UO to share latest details on addressing budget gap

Presenter: The University of Oregon has promised to release this week—the week of Sept. 7—an update on its plan for addressing its $25 to $30 million budget shortfall. Here’s what we heard at the UO Town Hall June 9. University President Karl Scholz:

Karl Scholz (University of Oregon, president): Thank you very, very much for coming here. I’m told there’s over 700 people on a YouTube stream and then in person, so there’s clearly a lot of interest in these issues. So again, thank you very, very much for coming out today. We’ve had over 100 questions submitted. I think there’s additional questions going to be submitted in real time.

[00:00:38] So rather than starting off with speechifying, let’s get right to the questions and I’ll take one of the questions that came in very frequently here. And the short version of it is: ‘How did we get here?’ Slightly longer version: ‘I’ve heard the budget deficit is in part related to enrollment in addition to the federal landscape and associated funding changes. Please speak to the current state of enrollment and its impact on the deficit.’

[00:01:05] So there’s lots of factors that have contributed to this $20 to $30 million, $25 to $30 million budget deficit that we’ve sent around. In no particular order, I’ll start with the state of Oregon. And so we’re ranked number 46 in the country, if we rank the 50 states on state support for public four-year higher education. The current budget that looks like will happen for the University is not sufficient to even maintain current services.

[00:01:36] In addition, the state requires us to participate in the pension plan, that’s PERS, the health insurance benefits, PEB, and the pension plan in the state of Oregon in particular is challenged by what I would say—others might disagree—overly generous benefits from past generations, that then the payments that we’re required to pay keep ratcheting up.

[00:02:01] In addition, we have great labor contracts. We are excited about that. We are committed to trying to have market-informed compensation for people, but that continues to put pressure on.

[00:02:13] And third, then, is the federal landscape. And so it’s not just the cutbacks to research infrastructure that we’re navigating, though those are part of it. We need to continue to keep our zebrafish alive. We need to do other things while grants are being cut back. But in addition, there’s been a chill put on international students, and we rely on international students as part of our population. And then policy changes like tariffs will create enormous uncertainty.

[00:02:44] So in response to that uncertainty, a couple things happen. One is families get a bit more conservative with their finances, about where they choose to send their children, or the children get more conservative about where they’re going. And so that means that we are seeing fewer students going out of state in order to secure their college education.

[00:03:06] The second thing that happens though is every university in the country is facing serious financial challenges. The one lever that universities can pull in navigating those challenges is their enrollment. And so, for example, the University of California system is taking more Californians, significantly more, thousands of more Californians.

[00:03:30] And there’s the old joke that The University of Oregon sometimes is known as the University of California-Eugene. That has an effect on our enrollments.

[00:03:39] And so taking all of those things together, we find ourselves in the financial pressures. So two other things, though.

[00:03:46] I was just spending just a small amount of time on the internet this weekend. And almost every institution in the Big Ten is navigating the same sort of challenges. My previous institution, the University of Wisconsin-Madison, has asked all their units to plan 5% and 10% budget cuts. And you can go almost across the Big Ten.

[00:04:08] The second thing, though, is like, ‘President, this is a couple days before graduation. Why are we talking about this now?’ And that’s complicated by the fact that our deposit deadlines for students is May 1. Our enrollment management people, I think, have done a fantastic job this year, but we didn’t have visibility on out-of-state enrollments and in-state enrollments until into May.

[00:04:34] And so we have been trying very hard to communicate clearly about the challenges, but the visibility on the magnitudes of the budget deficits have only become apparent now.

[00:04:46] Chris Long (University of Oregon, provost): All right, let me ask the next question. I’m Chris Long, I’m the provost. I’m grateful to have an opportunity to engage with people in this format.

[00:04:55] ‘How specifically will the provost’s office and the dean’s offices decide which programs to cut and how much to cut them? I’m interested in the in-the-weeds rubrics, metrics, and models, not a single PowerPoint slide with a set of buzzword values on it.’

[00:05:15] I empathize with the buzzword values comment there at the end of that question. Those of you who know me, after my year, this is my first anniversary here. This is entering my sophomore year starting now. I am committed to values-enacted leadership, and that really gets to the heart of this question which is about how we’re putting our values into practice.

[00:05:44] And as we think about the kinds of cuts that we’re looking at, we’re going to have to be very intentional about how we do that. And we’re going to have to do that at multiple levels of the organization.

[00:05:57] Karl mentioned that we have the budget cuts that we’ve announced over the last couple of weeks. I also want to highlight the fact that both on the administrative side and on the academic side, units have been working very hard to bring their existing budgets in line with their expenses.

[00:06:15] So there’s multiple dimensions that we’re having to navigate right now.

[00:06:21] The work that we’re doing to get to the 4% in the administrative side and then across the schools and colleges, 2.5% on average, is in addition to bringing our budgets in line with our current expenses.

[00:06:37] And so the deans and the provost’s council has been working on that on the academic side. And I know we’ve been working very hard on that on the administrative side as well. So for that component, that dimension, namely the bringing-our-budgets-in-line component, there will be more actions that we’re going to have to take sooner rather than later.

[00:06:59] And the conversations we’re having now about the budget cuts in addition to that is connected to, I think, the heart of this question, which is around program cuts and how we’re going to do that, what metrics we’re going to use.

