With the adjournment of the 2017 legislative session last Friday afternoon, this issue provides a summary of the session, including:

  • The big picture and a prognosis for the next year;
  • How OSU’s legislative priorities fared;
  • Other bills that captured our attention and time; and
  • Acknowledgements for all the help we received over the last seven months.

 

The Big Picture

As described in previous updates, the legislature entered the session with a list of “mega issues” that demanded attention in order to balance the budget and address real problems facing Oregonians across the state. Over the course of the session the items on this list ebbed and flowed, but they generally included:

  • Revenue reform (tax increases);
  • Investments in transportation infrastructure;
  • Public Employees Retirement System (PERS) reform;
  • Health care reform, including a health provider tax and bolstering the state-financed health care system that was susceptible to changes at the federal level;
  • Housing affordability; and
  • Overall cost management/cost cutting for state agencies.

Legislative leaders formed task forces and joint committees, some of which operated in open forums with hearings that involved citizens who waited in long lines to deliver their allotted three minutes of testimony. Other efforts were conducted behind closed doors, with an occasional issuance of working documents that appeared like wisps of white smoke as they circulated among the interest groups and factions.

Throughout the session, legislators monitored state tax receipts which in May brought the “bad news” that Oregon’s economy was working better than had been predicted back in May 2015. Revenues were forecasted to be slightly over the 2% “kicker” threshold, resulting in state income tax refunds totaling more than $400 million. Had the $18.8 billion May forecast been just $70 million lower (.4% of the total forecast), some $400 million would have been available to address any of a number of problems during the 2017-19 biennium.

Success required that all of the mega issues fit together like a patchwork quilt with each piece needing to attract the necessary votes to gain passage. Differences of opinion between chambers were sometimes as fractious and disruptive as the differences between parties. Concessions made in one package implicated adjustments in another. And, for votes involving tax increases, a three-fifths bipartisan supermajority was needed. Late in the session the House sought to eliminate a tax credit by a simple majority vote, because although eliminating a tax break may increase the taxes a person may pay, it is technically not a tax increase. Ultimately that ploy died in the Senate.

Despite rigorous efforts, legislators were unable to produce the bipartisan super majority needed to reform Oregon’s tax system. With two weeks left in the session, the Governor, Speaker, and Senate President threw in the towel and issued a statement that revenue reform in 2017 was simply not going to happen. With that news, legislators made a slow slog for the exits as they worked through hundreds of bills waiting for floor consideration. The good news is that, generally, “The Oregon Way” worked. There were threats, but no nuclear options. Breakdowns happened, but they got repaired.

The bad news is that not all of the work got done. There was no revenue reform and there were not significant changes in the cost drivers that are causing the revenue imbalance. Consequently, the pieces in the patchwork quilt took on new shapes and sizes. Some pieces disappeared, some shrank, and others became fodder for voter repeal. The graphic below describes how the ideal process was portrayed in an earlier update and how it morphed into a less than ideal, but slightly workable approach:

The Ways & Means co-chairs were able to issue a balanced budget, but it was smaller than what the K-12 system wanted. Legislative leaders settled on a health care provider tax, which passed the House when a retiring Republican joined the 35 Democrats to form a 3/5’s majority. But that approach developed cracks when another House Republican announced plans to mount a citizen campaign to overturn the measure at the next general election in November 2018. The Democrats countered with a bill that accelerated the process to require the measure be considered on the ballot in January 2018. If voters were going to repeal the provider tax, they wanted to be able to re-balance the budget during the February short session.

Legislators also approved a smaller, less Portland-centric transportation package. Cost containment elements were identified, but it’s not clear how they will be implemented. Rental restrictions were enacted, but they weren’t as expansive as some desired.

Some of the unresolved issues will likely spill over to the February short session. But short sessions are like Olympic short track speed skating races: there is no time for a change in course and one slip takes you out of the race. Between now and February legislators and lobbyists will be working on manageable initiatives. Concepts will likely emerge during interim committee days – the first round is scheduled for mid-September. The short session simply will not provide the time needed for meaningful tax reform and cost restructuring, but those issues will continue to brew.

What is certain is that legislators will be spending much of the next 16 months preparing for the 2018 off-year elections. At the national level, off-year elections typically result in increases in seats held by the party not in the White House. In Oregon during the Obama years, for example, while Democrats picked up seats in the legislature when Obama was on the ballot, they lost a number of them to Republicans in the off years. As is typical, the House will see a significant turnover. Already, Reps. Huffman (R-The Dalles), Esquivel (R-Medford), and Lininger (D-Lake Oswego) have announced they are either retiring or moving on.

With the Democrats solidly in control of both chambers, it remains to be seen if, or how many, seats they may wrest from Republican control and whether the current situation in Washington, DC will play a role. An increase of just one seat in each of the chambers would provide the 3/5’s super-majority needed for a party-line vote on revenue reform. Even so, a party-line vote is not guaranteed.

 

How did OSU’s Legislative Priorities Fare?

Here are OSU’s legislative priorities as written when we headed into the session, with an assessment of how we did:

Unity of Purpose among all Seven Public Universities

Oregon’s seven public universities were successful during the 2015 legislative session in achieving an unprecedented increase in funding largely as a result of unified advocacy. During the 2017 session, universities will continue to work together to address the challenges presented by structural costs that outpace Oregon’s projected revenue growth and disruptive program changes or mandates.

Assessment: All seven universities stuck together throughout the session. Newly hired staff from the Council of Presidents provided a great deal of help and support to ensure that universities addressed over 800 hundred bills that had a significant effect on universities in one way or another.

 

$100 Million Increase in University Support

As outlined by the seven university presidents in April 2016, Oregon’s Public Universities are seeking at least a $100 million increase (for a total of $765 million) in operating funds for the 2017-19 biennium. Despite increasing revenues, the Governor’s Recommended Budget (GRB) “flat-funds” university support at 2015-17 levels. This level of funding creates significant upward pressure on tuition and harmful programmatic reductions that will threaten student access and success.

Assessment: The universities established a drumbeat for the $100 million figure early and maintained it throughout the session. As a result, the Ways & Means committee members were well aware of the figure, if not all 90 legislators. In the end, SB 5524, the bill that funds the universities through the Higher Education Coordinating Commission, included a $70 million increase to be distributed among all seven universities. This funding level has enabled significant reductions in planned tuition increases for the five universities that had proposed increases of over 5% for next year. For OSU, this figure will alleviate a significant budget hole for the next academic year.

 

Increased Capital Funding

OSU supports all of the projects recommended to the Higher Education Coordinating Commission by the seven university presidents. The GRB reduces and eliminates key projects. OSU will continue to explore and advocate for pathways that would fully fund its projects in a manner that would not result in reductions to other university projects. OSU projects include:

  • $69.5M for the continued expansion of OSU-Cascades [$20M in the GRB];
  • $9M for a Quality Food & Beverage building [fully funded in the GRB];
  • $29M for capital renewal for Cordley ($15M), Fairbanks ($11M), and Gilkey ($3M) [GRB eliminates Fairbanks]; and
  • A share of $65M for capital renewal and repair for all seven public universities [GRB provides $45M].

Assessment: The universities sought a total of $284 million in a consolidated request to the HECC. In the final week of the session, they received a total capital investment of $264 million, the highest amount ever–not accounting for inflation. For OSU the final numbers were a disappointment because they included only $9.5 million for site preparation for the OSU-Cascades Expansion and a modification in the Graduate & Research Center. All of the remaining OSU projects were fully funded by the legislature, though the final allocation for capital and renewal for all seven campuses was at $50 million – an increase over the Governor’s recommended budget, but less than the universities had sought.

Next Steps: Over the last year a broad coalition of supporters stepped forward to lend their voices and resources to advance the future of our state and the Central Oregon region. We are all disappointed by the session. OSU is working with the region to develop an explicit game plan focused at both the 2018 short session and beyond to the 2019 session. We are assessing the political landscape, determining what we can accomplish in that landscape, and assessing the opportunities we face to change that landscape as we deliberately move forward toward the goal of the continued expansion of the educational opportunities and resources available to the Central Oregon region.

 

OSU Statewides – Agricultural Research Station, Extension & Forest Research Laboratory

Despite increasing revenues, the GRB flat-funds the OSU statewides. OSU supports a $9.4M increase in order to maintain a continued service level for these vital programs which serve the needs of Oregon family farmers, low income families, and Oregon’s natural resources enterprises in all 36 counties of the state.

Assessment: Following the issuance of the Governor’s recommended budget in December, OSU worked with a diverse array of supporters in seeking the $9.4 million increase. The good news is that the legislatively approved budget made a significant step in the right direction with a $5.6 million increase. The bad news is that the Statewides are now left to deal with a $3.8 million shortfall which will likely result in the loss of 17 FTE positions across the three programs. At the urging of individual legislators, the final budget also directed some targeted funding for the North Willamette ($120K) and Hermiston ($260K) Experiment Stations. OSU also received funding for the Molluscan Broodstock Program ($570K) and for addressing ocean acidification ($280K). We are seeking more information to determine if these are one-time or continuous funding streams. (Funding for Outdoor School is discussed in the next section.)

Affiliated with the funding of the College of Forestry is the passage of a forest harvest tax which must be renewed each biennium by a super-majority vote. This session provided multiple challenges as a number of legislators proposed changes in both the process and the amount by which this tax is levied. HB 2270 ultimately passed both chambers without any significant changes and is now awaiting the Governor’s signature.

Next Steps: OSU program managers will meet later this summer with program advocates and supporters to determine how best to manage the loss in funding and positions. The discussions will also reflect how we will approach the legislature both in the February short session and over the long term to recover the loss of state support. A key issue in this effort will be aimed at the manner in which the “Continuing Service Level” used by the Department of Administrative Services and the Legislative Fiscal Office does not appropriately consider the mandated costs that are applied to the Statewides. Until this issue is addressed, OSU will continue to face continuous erosion of state funding for these vital programs.

 

Establishment of a “Fighting Fund” for Oregon’s Research Universities

Oregon’s public universities support the investment of $20 million in carry-over funds from previous biennia to establish matching funds that will enable universities to better compete for federal grants. The Fighting Fund would match federal research grants awarded to Oregon universities when they compete for grants that enable research and economic development in Oregon.

Assessment: One casualty of the 2017 legislative session was HB 2582, sponsored by Rep. Dan Rayfield, which would have provided $20 million in matching funds for Oregon’s public universities. The House Higher Education Committee approved and amended the bill to reduce the financial impact and implement the funding over multiple biennia. Unfortunately the bill lost traction when it reached the Joint Ways & Means Committee.

Next Steps: We anticipate universities will revisit this issue during the 2018 short session. In the meantime, we will be re-assessing the financial mechanism for the fighting fund and will further develop information from other states to show how they invest in university research capacity.

 

Priority Funding for State Need-Based Financial Aid

The GRB includes a $30M increase in the Oregon Promise (“free community college”) in favor of fully funding the Oregon Opportunity Grant program which provides need-based financial aid for low income university and community college students. Oregon’s public universities and the Oregon Student Association support fully funding the Opportunity Grant before expanding the Oregon Promise – which is not a need-based program.

Assessment: From the 2015 appropriation of $10 million, the legislature provided a total of $40 million for the Oregon Promise for the 2017-19 biennium, while providing $160.1 million (a 15.7% increase over the 15-17 biennium) for Opportunity Grants. Legislators sought to manage the significant cost increases presented by the Oregon Promise through the use of an income test that will limit availability to the grants for families with an “expected family contribution” (EFC) of greater than $18,000 per year. (This EFC generally equates to a gross family income of approximately $100,000.) While this is a significant step, it does not necessarily create parity for students attending four-year universities. An additional concern is that it creates and maintains a financial wall for community college students as they transition from “free” community college to the higher tuition levels charged by four-year universities.

Next Steps: Universities will continue to assess how the OOG and Oregon Promise programs can co-exist to the benefit of all students seeking a post-secondary education. With only one year of the Oregon Promise to evaluate, we plan to work closely with the HECC, the community colleges, and students over the months and years ahead to devise a comprehensive approach to financial aid that leverages the resources available in each sector for the greatest benefit for students across the state.

 

Sports Lottery Scholarships

The GRB eliminates all of $8 million in lottery funding which, under Oregon statutes, has provided scholarships for athletes and graduate students at all seven universities.

