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Official: Unfair to describe SOU as 'financially fragile'

The singling out of Southern Oregon University as a financially fragile public university at last week's State Board of Higher Education meeting was unfair, said an Oregon University System official.

"Southern is not unique in being in a fairly fragile financial situation "… it is similar to all of the smaller regionals." said Di Saunders, OUS director of communications.

Each of the system's seven universities last week successfully requested tuition hikes, echoing similar increases stretching back a decade, long after state support for higher education began to dwindle.

During the 1999-2001 budget biennium, the state provided OUS with about $754.9 million, said Saunders. This biennium, that figure has fallen to $669.2 million, and the university system is serving about 30,000 more students, Saunders said.

"We propose to increase tuition to recover some of the loss in state funding," as this year's proposal letter for SOU's 9.9 percent tuition hike stated.

At SOU, state dollars allocated by OUS have been cut about 27 percent since 2009, said Jon Eldridge, vice president of student affairs.

"A large revenue source for institutions now is tuition," said Saunders. "And the smaller regionals don't have as big of a pool there."

Oregon's big three: Portland State, Oregon State and University of Oregon, have "an incredible donor base," contributing toward scholarships and capital projects, said Saunders. They also have the efficiencies to land large research grants, which allows them to harbor research institutions and expand programs — all of which contribute to large student populations.

"When you look at that versus having five or six thousand students, you don't have the same levels of efficiency," she said. In 2011, UO Foundation forked out about $95 million in scholarships and other university support for the school; SOU foundations contributed about $1.6 million that year.

Six out of the seven tuition increase proposal letters submitted by OUS institutions this year cited eroding state support as a reason for needing to increase tuition.

Accounting for next year's 9.9 percent tuition increase at Southern Oregon University, which was approved at the June 1 meeting, the per-term cost of an education for a full-time student taking 15 credit hours during the academic year has risen 31.5 percent, or $1,803 in the last five years at the school.

Next year, it will cost that student $7,521 for three terms, compared to $5,718 in 2008 and 2009 school year.

The increase at SOU was "a part of a larger strategy to attempt to replace State support and provide for financial sustainability," the university's proposal letter states. As well as, "the cost associated with increased enrollment."

Oregon Institute of Technology's tuition has jumped nearly 32 percent, or $2,208, in the same span, for the same student. The same increases are 26.4 percent or $1,671 at Western Oregon University's, and 15.9 percent or $997 at Eastern Oregon University.

At the three larger schools: University of Oregon shows a 43 percent or $2,824 increase, Oregon State University shows a 31.5 percent or $1,950 increase, and Portland State University rose 24.5 percent or $1,506 .

Overall, the average cost of an education at a public university in Oregon next fall will be $8,021 for 15 credits, including tuition and fees for three terms.

"We were set up as a low-tuition teaching school for people in this region and to be subsidized by the state to make this work," said Jim Beaver, SOU director of interactive marketing and media relations. "Without that support, it is a challenge."

Beaver said the school is reaching its limit on how much more it can raise tuition, before negatively impacting tuition.

Oregon University System Chancellor George Pernsteiner, at the June 1 meeting stated, "Southern is in a very fragile financial situation," which he considered and discussed with other members prior voting to approve SOU's 9.9 percent increase.

Board members considered tapping into reserve funds to offset the increase at SOU, but backed away, fearing what could happen if positive enrollment forecasts don't hold true at the school in coming years.

"The regionals are facing a different financial challenge compared to the larger schools," said Beaver. "We're in a different financial category."

Officials at SOU expect its current 6,745 student body to grow next year, said Beaver, as it has continued to do at the university since fall term 2009, when it had 5,104 students.

In 2009, full-time equivalent enrollment increased 2.1 percent at SOU. Beaver said, 2012 "was an unusual year," as SOU saw at a 15.1 percent increase in the area. Last fall, enrollment was up 3.4 percent.

Pernsteiner, other OUS members and SOU President Mary Cullinan said SOU was counting on another modest, but important, enrollment increase next fall. Those forecast figures were not available from SOU.

Record enrollment during the past few years has kept SOU from having to consider higher tuition increases, said Beaver, but it's a give-and-take situation as more students means more costs associated with educating them.

Last year, the average cost for a university to fund a full-time student's education for an academic year was $11,670, said Saunders, the state covered 35.7 percent, tuition covered about 65 percent.

"It use to be flipped, 20 years ago," said Saunders. "Student cost is going up."

This year, SOU received about $13.7 million from the state, a more than $2 million reduction from last year's budget, university officials said.

Expenses for labor, health care and the Public Employee Retirement System continue to rise at SOU and all of the universities, Saunders said, the catch-22 of increased enrollment and the costs associated with accommodating it.

Costs associated with climbing enrollment, increases to PERS employee healthcare and other personnel costs account for about $450,000 of SOU's budget shortfall this year, according to estimates.

University officials didn't respond to a request for specific increases.

At SOU, 12 university staff including adjunct professors were laid off to help balance the about $2.5 million budget shortfall; now, students are paying more tuition to not lose more.

The 9.9 percent increase is intended to build a base for avoiding such drastic increases in the future, said Cullinan in the June 1 meeting.

"This year was just SOU's turn ... other institutions have had just as high of raises," said Saunders. "Everyone agrees that the 9.9 percent increase was a good thing."

In 2009, a 9.3 percent tuition increase was approved at SOU. Last year, PSU posted a 9 percent tuition increase.

"Including the Southern Oregon administration, raising tuition wasn't something that anyone wanted to do," she said.

Although operating below the OUS suggested 5 to 15 percent contingency or "future" fund, said Saunders, SOU is entrenched in a $56 million residence hall construction project. The school will pay for the project over an extended period by entering into a 40-year ground-lease arrangement with Collegiate Housing Foundation, a nonprofit organization, and American Campus Communities, the developer selected for the project.

Collegiate Housing Foundation obtained about $56.6 million in tax-exempt housing revenue bonds from the Oregon Facilities Authority to fund the project, a report to the OUS Finance and Administration Committee states.

That amount, plus interest, is expected to be paid back to CHF by the university by the time the lease expires, the report said.

Student rent revenue, not tuition dollars or taxpayer money, will be used to pay off the lease, said Eldridge.

Southern Oregon University remains the second cheapest public university to attend in the state.

Reach reporter Sam Wheeler at 541-499-1470 swheeler@dailytidings.com.