Periodic Budget Update 5.26.09
Dear Oregon Tech Family,
This is the next in a series of updates regarding the Oregon budget and Oregon Tech's place within that budget. The revenue forecast released earlier this month projected a greater deficit than anticipated in March, both for the current fiscal year and for the next biennium, but that forecast was not as bad as some had feared. On Monday of last week, the co-chairs of the Ways and Means Committee issued a recommended budget for the next biennium based on the most-recent forecast. We are grateful for what the co-chairs have been able to do for the OUS within this budget, and hope for a better economy next year and for some additional resources to support students and the universities.
The co-chairs' budget broadly calls for a 15% reduction in state general funds to the Oregon University System (OUS) institutions, and a 25% reduction in state general funds to the Chancellor's Office. These reductions are based on a number of conditions and assumptions, including: (1) this reduction is contingent upon the passage of an $800 million increase in taxes; (2) there will be a number of one-time reductions of FTE across state agencies; (3) an additional $100-million reduction in spending, which has yet to be distributed among budget categories and state agencies, will not be applied to the University System (if this is not the case, our functional decrease will be approximately 20% instead of 15%); and (4) there will be no further reductions of revenues in future forecasts over the next two years.
Legislative leaders intend to end the session on June 30. They most likely will address the higher-education budget close to the end of the session. Once the legislature completes its work, the Oregon University System (OUS) will need time to interpret and distribute the budget to the individual universities. The OUS Board of Higher Education will determine tuition increases at its July 9-10 meeting. We intend to announce the new rates in July after this meeting. OUS will finalize the budgets for individual campuses after its July meeting. This means that we will not know our budget with any certainty until mid-July at the earliest.
Additional state revenue forecasts will be released in September and December, and each could require changes in the OUS and Oregon Tech budgets. There is a reasonable likelihood that we could face a budget reduction in excess of 15% before the 2009-10 biennium ends. At this time, we believe there will be a short legislative session in February 2010 to reassess and readjust, if necessary, the state budgets.
Because of the uncertainties in the proposed budget for the OUS, Oregon Tech's Program Reduction and Elimination Committee (PREC) will NOT be issuing a public report in early June (i.e., there will be a public PREC report, but not in early June). PREC will provide a very preliminary set of advisory comments directly to me based on the current conditions, and will be on standby for a public report once various budget and revenue projections stabilize. I will NOT act on any advice from PREC before there is an open, public report available for the Oregon Tech community. I did ask for their preliminary guidance, however, to make sure that we all are on the same general path with the guiding principles and philosophical direction with which PREC has been working.
Oregon Tech's Fiscal Operations Advisory Council (FOAC) continues to meet regularly. We are scheduled to present aspects of the Oregon Tech budget to FOAC on Tuesday and Wednesday, May 26 and 27. Although we will provide some details of Oregon Tech's budget, there is nothing in that presentation that should be considered as fact until some time after the OUS budget is finalized. I encourage you to attend the administrative budget presentations to FOAC. The schedule is as follows:
Tuesday, May 26, 4:00PM, Sunset
Chris Maples: President's office
Mary Ann Zemke: University Advancement (Development)
Erin Foley: Student Affairs
Wednesday, May 27, 4:00PM Sunset
Brad Burda: Provost
Bob Nettles: Finance and Administration
These are challenging times for all of us. But as I have noted to many of you, we will succeed by working together and thinking creatively about revenue and more efficient ways to operate. We already are seeing numerous successes across Oregon Tech. We have record enrollment, CHP is nearing completion, there are numerous capital upgrades across several of our campuses, and our new residence hall is on schedule for opening in September. I am deeply grateful to all of you for your willingness to curb spending, suggest revenue enhancements, and generally pitch in to see us through these challenges.
Periodic Budget Update 4.7.09
Dear Oregon Tech,
This is budget email update No. 3 in a series, the purpose of which is to keep you all informed about budget news related to Oregon Tech and the budgets for Oregon and the Oregon University System (OUS). This particular budget email summarizes the more-salient points directly related to budget items from the most-recent OUS Board of Higher Education meeting, which was held on Friday, April 3.
