Universities defend giving raises after salary freeze.

Byline: Greg Bolt The Register-Guard

A new state audit charges the Oregon University System with granting more than $800,000 in "questionable" raises after the governor imposed a statewide salary freeze in 2003, but universities dispute the findings.

The audit from Secretary of State Bill Bradbury's office found 126 raises totaling approximately $810,000 granted before the 2003-05 biennium officially started but after Gov. Ted Kulongoski had ordered the freeze and the Legislature had endorsed it. Most were at the University of Oregon and Oregon State University.

University officials say the raises were proper because they were approved before the current budget went into effect on July 1, 2003. But state officials counter that other agencies began freezing wages in February 2003, when Kulongoski announced the order.

"I think the wage freeze went into effect in February," said Sen. Kurt Schrader, co-chairman of the 2003 Joint Ways and Means Committee. "I don't think the university system deserves any special exception compared to the rest of the agencies."

Of the money in question, the UO granted $660,000 in raises and OSU granted $150,000. Close to 100 of the raises were given to UO employees.

The raises do not include those granted under union contracts, which were exempted from the freeze. But the universities say some of those questioned were required as part of grants and came from grant funds, not from their state allocation.

Lorraine Davis, vice president for academic affairs at the UO, strongly defended the university's salary decisions. She said the raises in question were granted as part of a process that had begun the previous fall and received final approval in spring 2003, before the Joint Ways and Means Committee passed a budget note endorsing Kulongoski's freeze.

"We made our promises long before the budget note was approved by the Legislature and the governor," she said Wednesday. "Any increases that were done after that were done because they were contractual, and the contractual agreements were done before the budget note was passed."

She also said that the UO has abided by the freeze since the beginning of the biennium. All normal salary reviews have been suspended since then, she said.

Davis contends that universities weren't obligated to begin the freeze until after the fiscal period began. She said that raises that had been under review and approved before then should not be considered a violation of the freeze even if they went into effect after the start of the biennium.

To do otherwise, she said, would break trust with university employees.

Other state officials disagree and say universities knew long before the biennium officially began that they were expected to freeze wages. Kulongoski said he is upset at the audit's findings.

"The audit raises serious concerns about whether the university system complied with my instructions to institute a salary freeze for state employees in 2003-05," he said in a statement issued late Wednesday. "While I understand the university system may have contractual issues that led to these salary decisions, I intend to examine this matter further to ensure that the university system is complying with both the letter and the spirit of my instructions.''

Schrader said he doesn't buy the university system's claim that raises approved before the biennium began were allowed to go forward. "I agree with the secretary of state that it was pretty clear this was happening and they're undermining legislative intent," he said.

Schrader doesn't expect OUS to face any consequences because of the raises.

The question now is what legislators will be talking about when the 2005 session begins in January. Kulongoski went so far as to take the helm of the state Board of Higher Education himself when former chairman Neil Goldschmidt resigned in disgrace.

The governor has said his goal is to stop the huge budget cuts that have driven up the cost of a university education and to establish a new fund that will grant scholarships to all qualified Oregonians based on financial need. Whether that effort will be damaged by the audit report remains to be seen.

Schrader, a Democrat, said he doesn't think so. The raises took place before Kulongoski replaced most of the higher education board and ordered sweeping changes in the chancellor's office, and Schrader said he thinks things have changed.

"I'm hoping this is a reflection of the old board, a reflection of the old way of doing things, and is a good example of what we're not going to do in the future," he said.

Davis said she, too, hopes that the Legislature will not see the audit as a sign that universities are trying to set their own rules. "I have to hope that people will acknowledge and see through to the fact we have in these two years of the salary freeze honored that," she said, "and that this difference of interpretation is certainly not something that should harm the confidence that people have in our following the laws that are passed as well as the expectations they have of us."