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Cause for Alarm
Oregon's budget crisis leads to tuition hikes and academic program cuts

By Pamela Burdman
Corvallis, Oregon

From Tim White's perspective, Oregon's higher education institutions need a "salmon problem." White, the provost at Oregon State University, recalls the impact of a recent front-page Oregonian photo of dead salmon floating down the Klamath River.

"Whether you were a wildlife expert, a biologist, a politician or a librarian, you knew something was wrong," said White. "We don't have an image like that. We're accepting more and more students. Their exit reviews haven't changed. Employees have 85 to 90 percent job satisfaction."

All this in spite of a dire state budget picture that, at OSU, has led to a drastic 18 percent reduction in state appropriations and higher student costs. Tuition and fees for Oregon residents (based on 15 credit hours) are rising from $1,338 a quarter in Fall 2002 to $1,648 by Winter 2004.

Part of the reason for the absence of "dead salmon" at OSU is that the overall campus budget hasn't suffered: Because of sharp increases in tuition and fees, state-mandated salary freezes, and increases in federal research grants, the total budget is up 2.3 percent. In spite of the rising tuition, administrators expect this fall's enrollment to rise from 18,400 to 18,600.

Photo by Brett Patterson,
Black Star, for CrossTalk
  

And yet, White and other higher education leaders see great cause for alarm as the share of instructional costs borne by the state at Oregon's seven four-year public universities has dropped from 51 percent to just 36 percent in the last four years. "We are dishonoring the conditions under which we entered the union," admonished Dave Frohnmayer, president of the University of Oregon and a former state senator and attorney general. The Oregon Admission Act of 1859 contained two substantive provisions, and one required the state to establish a public university, he explained.

Budget cuts began in the second year of the 2001-03 biennium, when state coffers came up short $900 million of a $6 billion one-year budget. Voters had a chance to spare students tuition hikes by passing an income tax surcharge, but they said no. Institutions hiked tuition-ranging from a low of 15 percent at some universities to a high of 60 percent at a couple of community colleges-as their budgets were whittled away in a series of special legislative sessions.

This year, after the longest session in state history, legislators patched together a biennial budget late in August only when Republicans crossed the aisle to help pass an income tax surcharge that reduced-but didn't eliminate-further cuts to higher education. However, the temporary tax could vanish if opponents successfully place a referendum on the February 2004 ballot.

Overall, Oregon's total 2003-05 state budget of $11.7 billion was about four percent higher than actual 2001-03 spending. But funding for public universities and community colleges combined was down six percent, with the universities' decline of nine percent the sharpest. The only increases went to the state's student financial aid program and to the Oregon Health and Science University, a public corporation that was spun off from the university system eight years ago.

Health care and K-12 education became the legislature's highest priorities, after newspapers carried horror stories about people committing suicide after losing drug benefits, and elderly citizens being thrown out of nursing homes, and the state's plan for a truncated K-12 school year made Doonesbury.

Photo by Brett Patterson,
Black Star, for CrossTalk
  

Miriam Gonzales, a student leader at Portland State University, recalls testifying before the legislature. "We were literally following people who were losing their health care coverage. One woman was crying because she was going to have her walker taken away," said Gonzales. Insiders said higher education simply could not compete with these tales of woe.

"Most legislators have a very limited understanding of how universities operate," said Bill Lunch, an OSU professor and state political commentator. "But they know that we have tuition available as a revenue source. Essentially legislators chose to increase 'user fees.'"

Higher education leaders trace their problems to a voter tax revolt in the early 1990s that enacted property tax ceilings and transferred responsibility for supporting schools and community colleges from counties to the state. With no sales tax, Oregon's economy is particularly reliant on the income tax, and vulnerable to recessions.

In the early 1990s, the university system eliminated 100 departments, colleges or schools. From 1990 to 2000, the portion of state dollars spent on higher education dropped from 15 percent to ten percent, while spending on prisons rose from two to eight percent.

Pro-education forces in the legislature sought to reverse that trend in 1999 when the high-tech sector was still soaring. But last year, as technology joined Oregon's other major industry-natural resources-in an economic slump, the state shot up to one of the top spots in the nation for unemployment.

Discussions in the mid 1990s about closing or privatizing one of the universities led to separate status for the Oregon Health and Science University, and the idea remains in the background as state support falls. "We are being privatized by default," said Richard Jarvis, who took over last year as chancellor of the seven-campus Oregon University System.

Community colleges are in a similar boat: "The message we have been getting from the state is, 'Don't rely on us. It's up to you to keep your doors open,'" said Mary Spilde, president of Lane Community College in Eugene.

But the fiscal crisis also bared rifts between legislators and higher education leaders, particularly those at the four-year institutions.

The view from inside is that universities have been sorely misunderstood and all but abandoned. Some leaders would have expected thanks from the legislators for their ingenuity in finding other funding sources to keep their campuses healthy. The University of Oregon, the flagship campus, for example, has expanded federal research contracts by about 30 percent, increased enrollment of out-of-state students (who pay much higher tuition) to 30 percent, and embarked on a capital campaign in excess of $500 million.

