Holding OUS Accountable: A Question of Priorities

It is widely recognized that the State of Oregon severely underfunds its public higher education system. However, as this report demonstrates, the Oregon University System compounds this problem by failing to manage its resources effectively, thus jeopardizing quality education for its students and depressing living standards and working conditions for university employees. OUS questionable use of resources includes creating an oversized and well-paid administrative bureaucracy and embarking on massive debt-financed capital projects. Further, information on many administrative practices at OUS is difficult or impossible to obtain, rendering meaningful analysis and oversight of the universitys actions and decisions much more challenging. With the passage in the 2011 legislative session of new laws giving OUS greater autonomy, reducing state oversight, and providing for more coordination among all aspects of public education in Oregon, the issue of public accountability for the Oregon University System takes on new urgency. This report suggests short-run approaches to addressing these issues and also calls for a reexamination of OUS long-term priorities, including the need to place a higher priority on direct services to students and a lower priority on administrative expenses and capital construction.

Big Men and Women on Campus: The Administrative Elite

Analysis of staffing data provided by OUS indicates that a large administrative elite absorbs precious resources at Oregons public universities at the expense of students, support staff and faculty. This surfeit of well-paid administrators is impeding OUS from fulfilling its mission. OUS divides its workforce into three categories: administrative staff, classified or support staff, and faculty. The following table lists the number of employees in each of these categories, by university during FY 2010. Table 1: Full-Time Staff, By Campus, OUS, FY 20101
CO* Administrative Staff Classified Staff Faculty TOTALS Ratio (C+F)/A *Chancellors Office.
1

EOU 119 120 104 343 1.9

OIT 107 108 134 349 2.3

OSU 1,239 1,215 1,783 4,237 2.4

PSU 719 587 912 2,218 2.1

SOU 160 188 180 528 2.3

UO 1,031 1,436 1,426 3,893 2.8

WOU 162 209 309 680 3.2

OUSALL 3,610 3,871 4,848 12,329 2.4

73 8 0 81 0.1

Oregon Transparency website, State Workforce section, http://oregon.gov/transparency/state_workforce.page. Data for fiscal year 2010 were aggregated from the eight spreadsheets available for download.

Based on the above data, there are 2.4 full-time faculty and classified employees for every fulltime administrative employee. The ratio varies among individual campuses, from a low of 1.9 at Eastern Oregon University to a high of 3.2 at Western Oregon University. This compares to a targeted ratio of 11 non-supervisory employees for every supervisory/managerial employee for state agencies as embodied in HB 2020 passed by the 2011 legislature. OUS system-wide enrollment in FY 2010 was 91,580, which means that based on this data there was one administrator for every 25 students. A national study released in 2010 by the Goldwater Institute, Administrative Bloat at American Universities: The Real Reason for High Costs in Higher Education, illustrates the dramatic shift from direct service staffing to administrative staffing at Oregon State University and the U of O between 1993 and 2007. (This study did not include information for the other five OUS universities.) The ratio of administrative employees to students for OSU increased by 10.8% from 1993 to 2007, while the ratios of staff to students decreased by 27.7% for instruction, research and service employees, 53.3% for clerical employees, 11.4% for other employees, and 22.4% overall. At the U of O, the ratio of administrative employees to students increased from 1993 to 2007 by 48.2%, while the ratio of staff to students declined by 16.8% for clerical employees, and increased by 13.3% for institution, research and service employees, 12.2% for other employees, and 13.1% overall. (See the chart below.)
Percent Change in University Employment Relative to Enrollment, 1993-2007 Oregon State University & University of Oregon
60.0% 48.2%

40.0%

Percent Change 1993-2007

20.0% 10.8% 13.1%

13.3%

12.2%

Full-Time Employees per 100 Students Admin Employees per 100 Students Instruction, Research, & Service Employees per 100 Students

0.0%

-11.4% -20.0% -22.4% -27.7% -40.0% -16.8%

Clerical Employees per 100 Students Other Employees per 100 Students

-60.0%

-53.3% Oregon State University University of Oregon

Source: Administrative Bloat at American Universities: The Real Reason for High Costs in Higher Education. Goldwater Institute, Policy Report No. 239, August 17, 2010. The study is at http://www.goldwaterinstitute.org/article/4941

OUS administrative employees are also more costly than other OUS employees. Table 2: Average Annual Salary per Position, OUS, FY 20102
Category Full-Time Part-Time Total