[00:07:14] Obviously, we’re going to be looking at student credit hours. We’re going to be looking at majors and double majors. We’re going to be looking at research productivity. We’re going to be looking at all the indicators that we normally look at when we think about programs.

[00:07:31] But I want to be clear that we’re not just talking about reading numbers off a spreadsheet and drawing a line and making budget cuts. What we’re asking each other to do is to engage with each other across leadership and to try to reach into the fabric of the organization to get as much of the wisdom as we can from that, to make the most intelligent and wise decisions that we can make.

[00:08:04] Having said that, it’s also true that hard decisions are going to have to be made. And those decisions are going to be made by the academic and administrative leaders of the institution.

[00:08:20] Presenter: UO President Karl Scholz:

[00:08:22] Karl Scholz (University of Oregon, president): All right, another question. I can tell my friends are not pulling punches on the questions. So this is: ‘Have administrators considered taking, for example, 20% reductions in pay, especially considering it as a responsibility of administration and not staff or teaching professors to steward the institution’s finances.’

[00:08:41] So again, thank you, thank you for the question. As my opening remarks said, I would argue that the situation that we find ourselves in is quite out of our control, what’s happening with federal research cutbacks, what’s happening with economic uncertainty, what’s happening with immigration policy, very, very tough to forecast, a while ago.

[00:09:08] I spoke about our desire to have market-based compensation for all groups on campus. That applies to administrators or highly-paid administrators. And it’s a very, very competitive market out there.

[00:09:24] So one of the principles, if I can elevate it to that, is that I do not anticipate asking any of our existing employment groups to take pay cuts to navigate this. So we can think about temporary pay cuts, but our problem is structural in nature, so one-time temporary cuts do not address the problem that we’re trying to address.

[00:09:49] The labor market is very competitive for administrators, as it is for all members across the university. And I do not want to impose pay cuts on administrators, causing them to get hired to other places.

[00:10:05] The University of Oregon has had a history, I think, of some instability in leadership, and I think that’s harmed the institution. So I want to identify, hire, support great people throughout the organization, and compensation is part of doing that.

[00:10:21] Presenter: At the June 9 town hall, UO Provost Chris Long:

[00:10:25] Chris Long (University of Oregon, provost): My next question is, ‘Can we expect faculty layoffs over the summer?’

[00:10:32] As I mentioned in my previous comment, we have multiple things happening here. The pay cuts, the budget cuts that we’re looking at, and we’re going to be working on over the summer, and also the efforts to get the budgets in line with expenses in the colleges and the University. So it could very well be the case that we see some layoffs over the summer.

[00:10:58] Presenter: President Scholz:

[00:11:00] Karl Scholz (University of Oregon, president): Next question, ‘Are alternatives to layoffs being considered or suggested and that could include hiring freezes, travel freezes, furloughs, voluntary pay cuts and other short-term fixes. Offering the option of reduced FTE or leave without pay would in some cases be welcome.’

[00:11:18] And I do want to say kind of everything is on the table. We have very, very challenging circumstances. And I’ll be blunt, I hate that we’re having to navigate this because Oregon has great, great people. And so it’s very frustrating to have to navigate this situation. And to do so, then everything needs to be on the table.

[00:11:41] Having said that, we need to differentiate between short-term challenges versus longer-term structural challenges. And so the specific question about reduced FTE or leave without pay, if temporary, doesn’t address those structural challenges. And so we will be trying to work with all good ideas about how to collectively navigate this, but we need to focus on longer-term steps.

[00:12:12] Chris Long (University of Oregon, provost): Okay, my question comes from a student. ‘If this institution claims to care about the education of its students, how can we mitigate the loss of faculty and academic programs and maintain smaller programs that have less enrollment with the upcoming budget cuts?’

[00:12:34] As I mentioned around some of the challenging—the scale of the budget cuts that we’re looking at, we are going to have to think about what kinds of programs we may need to cut. That $25, $30 million budget cut is a big number. And we have agreed as part of our process not to just do across-the-board cuts, that we were going to try to be strategic.

[00:13:03] And being strategic in doing those cuts means that we have to take into account exactly what this student is worried about: How can we try to do our best to ensure the educational experience of our students continues to be very strong, even as we have to make very difficult budget cuts?

[00:13:22] We have to balance a number of elements here, the educational experience, the priorities that we have as a university to be a Research 1 public AAU university, which means we have to focus also on research.

[00:13:38] And so, as you can see, some of the principles that we’re dealing with are in conflict with each other. We’re going to have to navigate that conflict.

[00:13:46] And we’re going to have to navigate that conflict in conversation with one another over the course of the next few months, but it’s absolutely critical that we attend to the needs of our students in the programs that we have as best we can, recognizing that we’re going to have to make some difficult decisions.

[00:14:09] We are not, as I said, just reading across a spreadsheet. So there are some programs that are very important to the mission of the University that are never going to be able to teach a huge number of students. And so we have to be mindful of that as we think about our difficult decisions ahead.

[00:14:27] Presenter: That’s Provost Chris Long and President Karl Scholz from the University of Oregon, with the first few questions from a financial outlook town hall June 9. You can see the full hour-long session at the University website. The UO plans to share the latest budget updates the week of Sept. 7.