"We know how to deal with the cuts," said Frohnmayer, whose campus receives just 16 percent of its total budget from the state. "What's insulting is the level of micromanagement over the dollars we have left."

But many legislators have a starkly different view, believing that the universities' budget is anything but transparent. The chief spokesperson of this point of view is Kurt Schrader, the powerful Democrat co-chair of the Joint Ways and Means Committee.

"I agree we're not funding them nearly adequately," Schrader said in an interview at his veterinary office outside of Portland. "I've been trying to be an advocate for higher education, but at the university level, it's been very hard to do. Some of the information we get is less than forthcoming and sometimes opportunistic. It's smoke and mirrors."

Schrader is not alone. "There's a frustration about the quality of the information and the amount of time it takes to get it," said Susan Morgan, a Republican, who chaired the Ways and Means education subcommittee.

Even Senator Ryan Deckert, a Democrat, an Oregon University graduate and outspoken friend of the universities, was alarmed to discover the mistrust during budget negotiations. "These aren't conspiracy-type people," said Deckert. "The new chancellor has some work to do. That level of mistrust costs them a great deal of resources."

One Democratic senator, Tony Corcoran of Cottage Grove, has even sponsored a bill to abolish the chancellor's office.

Lawmakers were particularly incensed late in the session when additional dollars appeared in the system's budget. "Lo and behold, $25 million appears in the last few weeks of the session," said Schrader. "This really fries my chops. That's pretty poor accounting, in my book."

But Oregon University System spokeswoman Di Saunders explained that no money was "found," but that unexpected enrollment growth combined with higher tuition changed the system's expected revenues. If anyone was shorted, they would argue, it was the universities who had to educate additional students without state money.

After picking up the tab for about 1,000 Oregon residents last year, the University of Oregon will now support 2,000 without state help. "We simply cannot educate more and more students at a loss," said Provost John Moseley. Out-of-state students help defray the cost with tuition of around $16,000. But to keep demand from exceeding supply, the campus raised its required high school grade point average from 3.0 to 3.25.

"For campuses to be doing heavy lifting and have legislators investigating or challenging individual pots of money...leaves them stuck between trying to do the right thing within the spirit of what the legislature wants and frustrated that the legislature has taken away the tools to do it," said Roger Bassett, a former lobbyist and retired board member for the Oregon University System.

For all the sturm und drang over the universities, the institutions that are probably suffering the most are the 17 community colleges, which have never recovered from the drop in property taxes.

When Mary Spilde took over at Lane Community College in 2001, the school was coping with a three to four percent budget deficit, just as predictions were emerging about a fiscal crisis. Lane's board cut $5 million from its budget, eliminated 48 jobs, and closed several programs. Tuition began climbing, from $38 a unit two years ago, the second lowest in the state, to $62 today, the fifth highest.

For 2003-04, the higher tuition is back-filling a $6 million budget reduction for Lane. Around the state, colleges have closed or suspended more than 50 programs in the last year, said Camille Preus-Braly, the state's commissioner of community colleges. Many of the programs are in professional-technical fields said to be crucial to the state's economic recovery-but are also costly to provide.

To protect its expensive programs, Lane is charging higher tuition for programs like nursing, dental hygiene, and automotive technology. "We were hearing from students, 'I'd rather pay more and have the program,'" said Spilde.

Photo by Brett Patterson, Black Star, for CrossTalk
  

But getting into classes remains a problem, and that's how Jeremy Williams knows there is a budget problem. In six terms at Lane, the 25-year-old hotel bellman has yet to be able to enroll in a single math or science class. This fall, he set his mind to it-awaking at 6 am on the day registration started. But he was too late-registration opened at 4 am and others beat him to it.

Williams' story would be less troubling if it weren't accompanied by a 60 percent tuition hike, and if it weren't being repeated at colleges around the state.

"There are fewer offerings, because the decision has been not to water down. We're less affordable, and we're limiting the options that our students have," acknowledged Preus-Braly.

If there are any "dead salmon" in the future, they will be in the form of students lost to higher education. But this is a group that is hard to quantify and even harder to capture in a front-page photo. The crisis tends to be incremental-students taking longer to graduate or delaying their education. Take the decision to end the tuition plateau, a policy that allowed students to take up to 18 credits for the price of 12.

For Miriam Gonzales, a third-year student at Portland State University, tuition and fees are rising by nearly 30 percent from $1,295 a quarter for 15 credits in Fall 2002 to $1,666 in Winter 2003. She said her only option is to take fewer classes.

"I can't see myself taking more than 12 units a term," said Gonzales, a double major in Spanish and Sociology, and a student government leader. "Almost everybody I've talked to says they're going to have to drop from taking 16 or 18 units to 12 and, in some cases, eight. They can't afford to be a full-time student anymore."

