Higher education advocates came into the 2023 legislative session with momentum, but at the halfway point of the session, any hopes of lofty new investments have been tempered by lean budget models and other spending priorities in Salem.
Though final allocations have yet to be decided, colleges and universities are planning for funding levels for the coming two academic years to potentially fall below current operating costs. And any increases in financial aid will likely be smaller than higher education leaders initially requested.
“It’s pretty grim,” said Nick Keough, legislative director for the Oregon Student Association. “We know when the state doesn’t invest in higher ed, the cost for running our institutions falls on student backs.”
Community college and public university champions made the case for increased state funding for higher education last year after intensive discussions of how to boost Oregon’s college-going and completion rates.
A joint legislative task force on higher education in December proposed several reforms to improve students’ access to and success in Oregon’s colleges and universities. The task force put a special emphasis on helping low-income students, students of color and others who have historically completed college at low rates.
Oregon’s Higher Education Coordinating Commission requested a huge new investment in financial aid that could take Oregon from below average to among the top states for per-student assistance. And university leaders commissioned a study that called for increased state investment in Oregon’s postsecondary system.
State and college leaders said they recognized they likely wouldn’t get what they asked for all at once, but they hoped their proposals laid the groundwork for meaningful progress.
Neither the governor nor the Legislature’s top budget-writers came close to matching that funding vision this year. Gov. Tina Kotek’s budget proposal and the budget committee chairs’ funding framework for 2023-25 both recommend funding community colleges and universities below the level they would need to maintain operations as they are now – a funding benchmark called the “current service level.”
Kotek’s budget does propose new investments in financial aid, including a $100 million increase in the Oregon Opportunity Grant for low-income students, and continued funding for a $40 million grant that pays for Oregon’s Indigenous students to attend college, one of the commission’s top priorities.
But the co-chairs of the Joint Ways and Means Committee’s budget framework recommends no substantial increases to the Oregon Opportunity Grant and doesn’t mention funding the tribal students grant at all.
“Overall the document is disappointing, if not particularly surprising,” Kyle Thomas, director of legislative and policy affairs for the Higher Education Coordinating Commission, said during a commission meeting Thursday.
Lean state revenue forecasts coupled with the end of federal pandemic funding means there is finite room for big spending increases in the 2023-25 legislative budget, commission director Ben Cannon said. The governor and Legislature also generally agree on key funding priorities for this session, including housing, behavioral health and early literacy. Higher education did not make that list.
“It’s not that anybody is turning their back on higher education,” Cannon said. “The priorities have been clear and they probably don’t leave a lot of room for additional large new investments. But we’ll see.”
COLLEGES TIGHTEN THEIR BELTS
Most sessions, the budget picture ends up somewhere between the governor’s budget and the co-chairs’ legislative budget framework, said John Wykoff, deputy director of the Oregon Community College Association.
Colleges and universities say this doesn’t bode well for them. While both budgets recommend spending more money on higher education than in the 2021-23 biennium, the proposed funding falls short of what the legislative fiscal experts say colleges would need to keep operating as they are now.
The state’s per-student spending on higher education has trailed the national average for at least two decades. Tuition and attendance costs at Oregon’s community colleges and universities have ticked upward, and families shoulder the majority of that burden. Families covered about 39% of educational costs in 2002, according to a Higher Education Coordinating Commission presentation to lawmakers, and in 2022 that was up to 53%.
The Legislature allocated about $718 million to community colleges and $920 million to public universities for 2021-23. To continue offering the same services they are providing now in the coming two years, with inflation costs and increase in personnel costs taken into account, community colleges would need a funding boost of 8.6% and public universities an extra 5.6%.
Kotek has proposed giving community colleges about 2% less than their current service level and public universities about 4% less. Other state agencies and spending areas are also recommended to take small cuts under her plan.
The legislative budget framework also recommends reducing current service levels by 2.5%, both in higher ed and some other areas of the state budget.
“If we don’t at least get that current service level, we’re not going to be able to maintain our current programs, services. There will absolutely be tuition increases,” said Keough from the Oregon Student Association. “If we don’t at least get (current service level,) we’re in some trouble.”