Assessment: As it has in previous legislative sessions, the legislature recovered the full funding – $8.2 million – for the Sports Lottery program. OSU’s share is slightly over $1 million, roughly $500K in scholarships each academic year.

 

Additional Legislative Initiatives

Marine Energy Grant ($2-4 Million): Funding would match a $40M federal grant recently awarded to OSU.

Assessment: Funding was not included for this effort and OSU will be working with legislators and the federal delegation to determine whether and how a combination of state, industry, and philanthropic funding can serve as a match for these federal funds.

 

Measure 100 technical fix: Provide flexibility for university researchers dealing with at-risk species.

Assessment: OSU worked with the Oregon Humane Society and Rep. Dan Rayfield (D-Corvallis), who introduced HB 2576, which resolves questions about how research universities (and, as amended, zoos) may exchange species and artifacts involving species covered by the ballot measure. The bill passed both chambers and the Governor has signed it into law.

 

Priority Registration for Veterans: Increased access for veteran students.

Assessment: OSU worked with veterans advocates, the other universities, community colleges, and Rep. Brad Witt (D-Clatskanie) to revise a program adopted during the 2015 session to ensure that priority registration would apply to veterans throughout their academic programs. HB 2565 passed both chambers and was signed into law by the Governor.

 

Extension of Open Education Resources: Continued funding for free textbooks.

Assessment: The HECC did not seek continuing funding for Open Education Resources – OERs or “free textbooks.”  OSU worked with the HECC, the Oregon Student Association, and Rep. Gene Whisnant (R-Sunriver) on the development and passage of HB 2729. That bill provides $1 million to support the continued development and use of OERS for community college and university students. The bill passed both chambers and is expected to be signed by the Governor.

 

Post Doc employment status: Enable an alternative retirement program for post-doctoral students.

Assessment: With much of the work carried by the University of Oregon, legislators approved SB 214, which enables public universities to offer alternative retirement programs to ensure that contributions can follow post-docs as they progress in their academic and research careers. The bill is awaiting the Governor’s signature.

 

Additional elements that were not originally in OSU’s Legislative Priorities

OSU and the other universities followed a number of other issues of interest that emerged throughout the session, including:

Outdoor School: The HECC funding bill, SB 5524, appropriated $24 million of lottery funds to the OSU Extension Service to administer the Outdoor School program as approved by voters with the passage of Ballot Measure 99 during the 2016 November election. While the measure called for approximately $40 million in lottery funding to flow through Extension to enable Oregon’s 197 school districts to provide Outdoor School programs to elementary students, the legislature establish a pathway to grow into that amount during the 2019-21 biennium. The funding provided for 2017-19 is estimated to serve roughly 45% of the target population in the first school year and roughly 65% in the second school year of the biennium. Administrative costs may be up to 15% for this biennium of the program, although estimates provided by the Extension Service do not anticipate it will need that amount of funding. Extension is already in the process of interviewing and hiring a director to manage the program.

Credit Transfer: HB 2998 requires the establishment of unified statewide transfer agreements between public universities and community colleges. Agreements must include various metrics, including ensuring that transfer students are able to obtain a degree with a similar number of academic credits as required for students who begin post-secondary education at a public university, minimizing debt, and increasing the rate at which transfer students receive a degree while maintaining standards of academic rigor at all institutions. The bill requires the first transfer agreement by December 1, 2018.

Elliott Forest: With the passage of the SB 5505, the legislature approved $100 million in bonding “to finance the release of a portion of the Elliott State Forest from restrictions from ownership of the Common School Fund to preserve non‐economic benefits of the forest.” As covered in a previous update, the Elliott State Forest is 82,000-acres of publicly owned forest in Oregon’s Coast Range north of Coos Bay. Over the last year, due to legal efforts to ensure that the assets of the forest contribute to the State Common School Fund, as required by the Oregon Constitution, the State Land Board conducted a process to sell the forest for a minimum of about $220 million based on its appraised value. SB 5505 provides a stream of revenues for the Common School fund; it does not address the long-term status of the forest or potential activities needed to retain the forest in public ownership.  Those issues will be addressed in the coming months and years and may involve the OSU College of Forestry.  None of the language adopted by the legislature addressed OSU’s potential role in research or any facets associated with the continuing status of the Elliott Forest.

Oregon Manufacturing Innovation Center (OMIC): OMIC is a collaborative effort bringing together industry, higher education, and government to develop new tools, techniques, and technologies to address near-term manufacturing challenges through applied research and advanced technical training. OMIC is modeled after The University of Sheffield Advanced Manufacturing Research Centre (AMRC) at University of Sheffield in England with Boeing. A broad industry and university coalition led by Sen. Betsy Johnson (D-Scappoose) worked throughout the last year in developing a more comprehensive proposal which eventually landed nearly $14 million through four different pieces of legislation.  HB 5025 contains $3.6 million in OMIC operations capital in the Oregon Business Development Department budget. HB 3470 includes $3.0 million in OMIC operations capital from leftover Connect Oregon funds that were transferred from ODOT to OBDD. SB 5530 contains $3.39 million in lottery bonds dedicated to OMIC access road construction. And SB 5506 provides $3.875 million in XI-Q general obligation bonds dedicated to OMIC personal property acquisition or real property improvements. The Oregon Institute of Technology will allocate and manage the funds.

HECC “Clean Up” Bill: SB 54 removes the deadline for public universities to submit biennial funding requests to HECC; requires HECC to evaluate public universities every two years instead of every year; eliminates references to public universities without governing boards; requires public universities to establish a system of shared administrative services for maintenance of federal tax benefits relating to state bonds and administrative services relating to certain employee benefits; and allows public universities to opt out of shared administrative services system only if DAS adopts rules pertaining to federal tax benefit maintenance and public universities.

Universities to Report Graduation Rate for Oregon High School Graduates: HB 2147 requires institutions to provide the following information to the HECC annually: the number of Oregon high school graduates from each school district enrolled at the institution and the graduation rate at that institution for Oregon high school graduates from each school district.

Reporting on Cost Drivers: HB 3288 requires public universities to submit reports to the HECC each biennium listing imposed legislative mandates, impact of mandates on costs, causes of any increase in administrative positions, and actions taken to monitor and control cost drivers.

Oregon Talent Council: HB 3437 winds down the Talent Council and shifts its duties to develop a statewide talent plan to the Workforce Investment Board.

Dyslexia Teacher Prep Requirements: SB 221 removes the requirement that educator preparation programs unable to demonstrate that teachers receive training on meeting third grade reading requirements submit a plan to the Teachers Standards and Practices Commission (TSPC). The bill allows educator preparation programs to phase in compliance with standards or rules.

Credit for AP Courses: SB 207 requires public universities and community colleges to give credit, beginning with the 2018-19 school year, for students who participated in an advanced placement program and received a grade of three or higher on a nationwide examination.

Collective Bargaining for Faculty: HB 3170 extends collective bargaining rights to certain public university faculty members whose duties have academic rather than administrative focus. The bill requires separate bargaining units for faculty who supervise other faculty members.

Reporting on Competency-Based Education: HB 3289 requires HECC to submit an annual report describing progress made in providing competency-based education in public post-secondary institutions. The report must describe effectiveness of expanding competency-based education; identify issues and barriers to implementing or expanding competency-based education; analyze competency-based education models; and recommend policy changes that may be implemented to expand competency-based education.

Health Insurance Coverage for Students during Campus Disease Outbreaks: HB 3276 requires insurers to cover vaccinations (even if out-of-network) when deemed necessary to prevent the spread of disease; requires insurers to cover or reimburse for vaccinations in urgent health situations; and creates a workgroup to make recommendations to improve student healthcare coverage.

Vaccine Education on College Campuses: SB 274 requires the Oregon Health Authority to create a flier to be distributed to new students on the importance of vaccination.

Cultural Competency Standards: HB 2864 directs public universities to establish a process for recommendation and oversight of cultural competency standards for employees and requires implementation by December 31, 2019.

Student Mental Health Support: SB 231 establishes Task Force on Student Mental Health Support to investigate the impact of mental health issues and substance abuse disorders on college education, recruitment, retention and completion.

Protecting Students Who Are Survivors of Sexual Assault: HB 2972 prohibits universities from imposing or threatening discipline or sanction for the purpose of influencing a student-victim’s decision to participate in investigation of sexual assault, violence or stalking.

Student Loan Debt Education and Reporting: SB 253 requires universities to provide the following information to students annually in any form: An estimate of the total amount of federal education loans the student has received to date; the total cumulative amount of tuition and fees a student has paid to date; an estimate of total potential payoff amount, including principal and interest; an estimate of the amount, including interest, of potential monthly payment; the percentage of borrowing limit student has reached to date; and a statement that the information provided does not include private loans or credit card debt.

Increased Protections for Student Athletes from Predatory Athlete Agents: SB 5 requires additional disclosures from athlete agents, including contact information, financial records, and past student athlete involvement. Allows reciprocal athlete agent registration and renewal between states, and enhances athletic director notification requirements.

Grant Program for Veteran Services on College Campuses: SB 143 establishes a competitive statewide grant program to establish campus veteran resource centers and coordinators, or expand and enhance existing centers and coordinators, on campuses of community colleges and public universities. The grant program, within the Oregon Department of Veterans Affairs, is initially funded with $1,100,000. Universities were unsuccessful in making the funding made available by the bill apply for multiple biennia.

 

Acknowledgements

Leading into and throughout the legislative session many individuals and organizations contributed to our efforts in Salem. Singling out particular individuals and entities comes at the risk of omission. Nevertheless, here goes….

Within OSU, Jan Lewis tracked the budget numbers, not only for OSU but also in coordination with the six other universities. Trina McGaughy did a patient and masterful job of gathering data from all seven universities to produce “fiscal impact statements” for bills that created requirements and expectations for institutions. Despite a grueling workload, Becca Gose was always available to engage, and on a number of occasions kept bad things from happening. The Extension Service and the College of Agricultural Sciences organized a terrific presence for “Statewides Day” in March with honorable mentions for Dana Martin, Jackie Russell, and Betsy Hartley, who helped organize meetings and advocates from across the state, and the members of ECAN, who made their presence known in the Capitol from almost every county in the state. ASOSU’s elected student leaders and staff, including Rachel Grisham, Brett Morgan, Candalynn Johnson, and Jacqueline Logsdon, travelled to Salem on multiple occasions and devoted time to regular Friday afternoon briefings. The same goes for the student leaders at OSU-Cascades – Molly Svendsen and Gabby Bangert, who travelled across the mountains on multiple occasions to advocate not just for the OSU-Cascades expansion but also for increased state investments in university operating budgets. Becky Johnson and her leadership team – Kelly Sparks and Christine Coffin – also logged in miles and hours working both in Salem and in Bend on behalf of OSU-Cascades. Jennifer Almquist provided excellent quality control as we produced our periodic updates. Chris DeHart, an OSU student working in the Government Relations Office, managed much of our routine correspondence with legislators and provided a great analysis of the state’s capital capacity.

Throughout the session esteemed colleagues at UO (Hans Bernard and Libby Batlan), PSU (Alyson Kraus), OIT (Lita Colligan and Brittany Miles), SOU (Craig Morris), WOU (Ryan Hagemann), OHSU (Joyce Brake), and EOU (Tim Seydel and Alex McHaddad) all collaborated and provided support as we worked on higher education and other bills that posed challenges to the universities. Through thick and thin, the team stuck together and did a great job of navigating the Ways & Means process. Throughout the legislative process, the glue that held the operation together and the oil that kept the wheels turning came from the competent and unflappable staff at the Oregon Council of Presidents – Dana Richardson and Ellie Boggs.

We had a lot of help from external supporters. “Now 4 OSU-Cascades,” a 501(c)(4) organization led by Amy Tykeson and Janie Teater, and represented in Salem by Erik Kancler worked steadfastly in promoting the interests of the Central Oregon region. Their efforts began well before the session and persevered to the last, disappointing gavel of the Capital Construction Subcommittee. While funding for the campus expansion was not what we expected, it was not due to a lack of effort and commitment. The team produced one of the most effective committee presentations I have seen during my 30-plus years working in Salem.

The conservation and natural resources communities also worked throughout the session in support of the OSU Statewides – most notably Katie Fast with Oregonians for Food & Shelter, Jenny Dresler with the Farm Bureau, Ivan Maluski with Friends of Family Farmers, Tammy Dennee with the Oregon Dairy Farmers, and Kristina McNitt with the Oregon Forest Industry Council.

