In the face of "a significant financial challenge," Southern Oregon University President Mary Cullinan has started a process that could end in cuts in campus programs and faculty.
She made her case for the budget crisis in a campus speech Monday and opened a comment period to determine whether a financial emergency requiring cuts exists.
The comment period, which ends Dec. 15, is required by the university's union contract with professors before any employment cuts are made. Soon after the start of winter term Jan. 8, she will decide whether to declare "a condition requiring reduction or elimination of a program" that would prompt an intense planning period to outline cuts.
The declaration would enable the president to terminate contracts with tenured or tenure-track professors, said Jay Kenton, vice chancellor for finance and administration with the Oregon University System.
The last time an Oregon university made a similar declaration was when Portland State University declared a condition of financial exigency requiring cuts in 1981 when the state was in the throes of a recession.
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Cullinan reassured students, faculty and staff that the university isn't closing and will maintain programs current students need to graduate.
"We can reshape our academic enterprise so it is fiscally sound and sustainable," she said.
Cullinan explained that operational expenses have outpaced revenue, forcing the school to tap reserves in fiscal years 2006 and 2007.
Between 1999 and 2006, expenses grew 30 percent, with significant increases in employee benefits and utility costs, she said. During that period, revenues increased only 23 percent and state support actually decreased 6 percent, making the school more reliant on tuition from students.
While the number of students this fall was up slightly, the full-time equivalent, a measure based on the number of credits they are earning and the one used to distribute state revenue, was down. That number has decreased steadily for several years and is down 615 from fall 1999, Cullinan reported.
"As we face this reality, we have concluded that SOU can no longer hope to correct fiscal problems just through higher enrollment," she said. "We must adjust our expenses."
She noted that SOU took temporary budget reductions such as cuts in travel spending, energy savings and vacant positions left unfilled in the last fiscal year, and continued those this year. Still, it spent nearly $1.6 million from its reserve account last year and will spend nearly $960,000 in reserves this year.
By July 2007, SOU's reserves will drop to about 3.3 percent of its revenue, below the 5 percent minimum the state higher education board's policy requires, Kenton and Cullinan both said. At its current spending levels, SOU will deplete its reserves in fiscal 2008, Cullinan said.
"They have burned through their reserves," Kenton said. "SOU is the first to fall below that floor" the state board adopted about three years ago.
Cullinan said the university must not be content with "opportunistic cuts," such as not filling empty posts, but must now strategically think about finding savings.
"It's an opportunity to employ hard work and creative thinking to build a sustainable SOU," she said. "A sustainable SOU is a university that is sized to its current enrollment."
She said the state university system board and chancellor support SOU creating a three-year strategic plan to make the school financially viable and responsive to the educational needs of the region.
After the speech, senior Brook Colley, communications director with the Associated Students of SOU student government, said she was pleased that the administration was willing to take an honest look at tough budget problems and to work in an open way to find solutions.
"This can be a good process if we don't let fear overcome us and do what is needed to make the school the best it can be," she said.
Kemble Yates, chairman of SOU's math department and past chairman of the Faculty Senate, said he was encouraged by the way Cullinan laid out the problem and answered questions.
Making sure people have information to understand the financial constraints and a chance to give input over time is valuable, he said. It wasn't always possible in past rounds of cuts, he added.
"I have every hope that this can be a reasonable process," Yates said. "It's not fun, but it is consultative and deliberative."
Faculty Senate Chairman and computer science professor Greg Pleva said professors welcome the chance to participate and understand the budget process and the plan for mapping out the university's future.
