregon mathematician who represents the system's faculty. "I signed up for five weekend meetings and nine board meetings for the year. [Now] I'm attending one or two meetings a week."

On a few occasions, the speed caused the board to miss legal deadlines for public notice, acknowledged system spokeswoman Diane Saunders.

Keeping the board busy are activities like scouring financial reports to cut costs, strategizing about ways to support the state's economic growth, and developing a plan to keep a college education within reach of all students. Kulongoski made college affordability a hallmark of his tenure by championing the formation of a constitutionally protected endowment to fund student financial aid.

"I have a vested interest in this idea," said Kulongoski. "Government traditionally never looks long-term. It's driven by the tenure of those who are in office. I have a concern that we're reverting back to the way we were before World War II, that higher education is becoming a benefit for those of wealth."

In fact, Kulongoski's only testimony during the last legislative session was to plug an earlier version of the proposal, called the Access Scholarships for Education Trust, or ASET. The bill got nowhere, however, because the $2.5 billion required to generate sufficient income seemed a quixotic goal, and because it stirred up a conflict over whether state dollars should fund financial aid for Oregon students at private and religious institutions. But he gets credit for highlighting Oregon's affordability problem, said John Wykoff, executive director of the Oregon Student Assistance Commission. "The governor's greatly elevated financial aid as an issue," he said.

Late last year, Kulongoski embarked on the current gambit, a broader reform, by asking most of the board members to resign. Besides Goldschmidt and Schuette, prominent replacements included Nike Chief Financial Officer Don Blair, former Intel Capital vice president Kirby Dyess, and Oregon AFL-CIO chief Timothy Nesbitt. The governor also reappointed Geri Richmond, a nationally known chemist from the University of Oregon. The board's veteran member, Richmond agreed to become vice president.

The spark was to come from Goldschmidt, a larger-than-life figure, former Portland mayor and U.S. transportation secretary. Yet, even had he remained, the plan for translating the new vision, new players, and new energy into the new money necessary to realize new initiatives was never clear.

"The elephant in the room is that there is no money," said Ryan Deckert, a Senate Democrat from Beaverton and a University of Oregon graduate.

With an eye at least to improving higher education's share of "no money," a top board priority has been reorganizing the Chancellor's Office, long a target both of distrust from state lawmakers and resentment from campuses.

In the absence of a coordinating body, the state allots separate budgets to the seven four-year universities, the 17 community colleges, and the Oregon Student Assistance Commission.

"Working with higher education was like working with a neighbor over a tall fence," recalled Yunker. "You'd hand over money, and the next thing you'd hear was, 'That's not quite enough.'" Yunker filled in as executive vice chancellor from April until Pernsteiner's arrival in July.

If legislators grouse about lack of accountability, campuses, especially the flagship University of Oregon, historically weren't much fonder of the centralized authority. "I used to call it the last bastion of communism," quipped Moseley.

The 2002 hiring of Richard Jarvis, against the presidents' recommendation, caused a "disjunction" according to Moseley. "The former board was moving increasingly toward more autonomy for the institutions, and inadvertently they hired a person who did not buy into that vision," he said. Former board member Roger Bassett countered that the ex-chancellor was moving toward decentralization, but more slowly than campuses wished.

More than anything, however, what doomed Jarvis' tenure, was a poor 2003-05 higher education budget. The new board was confirmed last January, and two months later Jarvis resigned, with a $250,000 separation package. Though he remained chancellor through June 30, he was not working at the chancellor's office, attending board meetings, or returning phone calls from National CrossTalk.

The board has begun paring back other functions of the chancellor's office, retooling it to focus on policy, advocacy, financial systems and board support. Most academic affairs staff left at the end of June, their duties transferred to campuses, for a savings of $1 million. A Council of Provosts is to make academic policy recommendations to the board.

Plans to eliminate other jobs-primarily in general administration, information technology and a technology education center that will move to Portland State University-were expected to yield another $2 million.

"We have hired some phenomenally talented presidents," said Kirby Dyess. "It may be more appropriate for the institutions to have more autonomy." Though appreciated at the three largest campuses-University of Oregon, Oregon State University, and Portland State-that independence creates uncertainty for the four smaller schools, which receive services from the chancellor's office.

An example is the information technology system for the regional institutions, which supports everything from admissions and academic scheduling to fundraising and development. "That's a big one for us," said Elizabeth Zinser, president of Southern Oregon University. "While we very much understand the need for change, it concerns us a lot."

Richmond, who is leading the chancellor's office overhaul, said the smaller campuses will be serviced by merging the system with Oregon State University's IT department. Another initial concern for Zinser, whose campus spawned the Oregon Shakespeare Festival and other arts festivals, has also been allayed.