Tim Cook, president of Clackamas Community College, said the budget co-chairs’ proposed 2.5% decrease would require cutting an additional $500,000 from his college’s budget.
The Clackamas board was already considering a $4 per-credit tuition increase to make up for an existing $800,000 shortfall due to low enrollment, Cook said. If the co-chairs’ plan goes through, the college could need to increase tuition by $6 per-credit, on top of an additional increase in fees, he said.
The board is also planning to nix a student shuttle and cut class offerings in areas like health and physical education, and it is considering charging students a small 2% fee on credit card purchases that the college has absorbed. The credit card fee alone could save the school $100,000, Cook said, but it creates another tax for students.
“Little things add up in both directions,” said Madalena Larkins, student government president at Clackamas. “Any time you increase costs for all students, a lot of them are going to be able to afford that – and a lot of them are not.”
Cook felt optimistic about higher education funding after the joint task force discussions and university study on higher education last year.
The Higher Education Coordinating commission had also proposed increasing the budget for universities by 10%. And it had recommended a 20% bump in ongoing funding for community colleges facing inflation, loss of federal pandemic aid and budget shortages caused by a steep downturn in enrollment during the pandemic.
“It was like, ‘OK, they’re really getting it, we need to make an investment, this is going to happen,’” Cook said.
Reality hit in Salem. Legislators were frank that the budget picture was tight, he said. Then Kotek proposed a slim 6.4% increase for community colleges and the Legislature’s chief budget-writers called for even less.
Cook said he’s somewhat frustrated that colleges find themselves in a familiar spot.
“It feels like every biennium we’re trying to figure out where we’re going to get some more funding and tend to fall short,” he said.
Oregon’s public universities issued a statement in March saying that the legislative budget framework would result in “significant lost opportunities” for students.
Oregon ranks 45th in the nation for per-student state funding of public universities, the Oregon Council of Presidents said in a news release.
Now university leaders must look at cutting the cost of personnel and supplies and trying to find new funding sources through grants while they try to keep tuition reasonable, said Oregon Institute of Technology president Nagi Naganathan.
The commission doesn’t expect any public university will increase in-state tuition more than 5% this year.
“We cannot and must not shift the burden to the students,” Naganathan said. “So we are going to be caught between a rock and a hard place.”
FINAL DECISIONS YET TO BE MADE
The Legislature won’t set final budgets until later in the year, and much of that hinges on a final revenue forecast set to be released in May. Higher ed leaders still have some hope they can increase the bottom line.
For the past several weeks, Cannon has been presenting the governor’s recommended budget to the education subcommittee of the Legislature’s Joint Committee on Ways and Means and said lawmakers have paid close attention to recommendations, particularly around financial aid. At least one lawmaker on that committee, Portland Democrat Michael Dembrow, has said he’ll work to find the money for Kotek’s recommended financial aid funding increases.
The higher education commission has tentatively awarded 2023 academic grants to students who qualify for the Oregon Tribal Students Grant based on conversations with legislative budget staff, Thomas said. And Cannon said one question still on the table is whether lawmakers might make new investments in workforce development to meet the needs of specific industries.
Several higher education leaders and supporters argue Oregon needs to find a more stable funding source for colleges and universities.
While colleges can raise tuition to combat costs, Wykoff said, it reaches a point where that runs afoul of public schools’ mission.
“We are the main point of access for a lot of systematically marginalized students, and we won’t be that, we can’t be that, if we just raised tuition beyond what folks can afford,” he said.
Keough said it’s high time for universities and community colleges, unions and postsecondary advocates to get behind something like the business tax adopted by the Legislature in 2019 that raises about a billion dollars a year for K-12 education and early learning.
Still, Keough is optimistic about the prospects in 2025. One recommendation from the joint task force on higher education success, House Bill 2265, would assemble yet another task force, this one to examine how higher education is funded in the state.
“The conversations are happening. Things are slowly coming together,” Keough said. “In the meantime, it’s very frustrating that we’re not getting the investments we need in the interim.”
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Sami Edge covers higher education for The Oregonian. You can reach her at sedge@oregonian.com or (503) 260-3430.