The Beaver Caucus, chaired by Bill Perry, staffed by Rebecca McAuliffe and Doug Badger with Quinn Thomas, and supported by the OSU Foundation continued to up our game in Salem with multiple advocacy visits and correspondence campaigns. The team is already gearing up for the February 2018 session.

Finally, throughout all of this OSU Government Relations Coordinator Karli Olsen ensured that none of the spinning plates hit the floor, while organizing OSU Day, issuing our periodic updates, holding down the fort in Corvallis, and supporting our efforts at the federal level. It is with mixed emotions that we announce Karli’s departure from OSU this fall as she has been accepted into the Teaching Assistant Program in France (TAPIF) administered through the French Ministry of Education and Cultural Services. She will take on the responsibilities of an English teaching assistant in the public schools of the Aix-Marseille region.

Over the last three years, Karli has been the front door and primary point of contact for the Government Relations office. I deeply appreciate her “keeping it 100” enthusiasm, charm, and the expertise that she has demonstrated and developed throughout her tenure in the office. I am also envious of her decision to take on a significant new adventure. We will soon begin a recruitment effort for her replacement.

If you have read this document all the way to the end, thanks to you for your attention. If you have any questions or concerns about this update, please do not hesitate to contact us.

This issue provides an update and summary of some of the major budget decisions affecting Oregon’s public universities. Last week when the Governor and House and Senate leaders announced they could not reach an agreement on revenue reform this session, both chambers started moving pell-mell for the exits, with the hope to adjourn well before the July 10 constitutional deadline. The legislature will be working through the weekend and, if necessary, over the 4th of July holiday.

 

Beware of the “CSL”

The budget documents produced by the Legislative Fiscal Office (LFO) use the term “continuing service level” (CSL) to indicate the level of funding needed in the next biennium to provide the same level of service delivered during the current biennium. When considering university funding, as a matter of its own policy, LFO does not fully account for increases in mandated costs such as employee health insurance (PEBB) and retirement (PERS) costs. For the last two legislative sessions, universities have sought more realistic CSL calculations. They have made some progress, but LFO’s calculations of CSL still do not accurately reflect cost increases. As a result, the budget documents for the 2017-19 biennium show increases in CSL, but in reality, these increases in the level of funding are largely overtaken by cost increases. Universities have filled the gap for most education-related programs with tuition resources. But for programs that rely solely on general fund appropriations–such as the OSU Statewide Public Service Programs–LFO’s depiction of CSL creates real budget cuts. These generally require eliminating personnel.

 

University Operating Budgets

On Wednesday, June 28, the Ways & Means Education Subcommittee approved an amended version of SB 5524, which provides operating funds for Oregon’s seven public universities. In the coming days, the full Ways & Means Committee and both chambers are expected to approve the bill. The LFO Recommendations Document provides details on all of the budget elements for post-secondary education, including funding for community colleges, the public universities, the OSU Statewides, other state-funded programs, the Oregon Opportunity Grant program, workforce development & education, and the Oregon Promise program–sometimes referred to as “free community college.”

The universities entered the session with a Governor’s Recommended Budget (GRB) for the Public University Support Fund–the primary account used to support education activities–that held them at the same level of funding as was provided during the current biennium: $667 million. The universities united with students and other stakeholders in seeking at least a $100 million increase. As approved by the subcommittee, SB 5524 provides $736 million, a $70 million increase over the GRB.

When compared to the trajectory in the budgets of other state agencies, the increase is remarkable and ranks among the largest increases put forward by the Ways & Means Committee. Though universities started the session well behind most other state-funded entities, the $70 million increase is a significant accomplishment, due largely to coordinated advocacy across the seven universities and the work of students and others across the state.

In order to ensure that the increased funding will go to rolling back tuition increases, a budget note in the bill requires tuition reductions at those universities that sought, and received, HECC approval for resident undergraduate tuition increases greater than 5% for the 2017-18 academic year. As provided in SB 5524, changes in tuition are as follows:

  • OIT from a proposed 7.42% increase to 5.0%
  • PSU from a proposed 8.37% increase to 5.5%
  • SOU from a proposed 11.43% increase to 9.0%
  • UO from a proposed 11.48% increase to 6.56%
  • WOU from a proposed 7.45% increase to 6.5%

Because resident undergraduate tuition increases at OSU and EOU (4.2% and 4.9% respectively) did not exceed 5% for the 2017-18 academic year, the legislature did not require them to reduce their tuition increases. As a result, both institutions will be able to devote the entirety of their share of the $70 million increase to filling anticipated budget holes. OSU is currently in the process of determining how increased funding will be used over the next two years. Funding provided in SB 5524 will be distributed through the HECC funding formula. Budget note language for the 2018-19 academic year limits tuition increases at all universities to no more than 5%.

For coverage of the higher education budget:

Lawmakers propose to reduce tuition hikes at Oregon’s public universities

Legislature pushes for more higher education funding to keep Oregon tuition hikes down

 

The OSU Statewides

For the 2017-19 biennium, the GRB also “flat-funded” the OSU Statewides–the Extension Service, Agricultural Experiment Station, and Forest Research Laboratory–at $118 million. The GRB eroded about 70% of the $14 million increase the legislature included for the Statewides in the 2015-17 budget. The 2015 session was notable for these programs because it produced the first across-the-board programmatic increase for these programs since 1999.

Since the GRB was issued in December, OSU has worked with a diverse array of supporters in seeking a $9.4 million increase to maintain a more accurate CSL. The budget approved by the Ways & Means Education Subcommittee this week includes a $5.6 million increase, resulting in a $3.8 million shortfall. The difference is largely due to the LFO calculation of CSL. OSU anticipates that, over the next biennium, this shortfall will result in the loss of 17 FTE positions among the three programs.

While the three programs will ultimately be responsible for managing the shortfall, Sen. Arnie Roblan (D-Coos Bay) has expressed concern over the reduction and he and a number of other legislators are continuing to work during the remaining days of the session to recover the $3.8 million shortfall. Roblan has also expressed interest in seeing that future budgets for university programs reflect a more accurate reflection of their costs–and the universities will continue to work for further improvements for the 2019-21 budget cycle.

Outdoor School: SB 5524 also appropriates $24 million of lottery funds to the Extension Service to administer the Outdoor School program as approved by voters with the passage of Ballot Measure 99 during the 2016 November election. The measure calls for approximately $40 million in lottery funding to flow through Extension to enable Oregon’s 197 school districts to provide Outdoor School programs to elementary students. The LFO Recommendation contained in SB 5524 provides:

This amount of funding is estimated to serve roughly 45% of the target population in the first school year and roughly 65% in the second school year of the biennium. Administrative costs may be up to 15% for this biennium of the program, estimates provided by the Extension Service show they plan to spend less than the limit. The costs include programming, transportation, stipends or additional compensation for the classroom teacher, and the administrative costs.”

 

State-Funded Programs

The GRB also flat-funded a wide variety of state-funded programs administered by universities, and the legislature maintained that level of funding in SB 5524. Programs with ties to OSU include:

  • Engineering Technology Sustaining Funds (formerly known as “ETIC”): $25.6M
  • OSU Fermentation Sciences: $1.3M
  • Signature Research Centers: $1.1M
  • OSU Ocean Research Vessel: $648K
  • OSU Institute for Natural Resources: $418K
  • Oregon Climate Change Research Institute: $327K
  • TallWood Design Institute: $3.6M (This figure includes a legislatively directed roll-up from the 2015-17 level.)

 

Oregon Opportunity Grant

SB 5524 includes $160.1 million for the Oregon Opportunity Grant (OOG) program, the state’s need-based funding program for students attending both community colleges and public and private 4-year universities. This figure is up from $138.4 million provided for the current biennium. The Office of Student Access and Completion under the HECC has already made decisions regarding the allocation of these funds for the 2017-18 academic year. Over the coming months we anticipate increased attention among all of the education sectors regarding how these funds will be distributed among university and community college students in the second year of the biennium.

 

Oregon Promise: “Free Community College”

In an effort to address increases in forecasted costs for the Oregon Promise program which began with a $10 million allocation in the 2015 legislative session, legislative budget writers chose to hold the program at $40 million for the 2017-19 biennium. Legislators are pursuing budget language that will require a means test for Oregon Promise applicants. This approach will eliminate access to those with an “expected family contribution” (EFC) of more than $18,000 per year. (The estimated yearly Adjusted Gross Income for families at this level of EFC is over $100,000.)

Oregon Promise will be ‘significantly’ changed amid budget crisis

 

Sports Lottery

SB 5524 recovered $8.2 million in funding for the Sports Lottery, which provides academic scholarships and support for student athletes and graduate students. The GRB had completely eliminated lottery funding for this program. OSU’s share of the total $8.2 million will be slightly over $1 million.

 

Talent Council

SB 5524 provides $500K for the new Workforce and Talent Development Board, which replaces the Workforce Development Board in the HECC. Funding will enable grants “to address urgent talent gaps, prepare students and current workers to be productive in priority occupations, and deliver innovative and cost-effective education and training.”  Funding will enable between two to six grants.

 

Harvest Tax

After consideration by the House Revenue Committee, on Thursday, June 29th the Ways & Means Natural Resources Subcommittee approved HB 2270 which, among other provisions, applies a 90 cent/1,000 board foot tax on timber harvested in Oregon. The harvest tax, which requires a 3/5 majority to pass, and is supported by the forestry industry, provides funding for the Forest Research Laboratory and College of Forestry to complement funding provided under SB 5524.

 

Capital Budget

In the next several days, we anticipate legislative action on a capital funding bill that would provide bonding for buildings and campus improvements across all seven university campuses. The most significant issue still in play in this bill is whether, and the degree to which, the legislature will invest in the expansion of the OSU-Cascades campus in Central Oregon. See a letter to legislators from OSU President Ed Ray and WOU President Rex Fuller regarding the attributes of capital investments in university projects here.

 

Fighting Fund

One casualty of the 2017 legislative session is HB 2582, which would have provided matching funds to enable Oregon’s public universities to compete for federal grants. We anticipate universities will revisit this issue during the 2018 short session.

We expect to issue a comprehensive review of the legislative session in the coming weeks. In the meantime, if you have questions, concerns, etc. regarding this update or any pending legislative actions during the closing days of the session, please do not hesitate to contact us:

 

Jock Mills, Director

Karli Olsen, Coordinator

This report provides a summary of recent actions and proposals on a wide range of issues, including revenue reform, a comprehensive transportation package, and the sale of the Elliott Forest. It also provides a rundown of some key bills under consideration as the legislature nears another deadline for committee consideration of bills.

 

The Mega Issues

Legislators are making slow but continuing progress as they cobble together the various “mega issues” that need to be resolved before the legislature hits its July 10 sine die deadline. The patchwork of issues includes a transportation package; PERS reform; health care reform, including a health provider tax; housing affordability; and, hardest of all, a balanced budget that includes both tax reform and budget reductions that address the structural costs that continue to place upward pressure on state budgets from biennium to biennium. All of these issues must come together in a coordinated manner that will attract the necessary votes to gain passage.

The last two weeks have shown progress in two areas – creation of a statewide transportation package and the unveiling of two competing tax reform proposals. Both issues have attracted a fair amount of media attention, which can be found below.

Transportation Package: Lawmakers presented a comprehensive proposal for addressing a range of challenges to Oregon’s transportation infrastructure. The proposals include efforts to reduce congestion in the Portland metro area, improve the backlog of deferred maintenance, and increase sagging revenues from the gas tax as cars become more fuel-efficient and non-reliant on fuels subject to the gasoline tax.

See a PowerPoint regarding the challenges and solutions presented to the Joint Transportation Committee here. Most notable for those in the Corvallis area is the listing of the single lane Van Buren Bridge as a “Possible Secondary Future Project,” which would require local approval for inclusion on the list.

For press reports on the proposal:

Issues that have attracted considerable attention include a proposed sales tax on bicycles to help pay for bikeways, possible toll roads in the Portland metro area, a payroll tax, increased registration fees and a tax on new vehicle sales.

Revenue Reform: In late April, Senate President Peter Courtney and House Speaker Tina Kotek announced the formation of a Joint Committee on Tax Reform responsible for developing proposals to raise revenues to fill an estimated $1.6 billion gap in the state’s budget. The legislature undertakes this effort in unison with other legislative efforts to reign in the factors that are contributing to upward pressures on the state budget, including the state Public Employee Retirement System (PERS) and state public employee health benefits (PEBB).

