Budget Update from the Provost February 20, 2009

Colleagues:

Just today the latest revenue forecast for the State of Oregon was released.  It is down $855M from the original forecast.  By law, the Governor and Legislature must rebalance the 07-09 biennial budget to reflect this lower revenue projection.  The general approach is to take an across the board cut for all agencies, and then moderate the cut with federal stimulus package funds. Note that these funds are not at all uniform across all areas, so they will help some and not others.  Further, the Governor and Legislature have discretion in the use of some parts of the federal funds.

The co-chairs of Ways and Means in the Legislature recently published their proposal for the cuts and use of stimulus package (see: http://www.leg.state.or.us/comm/lfo/ and click on “2007-09 Budget rebalance plan”).  For Higher Ed, they delivered exactly the cuts we had anticipated, an additional $6.4M in cuts to UO.  This will be difficult since there are few weeks left in the biennium.  Most of it will be covered by depleting central reserves and borrowing against auxiliaries (which we will need to pay back).  There will be some impact on the school/colleges and admin units, but with so little time left in the year, you have little flexibility to deal with rescissions.  We will protect you to the extent possible.

The bad news is that the Governor and the joint chairs have proposed that all federal stimulus money for education be channeled to K-12 and community colleges, with none going to higher education.  We are currently trying to understand why the Oregon University System was cut out, especially in light of language in the federal bill that suggests otherwise. This is still just a proposal that is being discussed in Salem.  We are working hard with the Chancellor’s Office to convince the Legislature and Governor of the significant peril this portends for the state

Bottom line is that we will be working with the Budget Planning Committee previously announced and with the Dean’s Working Group to develop a plan to handle the cuts we expect to have finalized on March 2.  Stay tuned.

Regards, Jim