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Oregon State University officials say they will need to cut $15 million each year to make up for the deficit presented by the state's current budget draft.

COURTESY: OREGON STATE UNIVERSITY - Oregon State University President Ed Ray, shown here in his office, visited Portland on Wednesday, Feb. 8, for his annual State of the University address. Oregon State University President Ed Ray has strong words for the governor and the Legislature as they head into the biennial budget process.

"The state's got to make a damn decision," Ray said at an editorial board meeting of the Portland Tribune/Pamplin Media Group after his annual State of the University address Feb. 8. "The state really does need to invest in education."

Ray's speech to the approximately 750 alumni and Beavers friends gathered at the Oregon Convention Center highlighted the many successes of the institution but also was peppered with laments of the lack of state funding and appeals for donations.

Oregon State University officials say they will need to cut $15 million each year to make up for the deficit presented by the state's current budget draft.

"The impact is landing on the backs of students and their families, as tuition now pays 66.9 percent of the cost of Oregon State's Corvallis campus educational operations and the state only 21.4 percent," Ray said, adding that means the state's slice of the cost pie is half the size it was 15 years ago.

"If you're a legislator, where's the element of surprise that Ed Ray wants more money?" he said to the editorial board. "But if you tell your legislators that higher education needs more money, they are more likely to act."

Oregon's seven public universities have opined for years that they need more funding from the state, which has, indeed, significantly disinvested in higher education. But it's also true that after a split with state government in 2013, the major universities are now able to raise even more millions of dollars in private donations.

Other state-funded services, such as law enforcement and K-12 education, do not see such success in their foundations.

Steve Clark, a spokesman for the university, said while it's true that OSU has been successfully growing during the state's disinvestment, it also still has to operate under state-required expenditures, such as public employee benefits, and significant investments in buildings and other infrastructure.

"The cost of doing business is substantially different than it was 15 years ago," Clark added, noting new federal regulations to counter sexual violence, among others.

Clark also said that many of the private donations coming in are tied up in trusts, with only the dividends paid out for scholarships. Assuming an average return of 7 percent, the university would need to raise $14 for every $1 lost in annual state funding, he argues.

A quick look at OSU's annual budgets shows their funding pie has grown dramatically bigger in the past several years. The operations budget for fiscal year 2017 is $1.17 billion — a $42.2 million increase from the year before. From 2015 to 2016, there was an increase of $119.3 million and the year before, a $64.5 million jump.

For the 2017-19 budget, the state's seven public universities have asked for $100 million in state funding, but Gov. Kate Brown's budget calls for a small fraction of that.

The effect could be fewer classes, longer paths to graduation, poorer quality education, and tuition hikes up to 9 percent, Ray argues.

At the same time, the university's foundation has announced it is a third of its way to a $150 million goal for wrap-around services to support retention and graduation of students. Called the Student Success Initiative, the program will give targeted scholarships and other aid to students at risk of dropping out.

The institution is also looking to expand its OSU Cascades campus in Bend with state-backed bonds but is short $49.5 million in the governor's proposal. Ray says that will delay the opening of Cascades' second classroom building until 2023 and therefore delay the economic growth opportunity in a region with no other four-year university.

OSU has also become a national player in the online learning arena.

"I think it's possible — in the next 10 to 20 years — that Oregon State University will be as large virtually as it is actually," Ray said.

Oregon State currently has more than 30,000 students enrolled and awarded more than 6,700 degrees last year in its largest graduating class in history.

Ray says the post-Oregon University System of boards of trustees is working out better than he anticipated. But he continues to worry that the public universities' boards will devolve over the decades into an aristocracy, installing big donors more concerned about good sports seats than good governance.

"I worry that it's going to become too politicized and lose its focus on really being good stewards of the universities," he said.

For now, however, Ray says the more independent system has been good for him — it's held him more accountable. "What I had forgotten — even as driven as I am — you're never as on your game as when you're being held to account."

Shasta Kearns Moore
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