Personal scandal forced former Oregon Governor Neil Goldschmidt to resign as chairman of the state higher education board.
(Photo by Michael Lloyd/The Oregonian)
"It's thrilled us that they understand that economic development...involves the arts," she said. "They have been very inviting to the presidents in working with them. They want our input. They expect it. The stars appear to be lining up very nicely."

That lineup will be somewhere in the comfort zone the board seeks between micro-managing and rubber stamping. Their initial moves suggest an inclination to free up campuses in academic areas while exercising considerable scrutiny over fiscal management. Where those areas overlap, the board seems quite ambivalent, as a June discussion over fund balances and tuition policies illustrated.

When the board uncovered some $100 million in state dollars sitting in bank accounts around the system, members pounced on the worst offenders, particularly Western Oregon University, whose projected fund balance of $9.6 million was nearly 30 percent of the school's $33 million budget.

"We can't afford surprises," said Richmond. "It will be a surprise to the legislature. This is as serious as if you had a deficit. This undermines our credibility unless we address it."

When the board reviewed the seven universities' plans for tuition increases, only Western's was rejected. The governor, well aware of higher education's credibility gap, was blunt in supporting the decision: "If this were [up to] me, you'd never get a tuition increase at Western Oregon right now," he said.

That move could play well in Salem, noted state Senator Deckert. "Higher education's biggest issue is transparency. That cost them terribly last session. They'll earn a lot of credibility by playing hard with the campuses and saying we're the new sheriff in town."

But playing too hard could run afoul of good management. The board was considering setting a fund balance range of five to 15 percent of revenues, with a target of ten percent. Though there is no national standard, Dennis Jones, President of the National Center for Higher Education Management Systems, said five percent could be too low.

"If a state had a long history of very stable state funding that didn't change in the middle of the year, then five to 15 is fine," said Jones. "Oregon is so idiosyncratic and erratic. Things can happen in the middle of the year and the whole budget unravels. Because contracts are signed, there are not many degrees of freedom."

The fund balance discussion dovetailed with a heated debate over some campuses' wish to eliminate the "tuition plateau," a volume discount that benefits students who take more than 12 units. The policy, campuses argued, forces part-timers to subsidize full-time students.

But some on the board felt strongly about keeping the plateau. Dyess, for example, recalled taking 21 or 22 credits a semester while pursuing her physics degree at the University of Idaho. "I needed to do that because I needed to get a job and get through to support my brothers so that they could go to college," she said. "We need to be very careful. We have something in place that encourages people to go through faster."

Some of the proposals entailed 20 percent and 30 percent fee increases for full-time students. Faced with such concerns, OSU revised its proposal to raise tuition an additional six dollars per credit in order to keep the plateau in place.

While several others on the board sided with Dyess, the board's final decision was influenced by a plea from University of Oregon President Dave Frohnmayer not to adopt a "one size fits all" approach to the institutions.

The board stepped back from a confrontation and approved the increases-along with a vague plan for using reserve funds to provide refunds to students facing the greatest increases. Campuses were to report back to the board with mitigation plans.

For student leaders who had opposed the removal of the volume discount, the prospect of a mitigation fund was a "stay of execution," said Wykoff. But the tuition proposals would still have to be approved by legislators, and powerful senators like Democrat Kurt Schrader were likely to be stringent.

"We are all well aware that Measure 30 failed," said Schrader. "That put even more of a burden on the university system. If they try to recoup a whole bunch more above what Measure 30 would have given them, they'll have a great deal of trouble."

Schrader, who last session attacked campus fee remissions as "slush funds" to help out-of-state students, promised to look closely at any refund proposals as well, to make sure they were benefiting needy Oregonians.

Ironically, Jarvis had angered presidents by slowing plateau removal, and its reemergence as a point of tension exposed the unsettled nature of the board's role.

"The relationship between the chancellor and the board and the university presidents is critically important," said Kulongoski. "That debate among this board must occur. If we can't get a line of governance, I don't think we'll ever succeed."

Oregon eliminated its higher education coordinating board in 1989, and though the idea of resurrecting it remains unpopular inside the system, some on the outside think it is time to reconsider. Paul Bragdon, president emeritus of Reed College and interim president of Lewis and Clark College, is among them. Bragdon also has served as education advisor to then-Governor Goldschmidt and as an official at Oregon Health Sciences University.

"After the great wrecking ball has gone through, does anybody have the design for the future in mind?" asked Bragdon. "The dysfunctionality of our institutional setup has hurt us. Certainly it ended up with a lack of credibility.

"The state of Washington would seem to have a better system-a coordinating board. It's not responsible for the institutions, but it's responsible for policy recommendations from the perspective of what the public interest is perceived to be."

