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

How ballot measures could have significant effect on how public services are funded.

Passage of several of the dozen measures on Oregon’s Nov. 4 ballot could have significant effect on how public services are funded by the state, according to information compiled by Jock Mills, director of OSU’s Government Relations Office, in consultation with the Legislative Revenue Office.

How Measures 57, 59 and 61 might affect Oregon State University and the Oregon University System is impossible to tell at this point because decisions about where to cut budgets or offset revenue reductions will not be made until the Legislature meets next year.

Ballot Measures 57 and 61 would mandate prison terms and other sanctions for those who commit property crimes.

Ballot Measure 59 would reduce revenues available to the state by increasing tax deductions.

On the accompanying graphic, the “Essential Budget Level” is the amount of state spending needed to deliver the same level of service provided in the current biennium.

Current forecasts project an EBL deficit of $500 million even if none of the measures are approved by voters. If Measure 57 passes, the deficit could increase to $700 million. If Measure 61 is adopted by voters, the deficit could grow to $800 million.

And if Measure 59 also passes, the deficit would increase to nearly $2 billion.

Even if the ballot measures do not pass, the deficit for next biennium could increase, if revenues continue to fall.  The next revenue forecast will be in late November/early December.  It is also possible that the first two months of the 2009 legislative session could be spent balancing the budget for the remaining six months of the current biennium due to declining revenues.

The graph shows how both expenditures and revenues will be affected by two ballot measures that would mandate expenditures and by one ballot measure that would decrease revenues.

Reductions in services would increase in future biennia when both measures are fully implemented.

Both Measures 57 and 61 would mandate sentences for property crimes.  Measure 57 would require substance abuse treatment instead of prison for some first time offenders.

Measure 61, sponsored by Kevin Mannix, is estimated to cost $249 million next biennium. Measure 57, referred to voters by the Legislature, and would cost $152 million in the first two years.

As provided by the Legislature, if  both measures pass in November, the measure that receives more votes will take effect.  This has caused a number of those who oppose all mandatory sentences to urge support for Measure 57 and opposition to Measure 61, Mills said.  Some contend a ‘no’ vote on 57 amounts to a ‘yes’ vote on 61 because voting ‘no’ on 57 will make it less likely to receive more votes than Measure 61.  For the same reason, proponents of Measure 61 are also urging voters to oppose Measure 57.

~ by Ed Curtin