For helpful materials and articles on revenue reform:

Ultimately, if legislators adopt a Commercial Activity or Gross Receipts Tax, they will need to weigh the issue of how many businesses–and what kinds–it will affect, whether to eliminate or reduce other business taxes, steps that can ameliorate the effects on low-income Oregonians, and a host of other issues. There are many complex issues to resolve over the final two months of the legislative session.

It is too early to predict what, if any, proposal will be able to attract the necessary bi-partisan super-majority vote in each chamber needed to pass a comprehensive tax plan. In both the House and Senate, at least one Republican member would have to break with party ranks to join all of the Democrats (assuming that party’s ranks are unified) to vote for a tax package. Tax packages in the Senate require 18 votes, while the membership is made up of 17 Democrats and 13 Republicans. In the House, with a membership of 35 Democrats and 25 Republicans, 36 votes are required to pass a tax bill. A simple majority of legislators can refer a measure to the voters for consideration.

Cost Containment: The Legislative Cost Containment Work Group recommended a number of strategies for agency budget reductions, PERS reform, health care cost containment, and overall budget principles. The work group broke the recommendations down by short-term solutions (solving this biennium’s shortfall) and long-term solutions (permanent). The Legislative Fiscal Office has not yet analyzed how each of the recommendations will actually result in savings. Notable among the recommendations are proposals to enact a statewide hiring freeze for nonessential positions (this would not necessarily apply to universities although most are looking at possible hiring “chills” or other actions), increase current and future employees’ contributions to PERS, and combine the PEBB and the OEBB.

 

The Elliott Forest

The Elliott State Forest is 82,000-acres of publicly owned forest in Oregon’s Coast Range north of Coos Bay. Over the last several weeks, the Governor and State Treasurer sought to engage OSU in discussions regarding ways in which the College of Forestry could provide research relevant to the management of the Elliott State Forest. These discussions have included consideration of an option five years from now that would enable OSU to purchase the forest to serve as a research and demonstration site.

Over the last year, due to legal efforts to ensure that the assets of the forest contribute to the State Common School Fund, as required by the Oregon Constitution, the State Land Board has conducted a process to sell the forest for a minimum of about $220 million based on its appraised value. The Land Board consists of the Governor, State Treasurer, and Secretary of State, and is responsible for the oversight and management of the Common School Fund.

Last year, the Lone Rock Timber Company and the Cow Creek Band of Umpqua Tribe made a joint bid of $220.8 million to purchase the Elliott Forest, a move that the College of Forestry supported. In February, by a vote of 2-1, over the Governor’s objections, the Land Board accepted that bid. Subsequently, the Governor and Treasurer indicated they opposed the sale, and they each embarked on efforts that would retain the public ownership of the forest and seek a financial instrument to provide a stream of payments to the Common School Fund to avert a suit by the Oregon School Boards Association.

On May 9, in response to efforts to retain the forest in public ownership, the Land Board unanimously rejected the sale proposal and embarked on a process by which the state would finance a $100 million bond to provide approximately $4 million in annual payments to the Common School Fund. The Board also considered a plan put forward by State Treasurer Tobias Read that would involve the College of Forestry in research within the Elliott State Forest. The plan includes a possible option that would enable–not obligate–OSU to purchase the forest after a period of five years, as guided by the research and federal efforts to establish a Habitat Conservation Plan (HCP) under the Endangered Species Act.

In discussions involving the Elliott, OSU has been clear on three points:

  • First, the university has no interest in contributing to the disruption of a sale that received a majority of votes by the Land Board. The university became actively involved in discussions regarding alternative plans only when it became clear, as a result of actions taken by the Governor and State Treasurer, that the sale would not take place.
  • Second, because actions involving the Elliott Forest may involve the use of state bonding capacity, OSU’s potential involvement in any actions taken regarding the Elliott Forest should not detract from our long-standing priority to secure bonding to finance the full expansion of the OSU-Cascades campus in Bend.
  • Third, the state needs to fund the research contemplated over the next five years. If separate funding is not secured, this research cannot be conducted.

The College of Forestry does present the State with an opportunity to engage in comprehensive, sustained research and data collection to better inform the relationship between active forest management and conservation of listed species. OSU research could provide a scientific basis to help guide the development of an HCP and future management of the forest. The university would not engage in management of the forest now, but would retain an option to purchase the forest at a future date if or when an HCP is in place.  The HCP would provide greater certainty regarding the forest’s management and support a well-defined and financially sustainable business plan. Executing an option to purchase would clearly be subject to review and approval by the OSU Board of Trustees.

 

Tuition Increases at Other Universities

Last week, the Higher Education Coordinating Commission (HECC) approved requests for resident, undergraduate tuition increases above 5% for Western Oregon University, Oregon Tech, and Southern Oregon University. HECC did not approve requests from Portland State University and the University of Oregon. Those universities are in conversation with HECC staff and the Commission about reconsidering the votes by which HECC denied those requests. If at least five of the voting Commissioners agree to provide approval, the HECC will convene a meeting within the next two weeks to reconsider the votes. The Oregon Student Association (OSA) had a strong presence at the HECC meeting and disrupted the meeting briefly during Commission deliberations. OSA has signaled that it would continue to oppose requests for tuition increases but that their focus will generally shift to the Legislature and the need for increased revenue. To that end, OSA is planning on phone banking on May 17 and holding lobby days on May 24 and June 6 with SEIU and other partners.

 

Legislative Bills, Hearings, and Issues

Revenue Forecast: This Tuesday, May 16, the state economist will issue the economic and revenue forecast that will guide legislators in constructing the state budget. Previous forecasts have shown continued growth in revenues, but recent changes in economic indicators may signal slackened growth. The forecast may also indicate that revenues will exceed the May 2015 economic forecast by more than two percent, which would involve Oregon’s unique kicker. When the State Office of Economic Analysis releases its forecast, you can find it here.

Credit Transfer and Articulation: SB 207 would require universities and community colleges to automatically accept college credit for students who achieve a score of 3 on advanced placement tests. Although the bill sailed through the Senate on a 29-0 vote, educational institutions are opposing the bill as it is considered by the House Higher Education Committee. We have raised concerns that it disrupts existing and functional faculty led efforts to review and establish course equivalency requirements that fit each institution’s curriculum. The provosts from all seven public universities submitted testimony in opposition to the bill.

Regardless of the bill’s fate, credit transfer and articulation will continue to attract attention from legislators and the Higher Education Coordinating Commission (HECC) who cite statistics that indicate that students who transfer from community colleges to universities must take significantly more credits than the 180 required in order to attain an undergraduate degree.

Financial Aid Information: Community colleges and universities have also sought changes to SB 253, which would require them to notify students individually of their debt load on a yearly basis. The institutions indicate that they already provide this information to students, that they cannot meet the requirements of the bill because they don’t have access to information about what private debt students may be using to finance their education, and because the cost of generating customized profiles would need to be included in state funding for the institutions. The institutions are seeking amendments that would make the bill less expensive to implement.

OSU-Cascades Expansion: On Wednesday, May 24, the Senate Business & Transportation Committee will receive a presentation from advocates for the expansion of the OSU-Cascades campus in Central Oregon. The presentation will focus on the linkage between the campus and the region’s economic growth and potential.

Remaining Ways & Means Reviews: Over the next two to three weeks, the Joint Ways & Means Education Subcommittee will conduct information hearings on a number of remaining issues, including:

  • Outdoor School: Legislators are weighing options for how much to fund the roughly $40 million biennial investment in Outdoor School approved by voters with the passage of Ballot Measure 99 last November. Under the measure, the OSU Extension Service is responsible for administering the grant program and developing the curriculum for this program.
  • Oregon Promise: Legislators are also weighing the extent to which funding for the Oregon Promise—“Free Community College”—flows to students from families that demonstrate little to no financial need.
  • State Programs: Legislators are interested in the outputs of specific state-funded programs at the universities and have asked for time to review a number of these programs. (This does not involve the OSU Statewide Public Service Programs.)

 

Capital Funding

On Friday, May 12, OSU supporters and faculty testified in support of a number of capital projects under consideration by the Joint Ways & Means Subcommittee on Capital Construction. Advocates from Bend drove the 120 plus miles to deliver the allowed three minutes of testimony in support of the expansion of OSU-Cascades. Others supported the investment in the OSU Quality Food & Beverage initiative on the Corvallis Campus. Faculty member Virginia Weiss testified in support of the capital renewal of Cordley Hall on the OSU Campus.

 

The Beaver Caucus

On Tuesday May 23, the Beaver Caucus will be holding a “two minute drill” with legislators in support of OSU’s legislative agenda. For further information:  http://thebeavercaucus.org/beaver-caucus-two-minute-drill-may-23/

Students, Faculty, Staff, and Presidents Call for Increased Funding for Public Universities

In a letter to legislative leaders, students, faculty, staff, and presidents of the public universities called for at least another $100 million in state investments from the level proposed last month by Governor Kate Brown.

Our unified funding request highlights and supports the following reality: To keep tuition increases below five percent at most universities, and also preserve most financial aid and student support services, state investment in the Public University Support Fund (PUSF) will need to increase by at least $100 million above the Governor’s Budget—in the 2017-19 biennium.

You can find a copy of the letter on the OSU Government Relations website and coverage of the accompanying press release in The Oregonian.

 

Legislators Organize for the 2017 Legislative Session

Legislators met last week to organize for the 2017 legislative session, which will begin in earnest on Wednesday, February 1st.  As expected, they elected leadership – Sen. Peter Courtney (D-Salem) will serve in an unprecedented eighth term as Senate President and Rep. Tina Kotek (D-Portland) will serve in her third term as Speaker of the House.  The leaders have announced committee rosters, and the approximately 1,700 bills that had been filed in December are now posted on the legislative website.

The Speaker and Senate President have referred the first wave of bills to the relevant committees for consideration.  We expect two or three more waves of new bills in the coming weeks as legislators complete the drafting process.  We will be notifying various colleges and principals in the next week with information regarding bills that affect OSU’s education, research, and outreach activities.  If there is a particular bill that is of interest or concern to you, don’t hesitate to let us know.

Most higher education-related bills will likely fall under the jurisdiction of the following legislative committees and subcommittees:

Joint Ways & Means Committee

Co-chaired by Sen. Richard Devlin (D-Tualatin) and Rep. Nancy Nathanson (D-Eugene), this committee is responsible for appropriating funds. Its Subcommittee on Capital Construction will determine how the state’s debt capacity will be used to finance long-term construction projects.  The Subcommittee on Education will allocate operating funds across the education continuum from early childhood to post-graduate and career education.  With significant turnover in the House since the 2015 session, House membership and leadership in the Ways & Means process has also changed.

Ways & Means Capital Construction Subcommittee

  • Sen. Fred Girod (R-Stayton), Co-Chair
  • Senate President Peter Courtney (D-Salem)
  • Sen. Richard Devlin (D-Tualatin)
  • Rep. Paul Holvey (D-Eugene), Co-Chair*
  • Rep. John Huffman (R-The Dalles)
  • Speaker Tina Kotek (D-Portland)
  • Rep. Greg Smith (R-Heppner)
  • Rep. Jennifer Williamson (D-Portland)*

*Indicates change from previous legislative session.

Ways & Means Education Subcommittee

  • Sen. Rod Monroe (D-Portland), Co-Chair
  • Sen. Chuck Thomsen (R-Hood River)
  • Sen. Arnie Roblan (D-Coos Bay)
  • Rep. Barbara Smith Warner (D-Portland), Co-Chair*
  • Rep. Diego Hernandez (D-Portland)*
  • Rep. John Lively (D-Eugene)*
  • Rep. Julie Parrish (R-Tualatin/West Linn)*
  • Rep. Gene Whisnant (R-Sunriver)*

*Indicates change from previous legislative session.

The Senate Education and House Higher Education and Workforce Development Committees will consider education policy issues.  While the Senate committee membership has remained fairly static, turnover in the House has resulted in significant changes, including the chair.

Senate Education Committee

  • Sen. Arnie Roblan (D-Coos Bay), Chair
  • Sen. Sara Gelser (D-Corvallis/Albany)
  • Sen. Mark Hass (D-Beaverton)
  • Sen. Dennis Linthicum (R-Klamath Falls), Vice Chair*
  • Sen. Jeff Kruse (R-Roseburg)

*Indicates change from previous legislative session.