Administrative Staff Classified Staff Faculty TOTAL

$ $ $ $

64,518 34,146 61,996 53,990

$ $ $ $

49,312 21,553 10,952 13,979

$ $ $ $

64,196 33,857 52,292 50,155

High-level employees can expect premium compensation but the disparity at OUS seems wide. On average, the salaries OUS paid to administrators in FY 2010 were 90% higher than those paid to classified staff and 23% higher than those paid to faculty. OUS paid salaries of $120,000 or more to 124 administrators. UO President Richard Larivieres salary for FY 2011 was $245,700 paid by the state and an additional $180,000 paid by the UO Foundation, for a total salary of $425,700. (See The Oregonian, 6/16/2011.) PSU President Wim Weiwel received a salary of $338,912 in FY 2010 more than nine times the $37,236 median salary of a classified employee at PSU. (Some university presidents also receive free housing and free cars as well as a generous expense allowance.) Furthermore, during the 2009-11 biennium, at a time when OUS publicly bemoaned State General Fund cuts, its universities somehow found money to grant many administrators large pay increases even as classified staff received no cost-of-living adjustment and had to take unpaid furlough days. The full extent of these increases cannot be determined at this time, because it is difficult to access OUS salary increase information centrally, but some information is available for two of the largest universities, the University of Oregon and Portland State University. The U of O publishes quarterly lists of administrative staff on its website.3 The format of these lists does not lend itself to comprehensive analysis. However, it is possible to identify examples of administrative employees who have received raises. The following table lists 35 UO administrators with salaries already exceeding $100,000 per year, who nevertheless received significant salary increases between February 2011 and May 2011.

2 3

Ibid. University Salaries (Quarterly Reports), http://ir.uoregon.edu/alpha. Data downloaded August 15, 2011.

Table 3: U of O Administrative Salary Increases

Annual Salary February, 2011 $108,675 $115,000 $112,015 $117,000 $108,675 $120,000 $137,241 $115,842 $122,746 $109,714 $104,838 $146,815 $105,656 $155,095 $146,815 $156,927 $129,150 $113,836 $120,060 $101,050 $176,800 $159,530

Name Henley, Brian L Eveland, Susan M Doxsee, Kenneth Boyd, Elizabeth A Wolf, Kelly B Tripp, Douglas L Evans, Daniel J Weiler, Philip J Stripp, Gregory J Johnston, Alan D Watson, Mark R Hecht, George E Bonamici, Andrew R. Hubbard, Laura E King, Linda L Nicols, Marianne S Hartz, Cheryl J Hutchison, James E Jones, Elaine R McDermed, Carolyn G Larson, Wendy Carver, Deborah

Title Director of Academic Affairs, Admissions University Registrar Assoc. Vice-Provost, Academic Affairs Univ. Relations, Assoc. VP, Pub & Gov Affairs Director and Controller, Bus. Affairs Office Exec. Dir & Chief, Public Safety Ex. Dir., Acad Affairs, Oregon Bach Festival University Relations, Sr. Director Univ Relations, Assoc. VP, Planning & Admin Assoc. Dean, Natural Sciences, CAS Admin Assoc. Univ. Librarian, Collections/Access Campus Operations, Assoc. VP Assoc. Univ Librarian Assoc Vice-Pres for Budget and Finance Assoc. Vice Pres, Human Resources Sr. Assoc. Dean, CAS Administration Jordan Schnitzer Museum of Art, Ex. Dir. Assoc VP, Research and Strategic Initiatives Assoc. Dean, Finance and Operations Sr. Assoc. Director, Public Safety Vice Provost, Portland Program Univ. Librarian, Knight Library

Annual Salary, May, 2011 $129,000 $135,000 $129,282 $135,000 $119,543 $132,000 $150,965 $127,425 $135,000 $119,403 $113,262 $158,500 $113,262 $165,000 $156,000 $166,339 $136,000 $119,836 $126,100 $106,105 $185,644 $167,507

$ Increase $20,325 $20,000 $17,267 $18,000 $10,868 $12,000 $13,724 $11,583 $12,254 $9,689 $8,424 $11,685 $7,606 $9,905 $9,185 $9,412 $6,850 $6,000 $6,040 $5,055 $8,844 $7,977

% Increase 18.7% 17.4% 15.4% 15.4% 10.0% 10.0% 10.0% 10.0% 10.0% 8.8% 8.0% 8.0% 7.2% 6.4% 6.3% 6.0% 5.3% 5.3% 5.0% 5.0% 5.0% 5.0%

Harris, Donald E Dyke, Frances Bean, James Bronet, Frances de Kluyver, Cornelius Frank, David A Foley, Charles B Hilton, Susan M Newton, Julie Katz,Paul D Shang, Paul Ramsey, Christopher C Monroe, James P

