Universities slip deeper into funding crisis.

Byline: Greg Bolt The Register-Guard

Top 10 in student debt, bottom five in state support, failing grades in affordability.

That's just some of the bad news about Oregon's higher education system that has piled up this summer from national and regional studies and from the Oregon University System itself. Together they paint a less-than-rosy picture of the health of the seven-campus system, where more than 80,000 students start classes next week.

Higher education officials have been warning about such news for more than 15 years, since 1990's Measure 5 started a long retreat in university funding that accelerated during the recent recession. Since then, state spending per student on higher education, including community colleges, has dropped 41 percent after adjusting for inflation.

Tuition at the four-year schools has increased 113 percent and state campuses, lacking the money to maintain aging buildings, have run up a $600 million repair backlog.

Even though enrollments have grown, and without adjusting for inflation, the higher education budget for the 2005-07 biennium is $50 million less than it was in 1999.

"As enrollments have grown, appropriations have not kept pace and in states like Oregon they've actually decreased," OUS Chancellor George Pernsteiner said. "We have the same nominal dollars today as we had 15 years ago even though we have 20,000 more students and we've absorbed 15 years of inflation."

In each of the past two legislative sessions, OUS officials proposed ambitious plans to begin reinvesting in higher education. They met with limited success as legislators wrestled with overall state budget needs that far exceeded revenue.

In 2005, universities won a significant increase in student aid and enough operating money to hold tuition increases to 3 percent a year, but it wasn't enough to pay for all the students who enrolled, improve lagging faculty salaries or reduce class sizes.

As always, universities face stiff competition for available state dollars and a Legislature that at times has been unwilling and at other times unable to increase taxes to cover the rising cost of state services. Although the state's economy has improved, political and fiscal realities seem unlikely to shift dramatically toward major spending increases.

But OUS is prepared to try. The state Board of Higher Education has just submitted an initial 2007-09 budget to the governor that, if approved, would begin a 10-year process aimed at ending the long period of state "disinvestment" in higher education.

Combined with a package of optional budget requests, the entire proposal would require $256 million more than the current $732 million 2005-07 OUS budget, plus an additional $41 million to further boost financial aid.

While it's too early to begin handicapping budget proposals, a request of that size almost certainly will face tough questioning under even the most optimistic of state revenue projections.

"I hope nobody expects to get that kind of money, because it isn't there," said Grattan Kerans, a retired state legislator and former chief lobbyist for the university system. "You talk about shooting at the moon, that usually means you crash in the desert somewhere."

So how do you justify that kind of increase? This year's series of negative assessments offer some ammunition. Among them:

An "F" in affordability in the biennial "Measuring Up" study by the National Center for Public Policy and Higher Education, the state's third "F" in a row. The study also noted that only 33 ninth-graders out of 100 will continue on to college and said that over the past 10 years that number has fallen more steeply in Oregon than almost any other state.

Eighth in the country in the amount of debt carried by graduates of public universities, according to the Project on Student Debt. What's more, the $19,050 average in student loans is almost as high as the $20,295 average debt incurred by students in the state's private universities, which typically are much more expensive.

An increase of 107 percent in student debt from 1993 to 2004, according to the Oregon Student Public Interest Research Group. That's three times the increase in the cost of living over the same period and substantially more than the 62 percent increase in medical costs.

In addition, OUS administrators say the state ranks 46th in the nation in the amount of state support per public university student and has one of the highest student-faculty ratios in the nation at an estimated 27:1.

The system spent down its reserves by $13 million last year, meaning it spent more than it brought in to educate its students and operate its campuses. The budget plan OUS is proposing would hold tuition increases to no more than the growth in median family income, begin raising faculty salaries and lowering student-faculty ratios, and provide money for increasing enrollments. It also would stabilize the finances of the smaller regional campuses, cover debt service on building projects approved earlier and provide enough money for building maintenance to keep the repair backlog from growing larger.

The slate of "option packages" would address specific needs such as improved technology education, statewide extension services and expanded programs in nursing and other health fields.

And that's on top of a proposal aimed at making college more affordable. The "shared responsibility" plan would increase state spending on financial aid in each of the next two biennia, more than doubling the number of grants while increasing their size.

Pernsteiner said that kind of added investment is needed not to put Oregon universities in the nation's upper ranks but to move them in the direction of the national average.

"I don't think it's a proposal that is in any way overly ambitious," Pernsteiner said. "It's a fairly modest investment in terms of where it will bring us in comparison to much of the rest of the country."

Kerans said that while the prospects for major spending increases for higher education may be grim, the initial OUS budget is a way for it to get the attention of legislators, remind them of the financial hits higher education has taken. Businesses require educated workers, he said, and without enough educated workers they won't come to Oregon.

"It's probably a reasonable budget if this state wants to be serious about having a work force that's prepared," Kerans said. "I hope they're doing this in hopes of pressing a fire alarm and making a lot of noise and getting everybody's attention. In that regard, it's worthwhile doing."

Pernsteiner said the budget request is more modest than it appears.

Because some of the added funding would cover inflation and larger enrollments, spending in the first biennium of the 10-year plan would only move the state from 46th to about 40th in the nation in per-student support, he said.

Still, students are pledging to support the request. Melissa Unger, executive director of the Oregon Students Association and a University of Oregon graduate, said her group supports the base budget increase. Students held 60 meetings over the summer with legislators and legislative candidates to pitch support for the budget.

"A lot of them said, 'That's a lot of money.' But the next thing they said is, 'But it is time we started to reinvest in postsecondary education,' ' Unger said. "I think legislators are aware of how the continuing disinvestment in students and in universities and in community colleges is going to directly impact the future of the state."