House Education and Workforce Development Committee

  • Rep. Jeff Reardon (D-Happy Valley), Chair
  • Rep. Gene Whisnant (R-Sunriver), Vice-Chair
  • Rep.Teresa Alonso Leon (D-Woodburn)*
  • Rep. Dallas Heard (R-Roseburg)*
  • Rep. Janelle Bynum (D-Clackamas)*
  • Rep. Mark Johnson (R-Hood River)
  • Rep. Brian Clem (D-Salem)*
  • Rep. Werner Reschke (R-Klamath Falls)*
  • Rep. Janeen Sollman (D-Hillsboro)*

*Indicates change from previous legislative session.

Rep. Reardon is new to chair a committee, though he served on the committee last session along with Reps. Whisnant and Johnson.  Reps. Alonso Leon, Bynum, Reschke, and Sollman are serving in their first terms.

 

Next Steps in the Budget Process

On Thursday, January 18th, the Ways & Means co-chairs will issue a budget that will reflect a number of changes from the budget Governor Brown proposed in early December.  For one, the co-chairs’ budget will not include new revenues from tax increases since the 3/5 majority required to pass new taxes is not a given.  As a result, state budgets will need to internalize the expected $1.7 billion state revenue short fall.

In addition, the co-chairs’ proposal may hold state agencies at their “continuing service levels” (CSL) – the amount of funding needed to provide the same level of service during the 2017-19 biennium as was provided during the current biennium.  Under this approach, any increases over CSL that the Governor may have created in her budget could be eliminated in addition while also reflecting the statewide shortfall.  Based on comments from Ways & Means Co-Chair Sen. Richard Devlin in a recent report in The Oregonian, it’s possible higher education could see some increases, but certainly not the $100 million sought by the students, faculty and presidents of the seven public universities.

 

OSU’s Legislative Priorities

OSU’s Board of Trustees will consider the university’s legislative priorities for the 2017 session at its meeting on January 20th. You can find a summary here.

 

For more information

To subscribe to our updates, contact Karli Olsen at karli.olsen@oregonstate.edu

If you have questions or thoughts regarding any of the information presented here, contact Jock Mills at jock.mills@oregonstate.edu

Yesterday’s update regarding the Governor’s recommended capital budget had a couple of glitches and should have included a broader discussion regarding the OSU-Cascades project.

OSU-Cascades Campus Expansion

OSU is seeking, and the HECC has recommended, a $69.5 million campus expansion for OSU-Cascades which includes:

  • $20 million in site reclamation and campus infrastructure improvements necessary for construction;
  • $39 million in bonds for a new academic building (matched by $10 million in donor funds);
  • $10 million in bonds (matched by $5 million in student fees); and
  • $500,000 for a renovation of the Graduate Center.

The Governor’s recommended budget included the first $20 million for site preparation and infrastructure improvements.  (This element was endorsed by all seven university presidents.)

Governor Brown’s commitment of $20 million in her recommended capital budget to prepare the construction site for the expansion of the OSU-Cascades campus is a significant step in the right direction.  The university is grateful for her recognition of the need to increase higher education capacity in this underserved region.  Earnest money of this magnitude clearly demonstrates a commitment to expand the campus, but it will not result in improved services to students in the region in the near future.

As the Governor recognized in her comments, the budget involves many difficult decisions.  There is still much to be done to address the needs of students and employers in the Central Oregon region.  Central Oregon is geographically isolated from other universities and OSU-Cascades is well positioned to support HECC’s charge to serve underrepresented, first generation, and rural students.

Another academic building is desperately needed in Central Oregon to accommodate the enrollment growth the region anticipates in the next few years at OSU-Cascades.  At its current capacity the 10-acre campus can serve no more than 1,890 students; enrollment is currently 1,122.

OSU and the Central Oregon region look forward to continuing this conversation with the Governor and Oregon legislators, and working together to find opportunities that could fully fund the project.

 

University Capital Funding

The HECC Agency Request Budget prioritized the original “Tier One” projects recommended by the seven university presidents earlier this year. At the request of the Governor, the HECC also prioritized additional OSU-Cascades projects that had not been included in the Tier One.  In November, UO sought additional state capital as a partial match for its Knight Campus project.  At that time, the HECC raised the rankings of two Cascades projects – the Site Reclamation for $9 million and Infrastructure for $11 million and inserted the Knight Campus project for $100 million at #13.  This resulted in the projects originally ranked at #11 or below all moving down three steps, including the OSU Fairbanks project moving from #13 to #17 (out of a total of 20 projects).

The GRB recommends $269.6 million in capital support.

Funded Projects:

  • ALL – Capital Improvement and Renewal:  $45.7 million
  • PSU – Grad Education Building:  $40.5 million
  • OSU – Quality Food & Beverage Building:  $9 million
  • OSU – Gilkey Hall Renovation:  $3 million
  • EOU – Information Technology Equipment Facility:  $1.2 million
  • OSU – Cordley Hall Renovation Phase I:  $15 million
  • OIT – Cornett Hall Renovation:  $38 million
  • UO – Classroom Building:  $44 million
  • SOU – Central Hall Deferred Maintenance:  $6 million
  • WOU – Oregon Military Building Renovation:  $7.7 million
  • OSU-Cascades – Site Reclamation:  $9 million
  • OSU-Cascades – Infrastructure:  $11 million
  • UO – Knight Campus:  $34 million
  • EOU – Loso Hall Renovation, Phase I:  $5.5 million

New project not previously considered by HECC:

All campuses, including community colleges, campus security measures allocated via competitive bid (based on recommendations by the Governor’s campus security task force):  $15 million

Eliminations:

  • OSU – Fairbanks $11 million
  • OSU-Cascades – Academic Building $39 million
  • OSU-Cascades – Student Success Center $10 million
  • OSU-Cascades – Graduate and Research Center $490,000
  • EOU – Fieldhouse $6 million
  • WOU – IT Building $5.5 million

Reductions:

  • PSU – Graduate School of Education project reduction of $4.5 million
  • OIT – Cornett Hall project reduction of $2 million
  • All – $20 million reduction to $45 million for seven campuses for capital renewal and maintenance (2015-17 funding was at the $65 million level)
  • UO – $66 million deferral of the Knight challenge grant

Governor Brown issued her recommended budget (GRB) for the 2017-19 biennium yesterday.  Facing a projected state budget shortfall of at least $1.4 billion compounded by rising personnel and health care costs, the GRB includes many difficult decisions.  This update provides a summary of the major elements affecting higher education in Oregon.  To review the entire budget document:  http://www.oregon.gov/das/Financial/Documents/2017-19_gb.pdf

In short, despite increasing costs driven by state-mandated employee health and retirement benefit programs, the GRB provides no programmatic increases for the state’s seven universities.  The university presidents, who had sought at least a $100 million increase in order to meet current service levels while keeping tuition increases at a manageable level, issued the following statement:

“Oregon’s public universities commend Governor Brown for prioritizing students and higher education in her recommended budget. Ensuring a college degree is accessible to every Oregonian without taking on a lifetime of debt is how our state will remain vibrant and competitive. With limited resources, Governor Brown took great strides to protect students. The investments outlined in her budget will mean Oregon does not balance its books at the expense of those who are most vulnerable.

“As the Legislature weighs difficult budget choices, we urge lawmakers to increase operating funds beyond the Governor’s budget. By doing so, every campus can keep tuition at a manageable level for the next two years and maintain vital support services that keep students on track to graduate. If we want to enable more Oregonians to earn college degrees at an affordable level of tuition, additional resources will be needed.

“Public universities are educating the workforce and leaders of tomorrow, and we act as incubators of ideas and solutions that can change the world. Oregon must protect students by recognizing that higher education is a fundamental necessity for a robust economy and a living wage. We stand as partners with the state, ready to work with the Legislature and the Governor to address the challenges that lie ahead.”

In comparison, K-12 State School Fund received a 9% increase in funding, for a total of $8 billion.  This figure is approximately $500 million below what the Oregon School Boards Association says local schools need to maintain current service levels.

 

The Public University Support Fund (PUSF)

The PUSF is funded at the 2015 Legislatively Approved Budget (LAB) level of $667.3 million.  Flat funding when costs are increasing means that universities will need to turn to tuition increases, personnel reductions, service cuts, and other actions to balance their budgets. The GRB was a significant improvement over Department of Administrative Services (DAS) internally driven proposals that would have restricted university access to general funds to support retirement and health insurance cost increases.  The Governor sought to shield public universities and students from taking a disproportionate cut, but since nearly 70% of the academic personal costs are born by tuition revenues, 70% of those cost increases will be covered by tuition increases.

The university presidents had sought to insulate students from these cost increases with their request for at least a $100 million general fund increase, which would have driven the PUSF to $765 million.  Now it falls to the legislature to determine whether or how this gap can be filled.  Legislators initially convene in January for organizational purposes, and then go into full business mode the first week of February.

 

OSU Statewide Public Service Programs – Agricultural Experiment Station, Extension Service, and Forest Research Laboratory

The GRB proposes no increases for the OSU Statewide Public Service Programs – the Extension Service, Agricultural Experiment Station, and Forest Research Laboratory, known as the “OSU Statewides.”  This spring, the OSU Board of Trustees sought a $9.4 million continued service level increase for these programs – simply the amount of funding that would be needed to provide the same level of service next biennium as what was provided during the current biennium.

Last session, after a year of activism by a broad coalition of advocates, the legislature approved a $14 million increase for these programs.  The resulting $118 million funding level enabled OSU to hire some 40 new research and extension positions across the state to address significant challenges facing Oregon family farmers, low income families, and Oregon’s natural resources enterprises.  This was a monumental step reversing a 15-year decline when these vital programs were forced to eliminate positions that served a diversity of Oregonians in all 36 counties.

The GRB will have the effect of eliminating nearly 70 percent of the programmatic increases the legislature approved last session.  Because the vast majority of these funds are used to cover personnel costs, the primary tool the Statewides have to manage their costs during budget reductions is through the elimination of positions.

While academic programs at OSU rely on state general funds, they also are able to turn to tuition when the legislature cuts their funding.  The Statewides do not have access to tuition revenues and so feel the full impact of state funding reductions.  However, because many of the Statewides’ positions are “shared appointments” which have both teaching and research responsibilities, there will also be impacts on the university’s education enterprise.  The elimination of research positions also inhibits OSU’s ability to compete for federal funding.  OSU estimates that every state dollar invested in the OSU Statewides leverages nearly $10 in economic benefits to the state.  The Governor’s budget puts these economic returns at significant risk.

It is too early to identify the precise number and location of the positions that could be eliminated as a result of flat-funding the Statewides.  The first step available to program managers is to leave position vacancies un-filled when they occur.  Managing through attrition is not a strategic approach to addressing Oregon’s challenges in the coming biennium, but it is the only practicable alternative currently open to the Statewides.

In order to maintain the same level of service for the Statewides the legislature will need to find $9.4 million in general fund resources.  OSU is committed to work with legislators and the broad coalition of stakeholders who have supported these programs in the past to find practicable solutions for addressing the funding challenges facing the Statewides in the 2017-19 biennium.

Outdoor School:  Due to the passage of Measure 99, which established and funded “Outdoor School” with $44 million in Lottery Funds, the GRB also includes a $44 million increase to the OSU Extension Service which, under the measure, is responsible for administering the funds and developing the curriculum for the program.  OSU has estimated that about $1.6 million of these funds will be needed to meet Extension’s responsibilities under this program.  Despite the ballot measure provisions, the legislature will ultimately make the final funding decisions, both for the amount of lottery funding that will be provided to local school districts and to Extension to administer the program.

 

Other Highlights in the GRB

Sports Lottery (Title IX Scholarships):  The Governor eliminated all funding for this program which under state statutes is supposed to provide 1% (approximately $12.5 million in 2017-19) of the economic development fund from the state lottery fund for scholarships for athletes and graduate students. Most of the scholarships are used to meet Title IX requirements for women athletes.  In previous legislative sessions (including 2015) legislators have capped the funding for this program at $8.2 million.  Previous Governors have also recommended eliminating funding for this program, but have faced legislative opposition.  The seven public universities will mount another campaign in 2017 to recover these funds.  During the current biennium, OSU received $1 million.