Bassett, a former board member and veteran of the higher education establishment, also worries about the current direction: "When you turn the campuses loose, and shift the focus of the board to advocacy and opportunity, the public interest has more to do with loyalty to a campus than to access for the full array of Oregon's population," he said.

The coordinating board concept has surfaced in some legislators' conversations on the "more better faster" agenda. "There's an opportunity to go there," said Senator Schrader. "But people are reluctant to talk about it politically at this point."

Another delicate topic is the board's desire to devote $500,000 to a "fighting fund" to provide raises for faculty at risk of leaving the system.

Even faculty are divided on the issue. "The unintended result is a morale problem among the faculty," Jim Earl, a University of Oregon English professor, told board members. A contrasting perspective came from Dan Edge, chair of the fisheries department at Oregon State. Edge cringed when he recalled losing Ian Fleming (a world expert on the wild vs. farmed fish debate), who was snatched away by Memorial University in Newfoundland, with a 50 percent pay raise.

Kulongoski pledged to personally approach Schrader and others on the state's emergency board to waive the state's salary freeze for exceptional faculty. "This is going to be a tough call," he said. "I'm asking them to amend a policy that I insisted on. If we wait until the next biennium, we will lose more people."

But Schrader has questions. "If we give this professor a raise, is he going to be a better teacher? If we are primarily research institutions, then that discussion has merit. But if our primary goal is to educate Oregonians, raising salaries when we have no money to keep the programs alive would be inappropriate."

With so much hand-wringing over a mere $500,000, the access and affordability plan developed by a working group at the governor's behest sounds wildly ambitious.

The idea is to establish an endowment through a constitutional amendment and build the corpus over ten years. The income would be sufficient to raise the Oregon Opportunity Grant to $4,500 for four-year students and $2,500 for community college students (from current levels of $1,482 and $1,257 respectively). Students attending private institutions would face the $4,500 cap, higher than the current cap of $3,232, and more grants would be available. At those levels, the private colleges remain open to the plan, said Gary Andeen of the Oregon Independent College Association.

Committee co-chair Timothy Nesbitt blamed lower-than-average financial aid resources for Oregon's poor affordability ranking-an F in the report, "Measuring Up 2002," published by the National Center for Public Policy and Higher Education (which also publishes National CrossTalk). Only two of every five students who qualify for a Pell Grant receive an Opportunity Grant, and Oregon's average financial aid spending of $133 per enrolled undergraduate is less than half of the national average. "We need to be doubling or tripling our efforts," he said.

For now, Nesbitt says the group is simply designing the program, not the funding source. Without funding, though, the initiative sounded more like a wish list. The governor mentioned two possible sources-capital gains taxes or revenues from forest lands. But capital gains are notoriously unpredictable, and business leaders are already seeking a reduction. Logging projects face existing opposition from environmentalists, so it is not clear how the state would earn more from forests.

The governor and board also were thinking about private fundraising. "If you were to ask industry to fund one third, and private foundations one third, you might find a fair number of people who would be interested," said Dyess.

Elizabeth Zinser, president of Southern Oregon University, chats with Colin Murphy, student government vice president.
(Photo by Steve Johnson, Black Star, for CrossTalk)
Part of the governor's plan, it seems, is to begin by winning the "hearts and minds" of Oregonians on the idea of college access for all. "The governor wants grassroots efforts here," said President Elizabeth Zinser of Southern Oregon University. "We've been told that we're expected to generate a groundswell of participation for this."

Championing the issue along with the governor will be Pernsteiner, who has held posts at Portland State, the University of Oregon and the chancellor's office and returns to the system after a two-year stint at UC Santa Barbara. His official title is chief operating officer, executive vice chancellor, and acting chancellor, though the degree of celebration about his hiring suggested that some hope the "acting" part will be removed. In an interview, Pernsteiner did not rule out the possibility.

Because his expertise is in budgets, a Pernsteiner chancellorship would signal a new direction for the job of chancellor that some think is healthy. "The real guts of the system is in the budget," said Duncan Wyse, executive director of the Oregon Business Council. "The way the board can influence policy is through how it sets rules for the allocation of money. A simpler, leaner chancellor's office that is focusing on that issue will help the board have more impact."

It would also make academic leaders like Frohnmayer, Moseley, Ray and Portland State's Daniel Bernstine the face of higher education in Oregon. In numerous interviews, Pernsteiner won praise from system officials, student leaders, private college representatives, legislators and business leaders. The feeling seems to be mutual.

"Perhaps the biggest enticement that could be offered to me is to work with this board," Pernsteiner said. "This board is excitement personified. Your governor has a vision that will animate this state for decades to come. We are in the optimism business because we are in the business of the future."

Pamela Burdman is a freelance writer in Berkeley and former higher education reporter for the San Francisco Chronicle.

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National CrossTalk Summer 2004



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