OUS Chancellor George Pernsteiner noted that the Legislative Fiscal Office (LFO) has asked each state agency, including the OUS, to submit a 30% budget-cut scenario.
Chancellor Pernsteiner noted that, given the federal stimulus dollars that will come to the state, a 30% cut is unlikely, but a significant cut at a lower percentage is likely.
Even though a 30% cut is judged to be unlikely, at the 30% cut scenario level, which would be about $285 million, Chancellor Pernsteiner asked the Board to approve the following cut options to provide to LFO:
* Reaffirmation of the policy decision that tuition increases for resident undergraduates that are higher than 3.6% per year will include a 30% set aside for need-based financial aid
* Priority will be given to programs related to instruction and support of students, and to research
* Campus public services will be reduced by more than 30%
* Funding for the OSU-Cascades campus will be reduced by more than 30%
* To help insure financial sustainability of OUS' smaller campuses, that their support be reduced by less than 30%, and that services and academic programs be limited to those needed in that region
* Salary costs shall be reduced by 4.6% for FYs 2010-11
The Board approved these elements as those to be provided to the LFO as part of the 30% cut scenario.
With regard to undergraduate program demand, OUS Vice Chancellor for Strategic Programs and Planning, Susan Weeks, said that the Provosts' Council will annually review the number of bachelor's degrees awarded, and for those awarding fewer than 5 degrees, a report will be provided to the Board that outlines:
* Degrees and enrollment trends over the last 5 years
* How the program is related to the campus' mission, priorities, relationship to general education requirements
* Faculty resources needed to offer the program
* Potential changes to the program being considered
* Other information to help the Board understand the low demand
Based on the information provided, the Board will determine whether a given program should be eliminated or whether it can continue despite the low enrollment.
With regard to undergraduate class size, Vice Chancellor Weeks said that no undergraduate lecture course enrolling fewer than 10 students will be scheduled unless there is a compelling educational reason, which will be determined by the institution president through their provost/chief academic officer (some courses are excluded, such as certain seminars, thesis, laboratory sessions, independent studies, music performance and others where small class size is necessary for the learning process).
Finally, Board member Brian Fox summarized some proposed guiding principles developed by the Tuition Policy Workgroup, which is comprised of the Oregon Student Association and OUS staff. Given the certainty of a tuition increase for Oregon Tech (in addition to all other OUS institutions), and the need for our students to have both input regarding a tuition increase and an understanding of the general budget constraints under which we are operating, I am working with ASOIT and Director Fox to have an open student session at Oregon Tech in Klamath Falls sometime in the next few weeks. An open student session in Portland will be scheduled as well. Details will be forthcoming, as well as the proposed tuition guidelines for student input and reaction prior to the open meeting.
A Final Observation
Obviously, the budgetary situation is very challenging for all of us, and the measures outlined in various budget-reduction scenarios are neither palatable nor pleasant. No one - OUS staff, Board of Higher Education directors, presidents, others - likes the measures that are being considered above in the 30% budget-reduction scenario. However, the actions are provided as a means of continuing to follow the general philosophical approach of doing our utmost to maintain the educational experiences, time-to-degree, retention rates, and reputations of the OUS institutions, including Oregon Tech, while minimizing staff reductions whenever possible. It remains an honor for me to serve all of you at Oregon Tech's president, and I remain incredibly impressed with the collective willingness of our Oregon Tech family to work together in these challenging times.
Christopher G. Maples, President
Periodic Budget Update 3.19.09
Dear Oregon Tech,
This is budget update No. 2 in a series of approximately weekly budget updates. As many of you are aware, we have formed a Program Reduction and Elimination Committee (PREC) at Oregon Tech. The purpose of this committee is to make recommendations to me about areas for cuts in Oregon Tech's budget. Currently, state budget cuts for higher education are projected to be approximately 20% for the next biennium (July 2009 through June 2011). Please note that PREC only will make recommendations to me based on this information- they will not do any actual reductions or eliminations.
