University of Oregon leaders presented details on the university’s projected $25.7 million funding gap at Tuesday’s board of trustees meeting, while staff called for more budget transparency and collaboration from administrators.

The deficit stems from fewer out-of-staters coming to UO for college, as well as insufficient state funding and cuts to federal research.

Universities across the country are experiencing budget shortfalls, UO leaders said Tuesday.

Maram Epstein, faculty union vice president and professor of Chinese literature, pushed the trustees to think long-term when considering budget cuts.

“The UO must maintain its ability to attract and maintain the best researchers and teachers and students and staff,” Epstein said. “Cutting faculty lines and staff lines may seem like a sensible short-term solution to budgetary problems, but it takes years to build a department, a curriculum and a campus as beautiful as this. It takes even longer to build a reputation for academic excellence.”

Questions regarding the full impacts of the projected budget deficit on UO staff and students remain unanswered, and the budget will not be finalized until September.

Nevertheless, some cuts to nontenure track faculty may be announced within a week, according to Edward Davis, chair of the organizing and membership committee for United Academics, the UO faculty union. 

Tenure-track faculty must be given a year’s notice before being laid off, Davis said.

“It’s a slow-motion train wreck,” Davis told Lookout Eugene-Springfield.

Staff members sound off

While the university has cited rising labor costs as one cause for the budget deficit, union leaders said in many cases, wages haven’t kept pace with living expenses.

“I have colleagues who have worked here full-time for over 20 years, and they are still making under $60,000,” Epstein said. “The cost of housing in Eugene has become unaffordable for many faculty, let alone our students.”

Union leadership complained that university leaders are not clearly communicating decision-making around cuts and have not been transparent about budget details.

Steve Holwerda, chair of the UO Board of Trustees, said in an interview after the meeting that while complaints around transparency should be listened to, board members believe they aren’t hiding anything. He said decision-making will be transparent as the university makes cuts.

“(President) Karl (Scholz) and his team will be talking to deans, who will be talking to professors, who will be talking to departments and it all gets pushed down,” Holwerda said.

Budget realities

Leaders from the university’s finance team were at a Monday afternoon session of the UO Board of Trustees quarterly meeting and presented the university’s revenue and expenses forecast for the 2026 fiscal year, which runs from July 1, 2025 through June 30, 2026.

Here are key numbers:

• Revenue projections are up 2.6%, while expenses are up 6.2%.
• The deficit is projected at $25.7 million.
• Compensation and benefits costs, which make up about 79% of expenses, are expected to rise by 7.1%.
• Tuition and fees revenue, which make up about 77% of total revenue, are expected to grow by 2.5%.
• If no cuts are made, UO is projected to spend $25.7 million of its current $115.4 million “ending fund balance,” which is the university’s cash on hand. (Last year it spent $800,000.)

Jamie Moffitt, senior vice president for finance and administration, said the university knew years ago that labor costs were outpacing tuition revenue because of declines among nonresident enrollment. But the effects have not been felt until now, because many post-pandemic staff vacancies were not filled until recently.

“We just had a point where we had a lot of operational savings because we just literally did not have enough people,” Moffitt said.

The board approved a temporary budget Monday that authorizes the university to continue spending at last year’s levels until a final budget is presented in September, when federal and state budgets are finalized.

Reliance on out-of-state students 

The university’s unrestricted revenue depends heavily on out-of-state or nonresident students, who pay about three times the tuition of residents.

According to deposits for the fall semester, which were due May 1, the number of nonresident students this fall is projected to be much lower than the university expected.

Here are the new enrollment projections for fall of 2025 based on deposits:

• Resident first-time freshmen: 2,770, 142 more than last year, 174 more than projected.
• Nonresident first-time freshmen: 2,391, 130 fewer than last year, 367 fewer than projected.
• Transfer students: 897 students, 72 more than last year, 59 more than projected.
• Total new enrollment: 6,183 students, 88 more than last year, 181 fewer than projected.

One of the reasons for the drop in nonresident enrollment may be because California students are deciding to stay in state. According to Moffitt, UO recruits heavily in California, and the University of California system reported an increase of 3,900 resident first-year students for this fall. 

Due to increasingly unpredictable funding from government entities, universities have also gotten more competitive in their recruitment efforts, because it’s something they can control, UO president Karl Scholz said. And, he noted, the same economic volatility has made it harder for families to afford sending their children to out-of-state schools.

“It’s a bit of a double whammy,” Scholz said.

State funding

One of the driving factors of the university deficit is continued underfunding from the state, university leaders said. Oregon is ranked 46th in the nation for state funding per university student, according to Trent Lutz, associate vice president for state affairs, one spot lower than last year.

Lutz reported Monday morning on the largest chunk of money the state provides universities, the Public University Support Fund.

Lutz said the state will provide $1.068 billion during the next two fiscal years to distribute between all seven state universities. This works out to be a 2.8% increase year over year after biennial accounting. This is $207 million less than the universities asked the Legislature to allocate and does not keep up with rising costs, he said.

According to Lutz, the state is now paying for about 20% of student costs, while 30 years ago, the state was paying for 60% of the student costs.

Because public universities have multiple streams of revenue, unlike other state-funded entities, Lutz worries lawmakers will see other sources of university revenue, especially tuition, as viable replacements for state funding.

“They see tuition as the valve to balance what they cut from the universities, without a full recognition that that’s just pushing the cost on students and potentially prices us out of the market,” Lutz said.

State lawmakers are planning the budget with caution amid a volatile economy and federal government action, Lutz said. At the final revenue forecast of the session, issued May 14, state economists reported that the state will have $500 million less to spend in the 2025-27 biennium than in the previous budget cycle. 

This projected budget decrease does not reflect federal cuts that may reduce state funds significantly. Lutz said about 33% of the state budget comes directly from the federal government for programs including Medicaid, which faces cutbacks in a budget bill that’s been passed by the U.S. House and is under consideration by the Senate.