Public University State Programs/ETIC:  The GRB essentially provides flat funding for multiple state programs administered by the universities.  Funding for programs that are administered or located at OSU include:

  • OSU Marine Research Vessel Program:  $638,929
  • OSU Fermentation Program:  $1.3 million
  • OSU/UO Center for Advanced Wood Products:  $3.5 million
  • OSU Natural Resources Institute:  $411,420
  • OSU Climate Change Research Institute:  $322,492
  • ETIC Sustainable Funding:  $25.2 million (distributed by a formula to all seven universities; about $14 million to OSU in 2015-17)
  • Signature Research: $1.1 million (distributed among OSU, PSU, and UO; about $500,000 to OSU in 2015-17)

Oregon Talent Council/Oregon Inc./Signature Research Centers:  The GRB indicates the Oregon Talent Council is “winding down” and the work on the Talent Development Plan will be continued by one of the former OTC partners.  It is funded at $200K for one limited duration position in 2017-19.  There is not sufficient detail in the GRB to provide information regarding the other programs.

Student Financial Aid: The Governor increased funding for the Oregon Opportunity Grant by approximately 8% from last biennium, bringing the total funding amount to $151 million.

Community Colleges/Oregon Promise:  The Community College Support Fund was also held at 2015-17 LAB levels at $550 million.  The GRB includes $39.7 million for the Oregon Promise “Free Community College” program, an increase of over $29 million to expand the program to cover two new cohorts of students over the next biennium.

OHSU:  Funding for OHSU is at the 2015-17 LAB levels, consistent with universities and community colleges.

 

Higher Education Coordinating Commission (HECC) Agency Budget

The GRB reduced HECC’s General Fund Budget by 3% from the 2015-17 LAB.  The total funds budget for the agency was reduced by 11%.  The GRB included the following HECC Policy Option Packages (“POPs):

  • Replacement of the Financial Aid Management Information Systems
  • Addition of internal audit and human resources positions
  • Funding for issuance of community college and university bonds

The GRB also included targeted reductions in the HECC budget, including:

  • An 11% reduction in positions through the elimination of limited duration position authority
  • Reductions in personnel services and supplies
  • Reductions in GED, ASPIRE, and match against federal Perkins Loans
  • Reclassification of 3 positions

 

Business Oregon

The Governor’s Budget removes the Small Energy Loan Program (SELP) from the Department of Energy and places it in Business Oregon and includes $2.7M for administration and to initiate a recapitalization of the program.  Specific information regarding the Signature Research Centers is not enumerated in the budget and will be provided at a later date.

 

University Capital Funding

The HECC Agency Request Budget prioritized the original “Tier One” projects recommended by the seven university presidents earlier this year. At the request of the Governor, the HECC also prioritized additional OSU-Cascades projects that had not been included in the Tier One.  In November, UO sought additional state capital as a partial match for its Knight Campus project.  At that time, the HECC raised the rankings of two Cascades projects – the Site Reclamation for $9 million and Infrastructure for $11 million and inserted the Knight Campus project for $100 million at #13.  This resulted in the projects originally ranked at #11 or below all moving down three steps, including the OSU Fairbanks project moving from #13 to #17 (out of a total of 20 projects).

The GRB recommends $269.6 million in capital support.

New Funded Projects:

  • ALL – Capital Improvement and Renewal $45.7 million
  • PSU – Grad Education Building $40.5 million
  • OSU – Quality Food & Beverage Building $9 million
  • OSU – Gilkey Hall Renovation $3 million
  • EOU – Information Technology Equipment Facility $1.2 million
  • OSU – Cordley Hall Renovation Phase I $15 million
  • OIT – Cornett Hall Renovation $38 million
  • UO – Classroom Building $44 million
  • SOU – Central Hall Deferred Maintenance $6 million
  • WOU – Oregon Military Building Renovation $7.7 million
  • OSU-Cascades – Site Reclamation $9 million
  • OSU-Cascades – Infrastructure $11 million
  • UO – Knight Campus $34 million
  • EOU – Loso Hall Renovation, Phase I $5.5 million

Eliminations:

  • OSU – Fairbanks $11 million
  • OSU-Cascades – Academic Building $39 million
  • OSU-Cascades – Student Success Center $10,000
  • OSU-Cascades – Graduate and Research Center $490,000
  • EOU – Fieldhouse $6 million
  • WOU – IT Building $5.5 million

Reductions:

  • PSU – Graduate School of Education project reduction of $4.5 million
  • OIT – Cornett Hall project reduction of $2 million
  • All – $20 million reduction to $45 million for seven campuses for capital renewal and maintenance. (2015-17 funding was at the $65 million level).

No ranking changes except what resulted from project eliminations:  The GRB included capital funding of $75.2 million for eleven projects as well as $15 million in lottery bonds for competitive grants for public safety improvements at Oregon’s public universities and community colleges.

Here is a brief review of Tuesday’s election and its implications for higher education in Oregon as we approach the 2017 legislative session.

Governor’s Race

Democrat Kate Brown defeated Republican Bud Pierce with just over a 50% majority. She carried seven of Oregon’s 36 counties: Columbia, Benton, Hood River, Lane, Lincoln, Multnomah, and Washington. Brown will serve a two-year term, because this was a special election – required to complete the two years remaining in former Governor John Kitzhaber’s fourth term. She is expected to run again in 2018 for a full four-year term. As Oregon approaches the 2017 legislative session, Brown will face her first opportunity to develop her own budget and policy priorities as governor.

 

Secretary of State

With 47% of the vote, Republican Dennis Richardson, who ran unsuccessfully for governor against Kitzhaber in 2014, defeated Democrat Brad Avakian, who is currently serving as Oregon’s Labor Commissioner. The race is notable because it is the first time that a Republican has been elected to a statewide office since 2002, when Gordon Smith won his second term in the US Senate. Richardson carried 30 Oregon counties. Avakian won in the same counties as Brown, less Columbia County, and with significantly smaller margins. For some observers, Richardson’s victory signifies improved chances for the Republicans in the 2018 election, whether it is Richardson for governor, or perhaps a more moderate candidate, if one is able to prevail in the Republican primary.

 

The defeat of Ballot Measure 97 and the budget implications for the 2017-19 biennium

By a margin of some 19 points (59 to 40%), Oregon voters rejected Ballot Measure 97, which would have generated an anticipated $3 billion increase in state general fund revenues from a receipts tax on large corporations. The measure’s defeat leaves Oregon legislators facing a projected $1.4 billion budget deficit – about 8% of the state’s $18 billion general fund budget for the 2017-19 biennium. Following the election, Brown issued the following release:

Post Measure 97, Governor Brown’s Budget Will Prioritize Children, Lifting Families Out of Poverty

“In the coming days, I’ll meet with legislative leaders on both sides of the aisle to discuss budget priorities and next steps in preparation for the 2017 session.

“Following these discussions, on December 1 I’ll release a balanced budget that makes every effort to protect vulnerable Oregonians to the greatest extent possible.

“I will give priority to protecting services for children and helping lift families out of poverty. Given the severe constraints, we will still have to make a number of heartbreaking cuts.

“Looking forward, if we expect to improve our dismal high school graduation rate, help more families achieve self-sufficiency, and keep Oregonians safe and healthy, we need stable and adequate revenue.

“I call on both the proponents and opponents of Measure 97 to find common ground and develop solutions that Oregonians support. As I evaluate potential options, I’ll look for proposals that provide adequate and stable revenue, do not hurt struggling families, and bring increased fairness to Oregon’s tax system.”

Universities respond:  Notably absent from the Governor’s priorities, Oregon’s seven public university presidents also issued a statement calling for a $100 million increase for higher education:

“We understand that yesterday’s vote means some very tough choices lie ahead for the Legislature and the Governor. In the face of these challenges, we believe that by working together we can still keep our public universities affordable for all Oregon students. Now is the time to continue the progress we have made over the last biennium. As our elected leaders weigh difficult budget decisions, we urge them to invest a minimum of $100 million for Oregon’s university students to continue to clamp down on student costs and debt. This investment will allow all campuses to keep tuition increases to a manageable level for the next two years and ensure that students can graduate without taking on a lifetime of debt. Oregon’s public universities are the incubators of ideas and solutions, and we are educating the workforce and leaders of tomorrow. We stand ready to work with legislators and the Governor to address the challenges that lie ahead.”

Next steps:  In early December Brown is required to propose a balanced budget for consideration during the 2017 session. State budget writers have been working on alternatives for the past three months. The Governor’s proposal will be further informed on Wednesday, November 16 when the State Economist issues his third quarter revenue forecast. That forecast will indicate what to expect for the remainder of the current biennium as well as what’s ahead for the biennium that begins on July 1, 2017. For those interested, the forecast will be available here.

 

The Oregon Legislative Assembly

Senate:  Republicans picked up one seat in the Senate, resulting in a 17-13 majority for the Democrats. A total of four new members will join Senate ranks. Two Portland area Democrats – Rep. Kathleen Taylor and Rep. Lew Frederick – will move over from the House. The two other new members are:

  • Alan DeBoer (R-Ashland) – DeBoer, the one Republican pick-up in the Senate, will fill the seat left vacant when Democrat Alan Bates died unexpectedly in August. The Jackson County seat is a “split district” – comprised by two House districts, one held by a Democrat, the other by a Republican. DeBoer is a car dealer and has served as Mayor of Ashland and as a member of the local school board. This seat will be up for election again in 2018 for a full four-year term.
  • Dennis Linthicum (R-Klamath Falls) – Linthicum is a software and large-scale database development manager who is presently a Klamath County Commissioner. He has a bachelor’s degree in Economics from UCLA and a master’s degree from Biola University.

 

House:  Although the House will see a significant increase in its diversity and a turnover of nearly a quarter of its members, the party margin of 35 Democrats and 25 Republicans will remain unchanged. As with the Senate, no changes in leadership are expected. The 14 new House members are:

  • David Brock Smith (R-Port Orford) – Currently serving as a Curry County Commissioner, Smith grew up working in, and currently owns and runs, his family’s restaurant, the Port & Starboard. He attended Southern Oregon Community College and Southern Oregon University.
  • Pam Marsh (D-Ashland) – Marsh is a city council member, small business owner and manager of Ashland’s nonprofit food bank. She was involved in the management and operation of Green Springs Inn and Cabins, which she currently owns and manages with her husband and son. Marsh is a graduate of Southern Oregon University with a BA in Political Science.
  • Julie Fahey (D-Eugene) – Fahey served as Chair of the Lane County Democrats and is currently the Treasurer of the Democratic Party of Oregon. She is co-founder of ThreePoint Consulting, a human resources consulting firm for businesses and non-profits. She is a graduate of Notre Dame.
  • Teresa Alonso Leon (D-Woodburn) – Alonso Leon is a first generation college graduate with a degree from Western Oregon University. She is currently a Woodburn City Council member, and administers GED programs with the Higher Education Coordinating Commission.
  • Ron Noble (R-McMinnville) – Noble is the former chief of Police for the City of McMinnville and is active in his church and community organizations. He attended Oregon State University and Seattle University and was a lieutenant in the Corvallis Police Department.
  • Rich Vial (R-Hillsboro) – Vial, a native Oregonian, is an attorney specializing in condominium and planned community developments. He is a graduate of BYU with a degree in Business and Accounting, and he completed his law degree at Willamette. With a large family, including 7 adoptees from Viet Nam, the Vial family owns a 24 acre farm in Scholls. He has served on the Washington County Planning Commission, Land-Use Advisory Committee, and County Fair Board.
  • Sheri Malstrom (D-Beaverton) – Malstrom has more than 30 years of experience as a public health nurse. She has served on the Oregon Commission on Women and was active in Emerge Oregon. Following the death of her husband, she raised 3 young sons as a single parent. She earned her bachelor’s degree in nursing at OHSU.
  • Janeen Sollman (D-Hillsboro) – Sollman, a Washington county native, has served on the Hillsboro School Board. She works for Vernier Software & Technology, an education software company, based in Washington County.
  • Mark Meek (D-Gladstone) – Meek was the first in his family to graduate high school and then went on to graduate with a bachelor’s degree in management from Park College in Parkville, Missouri. An Air Force Veteran, Meek owns a small real estate and property management business. He has coached high school football and serves on the Clackamas County Planning Commission and Economic Development Commission.
  • Karin Power (D-Milwaukie) – Power is a nonprofit environmental attorney and Milwaukie City Councilor. She is a graduate of Mount Holyoke and earned her law degree from Lewis and Clark.
  • Tawna Sanchez (D-Portland) –Sanchez, born of Shoshone-Bannock, Ute, and Carrizo descent, grew up in Portland. She received a Bachelor’s of Arts from Marylhurst University and a Masters in Social Work from PSU. She is a co-founder of the Native American Youth and Family (NAYA) Center and currently serves as the organization’s Family Services Director and Interim Executive Director. She has helped raise 18 foster children and has served on the Oregon Family Services Review Commission and Oregon Child Welfare Advisory Commission.
  • Diego Hernandez (D-Portland) –Hernandez is a product of East Portland’s public schools and worked his way through the University of Oregon, where he earned a BA in Political Science and Ethnic Studies. He also holds a Masters in Social Work from PSU. He is the first Latino elected to the Reynolds School Board and currently serves on the Oregon Commission on Hispanic Affairs. He is the Co-Executive Director of Momentum Alliance, a nonprofit that develops young civic leaders.
  • Janelle Bynum (D-Happy Valley) – A mother of four children, Bynum owns and operates, with her husband, two McDonalds franchises. She holds an MBA from the University of Michigan, and a bachelor’s degree in Electrical Engineering from Florida Agricultural & Mechanical University.
  • Werner Reschke (R-Malin) – Reshke grew up in Beaverton, and, after starting at Judson Baptist College in The Dalles, graduated from Oregon State University with BA (honors) degree in Business Administration. With his wife, Reschke owns a small online marketing agency specializing in web design, cloud development and email marketing. His employment history includes time with Georgia-Pacific, Tektronix, and Xerox.