Since my last budget update, we have taken some short term budget reduction actions. We have implemented a hiring freeze (with a process for making sure that required positions are filled) and a freeze on all non]essential travel. In addition, we are following in step with the Governor's directive to other state agencies in implementing a voluntary FTE reduction of up to 4 days (one day per month for the remainder of the fiscal year) for all unclassified employees at the director level and above. I have a general philosophy of never asking anyone to do something that I would not do myself, so I have opted to take twice the number of days (8 instead of 4) of voluntary FTE reduction between March 1 and June 30, 2009. Some form of FTE reduction may become mandatory after July 1, and may extend beyond this initial group at that time as well.
I do not mean to alarm anyone with this information. In fact, seasoned leaders in the Oregon University System have reminded me that Oregon has been through this before. And having been through this before, I have no doubts that we will come through it again-this time with an even better, more unified Oregon Tech as a result.
With this in mind, I think it is important to provide you with some core principles that will guide the decisions and decision]making process over the coming weeks and months in these challenging budget times.
* We are committed to our students and to maintaining, even enhancing, the quality and relevancy of both their educational experience and the curricula that they undertake.
* We will have an open, transparent process that encourages comment, reflection, and involvement of the entire Oregon Tech family.
* We are committed to keeping Oregon Tech among the leading baccalaureate institutions in the US.
* We will see some growth in areas that require growth, even while some areas experience reductions.
* Position cuts will be our last resort.
* We will call upon a variety of approaches to see us through the current fiscal challenges, including internal reductions and combinations and exploration of enhanced revenue opportunities (e.g., increased private support, tuition and fees, and other sources of income).
* We will maintain an optimistic, can-do approach to moving forward.
* We are all in this together as One Oregon Tech.
As part of the openness and inclusiveness that are among the core principles noted above, we have done the following:
* We have established a new email address for you to submit suggestions for revenue enhancements, cost reductions, and other related ideas. That email address is:BudgetIdeas@oit.edu
* In addition, we will be holding an open forum at the next Faculty Administrator Meeting (April 21), which will be conducted collaboratively with Oregon Tech's longstanding Fiscal Oversight Advisory Committee (FOAC). During this Faculty Administrator Meeting, we will spend part of time brainstorming about suggestions for both revenue enhancement and cost reduction. There will be a reminder about this at a later date.
As always, your comments, emails, and suggestions are welcomed! Please use BudgetIdeas@oit.edu
so that members of the PREC can see these ideas and suggestions as well. I look forward to hearing from you!
Chris Maples, President
Position Searches and Travel 3.3.09
As you are aware, the Program Reduction and Elimination Committee (PREC) is working on recommendations that will come to me regarding how we here at Oregon Tech will handle our budget in these somewhat extended, but nonetheless temporary (I assume), economically challenging times. In addition to the PREC deliberations, I have been meeting with various administrative leaders to address some of the short-term challenges that we face before the end of June. To that end, I am implementing the following actions at Oregon Tech:
* All position searches, either currently in progress or proposed, are on hold pending a new approval from me
* All requests for search approvals will be routed through one of the three appropriate Vice Presidents at Oregon Tech (Brad Burda, Bob Nettles, Erin Foley) to me
* All requests for search approvals should include a brief justification for the search (either starting or continuing one), the source of funds to pay for the position, and a recommendation as to whether the search could be postponed temporarily while the PREC, Oregon Tech administration, and I take a more holistic look at Oregon Tech's financial situation vis-à-vis Oregon's financial situation
* An "essential travel only" policy is being implemented immediately, which means that all travel must be approved by the appropriate dean or vice president
We are positioning Oregon Tech to be in the best possible financial situation for the coming biennium, and these actions will help us achieve that goal. I thank all of you for your help thus far.
