This update provides a summary of the 2019-21 budget for the Higher Education Coordinating Commission, including the seven public universities, approved by the Joint Ways and Means Subcommittee on Education during its June 11th meeting. For the Legislative Fiscal Office Report, click here.
Operational Funds – the Public University Support Fund
In November, despite a recommended 25% increase from the Governor-appointed Higher Education Coordination Commission (HECC), Governor Brown proposed a $736.9 million budget for Oregon’s public universities – essentially flat funding universities at the 2017-19 level. In a supplemental budget, she proposed a $120 million increase (16.3%) hinged on the expectation that the legislature would approve a $2 billion tax increase, a portion of which would be dedicated to higher education.
The universities indicated that a $120 million increase would enable all but one of the seven institutions to meet mandatory cost increases while keeping tuition increases below 5% each year for the next two years. (SOU indicated that even with the $120 million increase, it would not be able to keep tuition increases below 5%.)
Legislators opposed using any of the $2.7 billion in corporate tax increases they passed to support higher education. In March, the Tri-chairs of the Joint Ways & Means Committee proposed a $40.5 million increase (5.5%) for university operating budgets, based on the state-defined continuing service level. Following two months of lobbying and subcommittee hearings, the Education Subcommittee approved a $100 million increase (13.6%), for a total of $836.9 million in operating funds for the 2019-21 biennium. This increase would currently enable at least three universities to keep tuition increases below 5%, though many would still face significant budget reductions. OSU estimates taking over $8 million in spending reductions over the next year. The HECC will consider tuition increases at those institutions with proposals higher than 5% at a June 13 meeting.
Statewide Public Service Programs
OSU sought a $30 million increase (24%) over a base budget of $124.4 million for the Statewide Public Service Programs – Extension Service, Agricultural Experiment Station and Forest Research Laboratory. This increase included a $14.6 million increase to meet “current service levels” and to recover past budget reductions. The remaining $15.4 million would enable new strategic initiatives across the three programs.
The current legislative budget allocates a $14.0 million increase (11.3%) to the Statewides, with no funding allocated to new initiatives. A preliminary version of the budget showed a $2.0 million increase for a new fire resilience program implemented by the Extension Service, but the appropriation appears to have been eliminated over the last week. It may yet reappear in an end-of-session budget bill.
After the tri-chairs threatened to reduce and/or eliminate some State Programs at each of the seven universities, the current appropriation bill includes increases of 5.5% to maintain state-defined current service levels. This funding category includes the following OSU-based programs:
- Engineering Technology Sustaining Funds (shared by OSU, UO, PSU & OIT)
- TallWood Design Institute (shared by OSU & UO)
- OSU Fermentation Science
- Signature Research Centers (OSU’s ATAMI, plus UO & PSU programs)
- OSU Marine Research Vessel
- Institute of Natural Resources
- Oregon Climate Change Research Institute (shared by OSU, UO & PSU)
The State Programs budget also includes a final, one-time appropriation of $1.6 million for OSU’s PacWave South wave energy test site. The additional funding brings total state support for the project to $5.4 million and provides a portion of the required match for a $40 million US Department of Energy federal grant. OSU is seeking to raise or invest $4.6 million from other sources.
Oregon Opportunity Grant
The proposed budget includes an overall increase of $12.5 million for Oregon’s need-based financial aid program, the Oregon Opportunity Grant. This will generate approximately 2,500 additional grants for students attending Oregon community colleges and universities.
The Governor proposed three distinct capital projects for the 2019-21 biennium, including $65 million for capital renewal across all seven public universities. She indicated that she would seek $225 million in debt capacity to fund additional university projects during the 2020 session, subject to an in-depth study currently being conducted by the HECC.
The Joint Ways & Means Capital Subcommittee held one hearing on university capital spending in early May in which legislators raised a number of concerns regarding university projects. Legislative leaders have not indicated which, if any, university projects may be funded, or whether the legislature will reserve borrowing capacity for use during the 2020 legislative session. Capital funding will be one of the last bills legislators consider before they adjourn sometime before June 30.
If you have any questions or concerns regarding budget numbers or other legislative matters, please do not hesitate to contact us.
We will produce a comprehensive summary after the legislature adjourns.