Economy overshadows election results; friends in high places but cuts expected

 

Growing concerns over the broader economy have tempered some of the potentially positive gains coming from last week’s election for Oregon State University, according to campus officials.

 

“Given the current economic forecast, I expect to see further budget reductions next biennium,” said Jock Mills, director of government relations. “Also, we fully expect new shortfalls for the current biennium,” he added.

On the national level, it is “way too early to opine” on how a more Democratic Congress coupled with the Democrat Barack Obama in the White House will affect appropriations for higher education, Mills said. Some key points:

- Obama’s support of Pell grants to aid low income students could mean more emphasis on this program;

- An additional economic stimulus package is expected, “but it is not clear that any of these investments will affect higher education,”

- Earmarks, which OSU has been successful in obtaining for its agriculture, forestry, and engineering programs, would have received more vetoes under a McCain administration, Mills said. With Democrats now in control both the legislative and executive branches, it is possible that earmarks will be less prevalent, but it is too early to tell, he said.

- The same is true for support of the basic research agency budgets – National Institutes of Health and National Science Foundation – that provide significant funding for OSU’s competitive grants.  There are too many variables in the current economic climate to forecast how these budgets will change over the near term.

Oregon State has lost an alumna in Congress with the retirement of U.S. Rep. Darlene Hooley, Mills said. But her successor, state Sen. Kurt Schrader, has repeatedly expressed his support for OSU as co-chair of the Joint Ways and Means committee in Salem.

“He is quite familiar with the depth and breadth of the programs we deliver throughout Oregon and in the 5th Congressional District,” Mills said.

At the state level, about a dozen OSU alumni serve in the legislature, and while college affiliations “are great fun for attracting attention and familiarity with our programs, they don’t – and shouldn’t – translate into direct benefits to the institution,” Mills said.

“Some of our strongest supporters for increased investments in OSU’s engineering program, for example, have been Ducks,” he explained.

Before last week’s election, state revenue shortfall was projected at $500 million. Passage of Measure 57 (increased penalties for property and drug crimes) added $200 million to that. This will cause the legislature to consider additional budget reductions in the early months of the 2009 session.

Even during the best of times, Mills warned, such as last session when state revenues were increasing by about 20 percent, the share of state appropriations going to higher education increased by only one-tenth of one percent.

“The Governor has expressed his support for higher education, but is not clear how we will fare among all of the entities that rely on state funding.”

A bright spot on the state revenue picture is easier legislative access to the $300 million Education Stability Fund, established by the legislature and approved by the voters to address economic shortfalls.

Legislators could use it for K-12 and higher education to minimize or prevent budget cuts during the remainder of the current biennium or into the 2009-11 biennium, Mills said.

“We will know more later,” he said, “But, it would not be prudent to count on any increases during the 2009-11 biennium.”

“I fully expect that we will see a legislative session that will primarily focus on dispensing budget reductions, and we should fully expect reductions in the 6 to 10 percent range,” Mills said.

If OSU is interested in funding new initiatives over the next two years, they will have to come at the expense of current activities, he said.

~ by Ed Curtin

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