Weekly Budget Update 3.3.09
Dear Oregon Tech Faculty and Staff,
Let me begin this update with my sincerest thanks to all of you for your patience and openness as we traverse some unknown waters in Oregon's and the nation's economy. This is the first in a series of weekly updates that I look forward to ending when they are no longer needed! You may wonder why I am sending these updates. The answer is simple - I want to provide as much open and concise information about where we stand at Oregon Tech with regard to the current budget challenges in as timely a manner as possible to all of you.
Most of you have seen the revenue projections released by the state economist on February 20, and you are fully aware of other financial challenges facing the state. The revenue projection for Oregon is much lower than anticipated, and Governor Kulongoski's declaration that he would take a 5% pay cut indicates to me that everyone at all levels of state government is trying to play a part in helping balance the budget.
In bringing this fiscal year to closure, Oregon Tech will need to cut approximately 4% of its biennium operating budget. This is in addition to the 1.2% we cut since October. As you may remember, that first cut came from our reserves. A specific plan for the next 4% has not been created yet, but it does appear at this time that most of those proposed reductions also will come from our reserves.
The Governor and others recently have floated the concept of furloughs. I know there is some confusion about this process. In taking a furlough, an employee is not paid for a specified workday. The employee is not expected to report to work on a furlough day, nor is it possible to take paid leave for that day. At this time, there is no specific plan in place to begin implementing furloughs, and it is unclear what role, if any, furloughs will play in the budget-balancing process at Oregon Tech or elsewhere in the Oregon University System (OUS).
Finally, there is some confusion over Senate Bill 442, which calls for the OUS to study the concept of consolidation. Specifically, the summary statement for SB 442 states "Directs State Board of Higher Education to report on consolidation of regional state universities with other existing state universities." Despite headlines and other reports, there is no mention of the University of Oregon or any other OUS university by name. We are keeping a close eye on the bill as it moves through the Legislature. I am taking a position that does not oppose a study of consolidation. I am taking this position, at least in part, because I am convinced that such a study will show how important it is for Oregon Tech to remain a separate entity within the OUS.
Please do not hesitate to ask questions that may occur to you. If it crosses your mind, undoubtedly someone else is wondering, too. I will continue to provide information on at least a weekly basis as it becomes available.
Budget Update 1.29.09
As I am sure you all realize, the challenging economic reality facing the country and the world extends to Oregon as well. All state agencies are working diligently to make prudent, proactive budgetary plans as we move into the coming years, and Oregon Tech is doing the same. The purpose of this email is to update you on what we know thus far regarding potential budget cuts, as well as to let you know both what has been done and what is being done to meet this looming budget challenge.
During Fall Term, all of the Oregon University System schools were requested to make budget reductions of 1.2% of their current budgets. We were able to take the $516,064 that Oregon Tech needed to reduce from our general fund, which resulted in no reductions to other areas.
Uncertainty remains regarding state revenue projections, which will be updated on February 20. Nonetheless, this week's news headlines indicated that lottery revenues were down, so we assume that other revenue sources likely will follow suit.
As we begin the budgeting process for next year, I have asked the Financial Operations Advisory Council (FOAC) to look at different budget scenarios involving cuts of up to 15%. I do not know if cuts will be that deep, but our approach to budgeting is to plan for a possible worst-case scenario (at least as portrayed to us at this time) so that we can be prepared for potential budget cuts to have as little effect as possible on the main mission of Oregon Tech -- that of educating our students.
At this time, we do not know the extent of cuts that Oregon Tech will need to meet, nor do we know the level of tuition increases that will be part of the overall budgeting process. However, I am dedicated to being both pragmatic and proactive about the economic challenges that face our institution, and I will work closely with FOAC, the Oregon Tech faculty and administration, and other Oregon Tech friends and family to ensure that the best possible ideas will be sought and that decisions will be vetted appropriately in as timely a manner as possible.
Thank you all very much for your support and your ideas. I look forward to working with all of you to make Oregon Tech the best institution possible in the years to come.