In a creative attempt to help reduce costs for students, and to address capacity constraints, the University of Oregon began offering students a 15 percent break on classes taken at the unpopular hours of 3 or 4 pm. Because of student demand, the campus is extending the program to include 8 am classes this year.

In recognition of the affordability gap, the legislature did increase its commitment to need-based financial aid. Funding for the Oregon Opportunity Grant rose to an all-time high of $45 million for 2003-05, a 25 percent jump over actual spending of $35.9 million in 2001-03.

"There's a conscious effort by myself and other Democrats to try to beef up the Opportunity Grant," said Schrader.

But the grants cover only 11 percent of the cost of a student's education. With both enrollments and tuitions rising, the grants will reach only about 33,500 students, just 70 percent of those who are eligible. And the standard for eligibility, previously 75 percent of median family income, was lowered to 55 percent, rendering about 6,000 students ineligible.

Individual students like Gonzales feel the effects. In her first year, she qualified for a grant of $1,254. Last year, the amount dropped to $1,026, but she was among 13,000 eligible students who weren't served. This year, the awards rise to $1,401, but Gonzales' mother earns more than $25,890, the new cutoff for a family of three.

Legislators also capped the amount universities could spend on fee remissions, preferring that aid be distributed by a state agency rather than by individual campuses, which gave some remissions to out-of-state students and children of professors.

In the coming session, Schrader and others also plan to challenge the larger grants that go to students at private universities. The grants are calculated as a percentage of total cost, so a community college student this year will receive about $1,257, and a public university student will get $1,482, but a private university student's grant will be as high as $3,232.

For this reason, it has been hard for public universities to lobby for the Oregon Student Assistance Commission (which administers the Oregon Opportunity Grant) instead of for fee remission funds that they can dole out as needed. "A dollar to the university is a dollar to the university," said Tim White, the OSU provost. "A dollar to the Opportunity Grant is about 30 cents to the university."

But financial aid is a top priority for private institutions, and their representative, Gary Andeen of the Oregon Independent College Association, is one of the Opportunity Grant's most vocal advocates. He notes that his schools don't receive a penny in state subsidies. "Even the student with the largest grant gets far less than every student who attends a public university," said Andeen. "The question is not how we're going to split up the student aid budget. The question is how to get the state to put more money into helping needy students, period."

Schrader questions that logic, and wonders if the state's money won't go farther by leveling out the grants. "Our job is to make sure you get a higher education. Our job isn't to provide you a Cadillac education," he said. The legislature has asked the assistance commission to study the idea of converting to a flat grant.

The new Democratic governor, Ted Kulongoski, also entered the affordability debate this year with a proposal for an endowment to ensure need-based financial aid for future generations. Although many questioned the model-they say students need help now, not in the next generation-most were encouraged that the governor's first legislative proposal was aimed at college affordability.

"He did that to gain visibility, and I think it will become one of his major proposals at the next session of the legislature," said Paul Bragdon, former president of Reed College and acting president of Lewis and Clark College (and father of Kulongoski's chief of staff, Peter Bragdon).

Another longstanding concern saw no progress this year: Oregon's persistently low faculty salaries. At the public universities, salaries are at 72 percent of the average of peer institutions, according to Bill Danley, president of the systemwide faculty senate, who just retired as an education professor at Southern Oregon University. And the state's fiscal crisis also cut into retirement funds.

"My retirement, after 20 years as a full professor with tenure, is about a third or less of my salary. I'm barely getting by," said Danley. "We suffered through all those years of low salaries with the expectation that when we retired we'd at least have a decent retirement system."

A statewide hiring freeze will make it hard for universities to make counter offers to professors who are courted by other institutions. Again, though, "dead salmon" are hard to come by. Despite low salaries, many professors enjoy the low cost of living and pleasant surroundings, said Bill Lunch of OSU. Administrators can't say that Oregon is a net loser when it comes to poaching faculty, only that they fear it will become one. "If I were in Nebraska looking for quality ag people, I'd be looking here," said Mark McCambridge, OSU's vice president for finance.

Photo by Brett Patterson, Black Star, for CrossTalk
  

But higher education leaders are loath to say they're waiting for things to get worse in order to get better, and most are looking for ways to live within the current constraints. "We're not going to be a Rodney Dangerfield university," said White.

"The day higher education stops admitting students on one of our campuses is the day that pressure will begin to build. At some point, we'll stop being able to adapt," said White.

"Higher education in this state is treated as an expenditure, not as an investment," said Bassett, who in addition to his work for the Oregon University System has also led the state's community colleges. "It is not as compelling an expenditure as wheelchairs or people dying in nursing homes. It's a compelling investment, but that's not the conversation we've been having.

"The budget situation is as good as it's going to be. It breaks my heart to acknowledge that it's going to be less than it used to be in terms of access, less than it used to be in terms of affordability, and hopefully not less in terms of quality, but there's some risk there, too."


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

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