 

Next Steps

Following Wednesday’s Economic and Revenue Forecast, Governor Brown will put the finishing touches on her Recommended Budget (known as the “GRB”) which is scheduled to be released on Thursday, December 1.

Meanwhile, legislative leaders are putting together committee rosters for the 2017 session. In the Senate, with a turnover of only four members, we do not anticipate significant changes. Sen. Richard Devlin (D-Tualatin) will continue to Co-Chair the Joint Ways & Means Committee.

In the House, Speaker Tina Kotek (D-Portland) is working to assign a significant number of new members to committees and to designate committee chairs to replace a number of veteran legislators who are retiring or moving to different offices. Two questions important to higher education include: Will the House Higher Education Committee be continued into the next session, and if so, who will chair it? And, who will co-chair the Joint Ways & Means Education Subcommittee which oversees the universities’ operating budgets? Rep. Nancy Nathanson (D-Eugene), has already taken the reins from retiring Rep. Peter Buckley (D-Ashland) as co-chair of the full Joint Ways & Means Committee, and will continue in that role in 2017.

Legislative Committees will meet for three days, Monday – Wednesday, December 12-14. Committee agendas will likely include a preview of legislative concepts that will come before the legislature when it convenes in January.

If you have questions or would like further information, contact Jock Mills.

The 2016 General Election

What happens during the 2017 legislative session will depend on how voters consider a number of measures that will likely be on the November ballot.  Most noteworthy of these is IP-28, which would create a state corporate receipts tax.  Proponents of the measure claim it will create revenues needed to balance the budget and improve services.  Opponents claim the measure will create an unfair and unbalanced state tax structure that will place Oregon businesses in an unfavorable position.  The Legislative Revenue Office presented an analysis of the measure to the House and Senate Revenue Committees last month. Proponents of the measure rebutted the analysis in a recent editorial in the Oregonian. (As a public entity, OSU does not take positions on ballot measures.)

 

May Committee Days

Throughout the year, legislative committees meet on a quarterly basis.  Following the February 2016 short session, committees met in May.  While a number of committees and task forces will meet occasionally over the summer, the next formal committee session is scheduled for the week of September 19th.  Here are some highlights from the committee sessions in May:

  • Upon the favorable recommendation of the Senate Rules & Executive Appointments Committee, the full Senate confirmed Governor Brown’s appointment of two new members to the OSU Board of Trustees:  OSU Engineering Professor Mike Bailey, past president of the OSU Faculty Senate (filling the position of faculty trustee) and Nike executive and OSU alum Julia Brim Edwards.
  • The House and Senate Committees on Veterans and Emergency Preparedness met jointly and considered possible changes in a 2015 bill that called for priority registration for veterans at Oregon’s seven public universities.  Working with campus veterans groups, representatives from the seven universities plan to develop recommendations for addressing a variety of veterans-related issues and report back to the committees when they meet in September.
  • Governor Kate Brown met with members of the OSU Women’s Basketball team, congratulating them on their historic 2015-16 Final Four season.  Senate President Peter Courtney welcomed the team to the Senate chambers.  You can see pictures from this visit on the Governor’s Twitter page and the Oregon State Women’s Basketball Facebook page.

GovBrownWBB GovBrownWBB2 GovBrownWBB3

Significant Policy and Budget Issues for the 2017-19 Biennium

Over the coming months, our efforts will be aimed at ensuring that legislators, the Governor, and stakeholders are aware of the dividends that have resulted from investments made in higher education during the 2015 legislative session.  In preparation for the 2017 session, we will be highlighting how state bonds for campus capital projects and budget increases for student success initiatives and the OSU statewide public service programs (Extension, Agricultural Experiment Station, and Forest Research Laboratory) have significantly improved OSU’s ability to serve Oregonians.

These efforts will be aimed at making the case for continuing investments needed to maintain the level of student success and economic well-being that have resulted from our work during the 2015 legislative session.  Here is a summary of seven significant initiatives and policy issues we will be pursuing over the coming months:

  • Maintaining Operating Expenditures: All seven public universities are working together to achieve at least a $100 million (15%) increase in operating funds.  This would enable universities to keep tuition increases below 5% and also preserve current financial aid and student support services.  In April the seven public university presidents sent a letter to the Higher Education Coordinating Commission (HECC) seeking increased funding along these lines. http://oregonstate.edu/government/sites/default/files/consolidatedfundingrequest2017-19.pdf
  • Securing New and Renewed Capital for All Seven Universities:  All seven presidents have also joined together in supporting $284 million in capital funding for the 2017-19 biennium.  At OSU, these projects involve significant capital renewal funds for existing buildings, investments in OSU-Cascades, and a quality food and beverage initiative. http://oregonstate.edu/government/sites/default/files/consolidatedcapitalrequest2017-19.pdf
  • Expanding OSU-Cascades:  OSU is developing and implementing a strategy for financing the long-term capital expansion of OSU-Cascades.  Currently, the state maintains a distinct funding stream for OSU-Cascades operations.  We are seeking similar treatment for capital funds in order to achieve the state goal of creating a four-year campus in Central Oregon.  While advocating for OSU-Cascades, we have sought to be clear that the state’s decision to establish an eighth campus in Central Oregon should not come at the expense of the existing seven public university campuses in Oregon.
  • Maintaining the OSU Statewides:  In 2015, the legislature allocated a $14 million increase for the OSU Statewide Public Service Programs (Extension, Agricultural Experiment Station and Forest Research Laboratory).  This level of funding needs to be maintained with an appropriate “continuing service level” increase in 2017.
  • Improving the Implementation of State Financial Aid Programs:  All seven universities are working together to address and resolve significant shifts in financial aid resources that have occurred over the last year.  In particular, we are working to understand how state investments in the Oregon Promise program (“free community college”) and changes in the Oregon Opportunity Grant program may affect state funding for low-income students who attend four-year universities.
  • Investing in State Economic Development Programs:  The research universities are working together to develop and implement a state Economic Development and Research Budget Strategy.  These efforts may include investments in inter-connectivity among and between campuses and a re-vamping of the state’s Innovation Council.
  • Continuing the Seven Public University Alliance: All seven universities are working together to be responsive and proactive on a wide variety of intricate policy issues likely to present themselves prior to and during the 2017 legislative session.

Lawmakers approached the February short session with a fundamental disagreement over what issues are appropriate for resolution in just 35 days. For this session, leadership sought to reduce the load by allowing each legislator to introduce only two bills. Nevertheless, legislators faced a wide range of well over 200 bills and a highly charged, divisive atmosphere. Although the deadlines for passing bills came quickly, the process by which bills were considered by the House and Senate slowed to a crawl when Republicans refused to vote for a “suspension of the rules” – resulting in the requirement that the entirety of all bills be read aloud when they were considered on the floor. (With the average reading time for bills at between three to four minutes per page, many bills took much longer to read than to debate and vote.)

One reason for the legislative divisiveness is the state’s initiative and referendum process, which this year presented legislators with two measures that were making their way to the November 2016 general election ballot. One, known as “IP 28”, would create a state gross receipts tax. The other would establish a statewide minimum wage. Legislative leaders had roughly four weeks to devise alternatives they believed would be preferable to the measures currently being circulated for signatures.

Opponents to the minimum wage increase contended that they would prefer to take the risk of losing at the ballot box, rather than accepting a more flexible alternative designed by legislators. On a generally party line vote legislators devised – and the Governor signed – a minimum wage compromise that ultimately caused petition backers to withdraw their proposal.

But given the state’s 3/5 majority requirement for passing revenue increases in the legislature, lawmakers faced little opportunity for forging a compromise tax package intended to head off IP 28. The corporate tax measure promises to be an expensive battle during the November general election.

******

Here is a summary of the measures considered during the 2016 legislative session that affected Oregon’s seven public universities.

A. Unified Priorities across all Seven Universities

As with the 2015 legislative session, Oregon’s seven public universities worked together on a unified agenda. While additional funding was not forthcoming, the universities presented themselves as a unified force and generated one of the most active lobbying days during the short session.

College Completion Initiative:  $15 Million to continue the education agenda. During the 2015 session, the legislature provided $700 million for Oregon’s public universities in response to a unified campaign for $755 million. The universities approached the 2016 session with hopes of additional funding targeted to address immediate and near term factors that impede student completion.

Result:  The legislature did not provide any additional funding for university operating budgets.

Renewal of the University Venture Development Fund (UVDF) Tax Credit (HB 4072). First enacted in 2005, this tax credit encourages individuals to donate to Oregon’s public universities, including OHSU, to help convert university research into new companies and products. Over the last decade, universities have raised some $7 million, resulting in the formation of dozens of new companies that have created approximately 270 high wage jobs. Over the last five years, jobs created by UVDF support have generated a total of $4.35 million in income tax revenues.

The legislature did not renew the tax credit during the 2015 session and the credit expired at the end of 2015. In an effort to renew the credit so that donors could continue to participate in the program during the 2016 tax year, Reps. Andy Olson (R-Albany) and Dan Rayfield (D-Corvallis) worked with the seven public universities and OHSU to introduce legislation that renewed the program at the historic level –  $8.4 million in tax credits. (The 2015 legislation sought to nearly double the credit cap to $15 million.)  HB 4072 also included provisions that simplify and facilitate the timing and process by which donors can use the credits.

Result:  With only one legislator voting “no” throughout the entire process, the legislature renewed the UVDF intact, enabling universities to use approximately $4 million in additional tax capacity the full $8.4 million tax credit created in 2005.

Constitutional Ballot referral to enable universities to invest in equities (HJR 203). When the legislature passed the original bill that established university governing boards in 2013 it included a provision that enabled universities to invest their funds in equities (stocks). The intention was to provide universities with more investment options that could result in both higher yields and greater stability. Subsequent legal opinions indicated that the state constitution has to be amended to extend this opportunity to the universities, so they sought a legislative ballot referral to put the matter on the November 2016 ballot.

Result:  HJR 203 passed the legislature and will be on the November 2016 General Election ballot. Passage of this measure will likely involve an effort to inform voters of the measure’s intent and impact.

An equitable approach for developing the 2017-19 Budget. Legislation that established universities as independent public entities resulted in state budget writers calculating future budgets that do not include an accurate calculation of Public Employees Retirement System (PERS) and public employee health insurance – Public Employee Benefit Board (PEBB) costs. This resulted in the determination during the 2015 legislative session that in order to provide the same level of services in the 2015-17 biennium – the “Continuing Service Level (CSL) –a 3.3% increase was all that would be needed. Because current statutes require the universities to cover these costs, an accurate calculation of PERS and PEBB costs for the current biennium would have involved at least an 8% CSL increase. The seven public universities sought budget note language during the 2016 session to direct the Governor to consider an appropriate CSL when compiling a budget for the 2017-19 biennium.

