(Ashland, Ore.) — Southern Oregon University President Rick Bailey announced to employees today an emerging plan to address an outdated financial model that has left SOU and many other public higher education institutions relying too heavily on tuition revenue to balance their budgets. According to Bailey, the work over the next several months will be to strategically realign the university for future growth.
“We are drawing a line in the sand on using tuition increases to meet rising costs,” President Bailey said. “We are all committed to the innovations that will keep more and more from being put on the backs of our students.”
The president called for teamwork in managing costs with steps that will reduce recurring, annual expenses, as well as programmatic realignments that enable SOU to sharpen its focus and better prepare students for success and service to their communities.
“Our university has operated for most of its 150 years on a financial model that’s very common in public higher education: near-exclusive reliance on a combination of state funding and tuition revenue,” Bailey said. “That model was effective until about 30 years ago, when the balance between those two funding sources began to flip – what used to be about a two-thirds share from the state and one-third from tuition is now the exact opposite.
“Our leadership and budgeting teams have looked long and hard at our structural issues, and are confident that SOU’s financial foundation can be successfully re-engineered, but it will take several years to get there,” Bailey said. “Our new, bottom-line fiscal formula must be one in which revenue is greater than or equal to costs for the long-term. While that sounds fairly straightforward, it isn’t always followed.”
Bailey said there are four “planks” to re-engineer the university’s fiscal operations: managing costs, vigorously going after grants, leveraging SOU’s growing philanthropic capacity and diversifying the university’s revenue streams.
In his announcement, Bailey offered two examples of how the university has already begun to address recurring costs: a three-year shift to a new core information system that will improve service and save $700,000 per year; and the goal of making SOU the first public university in the nation to make all of its own electricity on its campus, saving another $700,000 to $800,000 per year. The university’s shift to the Workday information system began last month, and SOU has applied for both state and federal funding for the next steps toward powering the entire campus with its own solar arrays.
Bailey acknowledged that changes to SOU academic and support programs will be complicated but he promised transparency and intends to include student, faculty and staff governance groups in the analysis process, along with the unions that represent faculty members and classified employees.
“Our guiding principles throughout this process will be to act with integrity, transparency, compassion and humility; to focus on the best interests of our students and the long-term vision of SOU; and to view each step through the lens of JEDI – justice, equity, diversity and inclusion,” he said.
Bailey cited recent examples of how SOU efforts in the areas of grant procurement and philanthropy are already on the upswing. Recent grants from the National Science Foundation will pay for cutting edge research equipment in the university’s Chemistry and Physics Department, and will allow researchers in the Computer Science Department to work with local elementary teachers to develop their students’ computational thinking skills. And SOU just last week announced a $12-million philanthropic commitment from Lithia Motors and GreenCars that will support the university’s sustainability and accessibility efforts. That gift announcement came just months after the estate of late wrestling coach Bob Riehm made a $3 million donation, which at the time was easily the largest-ever single gift to the university.
The SOU president said that his vision for diversifying revenue to the university, beyond the traditional sources from tuition and state funding, will start with four ideas: expanding solar production as mentioned above; razing the Cascades Complex and building an innovative senior living facility that creates synergy between its residents and students; establishing a University Business District that produces partnerships between SOU and neighboring businesses; and creating a training center to help other organizations transition their core information systems to the Workday platform.
“There are undoubtedly more ideas that we have yet to imagine, but these are the handful that we are actively pursuing for now – and we are confident in each of them,” Bailey said “If just one or two of them pan out, they will be game-changers. If all of them cross the finish line, they will be transformational for the university. Ultimately, I am confident that SOU will reimagine what public higher education looks like, build a fiscally sustainable institution for our students, faculty and staff, and become a role model for the rest of the country – and we will do it together.”