Result:  In adopting SB 5701, the legislature adopted the following budget note:

The Subcommittee recognizes that the Current Service Level (CSL) is intended to estimate the cost of legislatively approved programs in the upcoming biennium. In 2009, the Joint Committee on Way and Means approved the adoption of a CSL model for the Community College Support Fund (CCSF) to reflect health benefit and retirement costs expected to exceed the Department of Administrative Services standard inflation rate.

To ensure consistency in post-secondary state support CSL calculations, the Department of Administrative Services (DAS) and the Legislative Fiscal Office (LFO) are directed to develop, in consultation with the Higher Education Coordinating Commission and the seven public universities, an estimated cost of applying the Community College Support Fund model to the Public University Support Fund, the Agricultural Experiment Station, the Extension Service, the Forest Research Laboratory, and Public University State Programs. The estimate will include data elements that the public universities will be required to submit to HECC in order to implement the model.

DAS and LFO will provide the estimated cost to implement the Community College Support Fund CSL model for Public University state support to the Emergency Board, through the Legislative Fiscal Office, by July 1, 2016

Universities will continue to seek provisions for state settlements on labor contracts to also be considered in the CSL. (Community Colleges are not subject to state labor negotiations.)

Individual University Capital Requests. A number of universities sought specific capital requests to address emergency or unanticipated needs or to shift already approved capital expenditures to other projects. (OSU had no projects on this list.)

Result:  The legislature funded the five capital projects sought by OIT, PSU, and SOU.

 

B. OSU Specific Legislation

State Matching funds for a Federal Marine Energy Grant. In December Congress appropriated $5 million to the US Department of Energy to fund a competitive grant to further develop a wave energy test facility. This initial funding could grow over the next 3 to 5 years to a federal investment totaling of $40 million, with the expectation that successful competitors for the grant will provide at least a 25% match, or $10 million. The total project—federal and non-federal funds—is expected to be $50 million. Oregon will be competing with other states that are developing their own matching proposals for this long-term funding opportunity. The Coastal Caucus and other legislators sought an appropriation for the first installment of $1.25 million in state matching funds to enable OSU to compete for the initial $5 million in federal funding.

Result:  With the passage of SB 5701, the legislature provided $800,000 to enable OSU to compete for the $5 million DOE grant. It is not clear whether or how OSU will address the additional $450,000 needed to fully meet the 25% match requirement.

Economic Development Investments for the 2021 International Track Championships (HB 4146). Last year Tracktown USA successfully bid to host the 2021 International Track Championships. The Governor worked with a coalition of supporters, including OSU to seek an increase in the statewide lodging tax to enable funding for the infrastructure needs for this event. OSU’s track facility is well positioned to serve as a training venue. It remains to be determined what funding may be available in 2017 to match philanthropic opportunities for the OSU track.

Result:  After a process that considered alternative rate increases and implementation periods, the legislature approved a 0.8% increase in the statewide lodging tax.


C. Additional actions

ALS Endowment:  Included in the final budget bill was a one-time $100,000 allocation that will enable the OSU Foundation to create and manage an endowment to provide scholarships for OSU students involved in research addressing amyotrophic lateral sclerosis (ALS). The funding is in honor of State Rep. Vic Gilliam (R-Silverton) who was recently diagnosed with ALS.

Endophyte Research: Endophytes are fungi found in grass stubble used as animal feed. The issue is important to the grass seed industry which, with the implementation of field burning bans, now exports grass stubble as animal feed. SB 5701 appropriated $100,000 for endophyte research to be matched by private dollars. “These funds are to be used only for endophyte research in support of Oregon’s fiber and straw export industry. A report to the Legislative Fiscal Office on how the funds were used in support of endophyte research and what was made possible by this additional influx of funds should be made by December 31, 2016.”

 

D. Other Higher Education Bills that Passed

SB 1540 Calls on the HECC and universities to determine the best method of increasing number of mathematics majors at Oregon universities.

SB 1558 Limits disclosure of records of college or university student health center, mental health center or counseling center, or records of health professional retained by college or university.

SB 1586 Requires universities to undertake a number of activities to encourage students to register to vote.

HB 4019 Requires universities to provide in-state tuition to dependents of Oregon residents who leave the state to serve in public service organizations.

HB 4021 Directs the State Treasurer to study possible refinancing mechanisms for student loans.

 

E. Increasing the Minimum Wage (SB 1532)

Governor Brown and Democratic leaders devised a phased-in minimum wage proposal that would pre-empt the November ballot initiatives seeking to increase the state’s minimum wage from the current $9.25/hour rate. The Legislature eventually approved SB 1532, which would phase-in minimum wage increases across three different regions based on their level of economic activity – the Portland metro area, a middle tier which includes Benton County and OSU, and rural/economically stressed counties.

The minimum wage hike will vary in how it affects universities, based on their locality, the number of workers at minimum wage, and the source of funds – tuition, student fees, or other funds such as housing and dining which employ a large number of minimum wage workers.

In short, both EOU and OIT may be largely unaffected because they are headquartered in non-urban or “economically distressed” counties. (The bill does not directly address what to do about universities with employees across the multiple wage rate zones.) Universities estimate that implementing the bill in 2017 will involve a $1.3 million increase in costs across all seven universities for the remainder of the current biennium. Almost half – $602,000 – would apply to OSU across all of the university’s activities whether paid for by general funds, federal funds, fees, or room and board. Assuming that OSU would not decrease the number of employees as a result of the increase in minimum wage, the OSU figure would grow significantly each year over the next three biennia: $771,000 per year in 2017-19 biennium to well over $1.5 million per year in future biennia.

The source of funding has yet to be determined. The preliminary analyses indicate that a quarter of the 2017 costs will accrue to state education and general (E&G) activities paid for either by tuition or general fund appropriations. A third of the costs will accrue to university housing and dining; a quarter will accrue to activities supported by student fees. The latter two involve funding streams that are entirely paid for by students.

While OSU student workers will be the primary beneficiaries of a minimum wage increase under SB 1532, they may also bear the burden of the increased tuition, fees, and housing and dining costs needed to pay these wages. It is also possible that those who receive work-study funding may see their wages increase but their hours reduced. State appropriations may help address the impacts to activities supported by “E&G,” but housing and dining and student fee supported activities cannot be supported by state appropriations.

Coverage of this issue can be found in the Oregonian.

The Governor’s statement following the legislature’s adjournment on Thursday, March 3 can be found here.

 

In our next update, we’ll look into the changes ahead for the Oregon legislature.  With the March 8th filing deadline, the House will see a significant turnover, particularly in the Democratic ranks with nearly a third of the caucus membership retiring or moving on to seek higher office. With only half of its membership up for election, the Senate will see fewer changes.

If you’re interested in supporting OSU in Salem, join the Beaver Caucus.

On Wednesday, Governor Kate Brown issued an outline of her key objectives for 2016, including the short legislative session, which convenes on Monday, February 1. Under Oregon’s Constitution, legislators must adjourn by Saturday, March 5.

  • View the Governor’s Agenda for 2016 here.

 

One of the most significant items on the Governor’s list is her proposal to increase the minimum wage. The proposal includes a six-year phased-in $13.50/hour statewide wage, with a $15.52 wage for the Portland Urban Growth Boundary to address that area’s higher cost of living. (Oregon’s current minimum wage of $9.25/hour is the nation’s second highest.) Democratic legislative leaders are interested in enacting state minimum wage legislation in February to stave off a November ballot measure that would involve a two-year phase-in of a $15/hour wage.

 

Legislative budget writers have asked universities to identify the potential fiscal impact of the Governor’s proposal. Impacts will likely involve activities that are funded by tuition and state appropriations as well as activities that are funded by auxiliary funds (such as athletics and housing and dining). Student fees are also used to support some on campus minimum wage jobs.

  • See The Oregonian’s coverage of the minimum wage proposal here.

 

A number of the Governor’s other priorities may be of interest to various units at OSU, including:

  • An Executive Order establishing the Governor’s Council on Educator Advancement, charged with coordinating comprehensive support to deliver excellence in teaching through leadership development, mentorship and best practices (yet to be posted);
  • Establishment of a Governor-appointed Campus Safety Working Group (last month OSU provided suggestions for participants in this group);
  • Appointment of a State Resilience Officer to deal with earthquake preparedness;
  • A drought package funding proposal to help local communities plan for and address persistent drought; and
  • A wildfire funding proposal to cover costs incurred during the 2015 wildfire season.

 

House Republican Leader Mike McLane issued a response to the Governor’s priorities, which you can find here.

 

University Priorities for the 2016 session

Not included on the Governor’s list of priorities are a number of legislative initiatives supported by OSU and the other public universities in Oregon, including OHSU. Chief among them is the renewal of the University Venture Development Fund (UVDF) tax credit. Reps. Andy Olson (R-Albany) and Dan Rayfield (D-Corvallis) have joined to introduce HB 4072, which would renew the credit for a six-year term. For information on the bill, see our UVDF Fact Sheet.

 

Universities are also seeking $15 million in increased funding to continue progress made last session to increase student completion rates. While the legislature’s Ways & Means leadership appear to believe that additional funding will be scarce, universities and students contend additional funding is needed to maintain improvements attained during the 2015 session.

 

Other university priorities include support for a legislatively referred constitutional amendment to enable universities to invest in equities. The original bill that established university governing boards in 2013 included a provision that enabled universities to invest their funds in equities (stocks). The intention was to provide universities with more investment options that could result in both higher yields and greater stability. Subsequent legal opinions indicate that this change cannot be accomplished through statutory changes; the state constitution has to be amended. As a result, the universities are seeking a legislatively approved ballot referral to put the matter on the November 2016 ballot.

 

Universities are also seeking an equitable approach for developing the 2017-19 budget. Legislation that established universities as independent public entities resulted in state budget writers recommending future budgets that do not include an accurate calculation of Public Employees Retirement System (PERS) and public employee health insurance – Public Employees Benefit Board (PEBB) – costs. During the 2015 legislative session, budget writers determined that a 3.3% increase would be needed to provide the same level of services in the 2015-17 biennium – the “Continuing Service Level” (CSL). Universities claim an accurate calculation of the state-mandated PERS and PEBB costs for the current biennium would have involved at least an 8% CSL increase. Because uncompensated PERS and PEBB costs will be borne by students and will erode current state investments in student success, universities are seeking a legislatively endorsed process by which a more accurate and equitable methodology is used to calculate the CSL for 2017-19.

 

OSU-Specific Bills

State matching funds for a $5 million Federal Marine Energy Grant. In December, Congress appropriated $5 million to the US Department of Energy to fund a competitive grant to further develop a wave energy test facility. This initial funding could grow over the next three to five years to a federal investment totaling $40 million, with the expectation that successful competitors for the grant will provide at least a 25% match, or $10 million. The total project — including federal and non-federal funding — is expected to be $50 million. Oregon will be competing with other states that are developing their own matching proposals for this long-term funding opportunity. Coastal legislators are pursuing state legislation for 2016 that would appropriate the first installment of $1.25 million in state matching funds to enable OSU to compete for the initial $5 million grant. Last week, the House Energy & Environment Committee agreed to carry the proposal as a committee bill.

 

The Session Ahead

University Lobby Day: Mark your calendars! All seven universities will be holding a unified lobbying day on Thursday, February 11. Activities for the day will include individual meetings with legislators seeking support for the higher education agenda, as well as a reception. Register to participate here. More detailed information will be forthcoming in the next week. If you have questions, please contact Karli Olsen.

 

Bill Tracking: The OSU Government Relations Office will be tracking legislation throughout the month-long session. While the volume of bills will not be nearly as great as during the six-month session, timelines will be extremely fast. For example, legislative committees have about ten days to approve bills before the bills become ineligible for consideration. If you are aware of issues that you’d like us to track, please contact Karli Olsen.

 

Legislative town halls with local legislators:

  • Thursday, January 27, 3:30-5:30, Memorial Union, Journey Room, sponsored by ASOSU. State Sen. Sara Gelser (D-Corvallis/Albany) and State Rep. Dan Rayfield (D-Corvallis) will participate.
  • Saturday, January 30, 10:00-noon, Corvallis/Benton County Library, sponsored by the League of Women Voters. This forum will also include local state legislators.

 

If you have questions or would like additional information about any of the items above, don’t hesitate to contact us.

Jock Mills, Director, jock.mills@oregonstate.edu

Karli Olsen, Coordinator, karli.olsen@oregonstate.edu

For Federal matters: Gabrielle Serra, Federal Relations Director, gabrielle.serra@oregonstate.edu