Vice-Provost, Informationm Services Vice-Pres, Finance and Operations Senior Vice-President and Provost Dean, Architecture and Allied Art Dean, College of Business Dean, Clark Honors College Dean, School of Music Dir., Enterp Admin Apps, Info Services Assoc. Dean, School of Journalism Assoc. Director, Academic Extension Asst. VP, Dean of Students Assoc VP, Campus Plannig and Real Estate Director, Institutional Research

$196,651 $212,493 $306,800 $225,000 $300,000 $124,800 $192,803 $119,123 $103,818 $101,556 $121,000 $146,815 $113,850

$206,484 $223,118 $322,140 $236,250 $315,000 $131,040 $202,443 $125,079 $108,876 $106,334 $126,570 $152,815 $117,000

$9,833 $10,625 $15,340 $11,250 $15,000 $6,240 $9,640 $5,956 $5,058 $4,778 $5,570 $6,000 $3,150

5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 4.9% 4.7% 4.6% 4.1% 2.8%

As an additional example, Michael W. Redding, Vice-President for University Relations, received an increase of 13.3% between September 2010 and February 2011, moving from $188,000 per year to $213,000 per year. By way of comparison, the annual salary of an Office Specialist 2 at the top of the salary range at the University of Oregon has been frozen at $35,520 since November 2008. For PSU, no data for 2011 is available at this point, so the following table compares salaries of highly paid administrators between November 2009 and November 2010.4

Portland State University, Unclassified Staff Lists for November, 2009 and November, 2010.

Table 4: PSU Administrative Salary Increases

Annual Salary, November Job Title 2010 CMP UP Assoc Chair forGradEduc 188,592 OSA UX Vice Provost 150,000 XDO UX Vice Provost/ExecDir XS 143,136 SBA UX Dean, Sch Of Bus Admin 199,104 FAD UU Vice President FADM 231,552 EDU UX Dean,School of Eduction 161,484 LAS UX Dean,Liberal Arts & Sc 176,268 EMP UX Dir Engineering Mgt Pr 150,888 OAA UX Provost & VP OAA 218,496 OAA UX ViceProvAcadPers&Lead 151,776 SBA UX Associate Dean 146,856 SSW UX Dean, Sch of Social Wrk 152,556 OAA UX ViceProvostFiscalStr&Pl 191,736 FPA UX Dean, FPA 156,612 CMP UP Assoc Chair for Research 207,456 EAS UX Dean Engr & Appld Sci 220,200 SHS UP Staff Dentist 146,652 UPA UX Dean Urban & Pub Affr 171,384 FAD UU Assoc VP Fin & Planning 138,228 Annual Salary November 2009 180,332 144,120 137,525 190,383 221,410 154,411 168,547 144,279 208,926 135,023 134,089 145,874 183,338 149,752 198,369 210,555 140,903 163,877 132,810 2009- 2010 Annual Salary Increase 8,260 5,880 5,611 8,721 10,142 7,073 7,721 6,609 9,570 16,753 12,767 6,682 8,398 6,860 9,087 9,645 5,749 7,507 5,418 2009-2010 Annual Salary Percentage Increase 4.6% 4.1% 4.1% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 12.4% 9.5% 4.6% 4.6% 4.6% 4.6% 4.6% 4.1% 4.6% 4.1%

Name Antoy, Sergio Balzer, Jacqueline Burton, Michael Dawson, Scott Desrochers, Lindsay Hitz, Randy Kaiser, Marvin Kocaoglu, Dundar Koch, Roy Mack, Carol Marshall, Ronald Nelson, Kristine Reynolds, Kevin Sestak, Barbara Singh, Suresh Su, Ren Jeng Truong, Tuan Wallack, Lawrence Wendler, Denise

Every administrator listed above already made over $130,000 per year, yet received a raise.

Build It and They Will Come? The OUS Edifice Complex

In FY 2010, OUS expended $457 million on capital improvements.5 Compared to the $2.1 billion in capital assets on the systems balance sheet as of June 30, 2010, this capital improvement program in FY 2010 alone represented nearly a 25% increase in OUS investment in capital assets. Such aggressive capital expansion has not come without a price. OUS has financed its capital improvement program largely by issuing general obligation bonds and certificates of participation, thus increasing its current debt service to over $139 million annually.6 In fact as of June 30, 2010 the University System had outstanding bonded indebtedness of $1.4 billion. Some would assert that capital improvements are funded separately from operations and should therefore be excluded from the scope of the annual budget deliberation process. However the reverse is true. When future income is pledged towards debt service, less income is available for current operations. In the Oregon University Systems case, this trend is illustrated in the following table. Table 5: General Fund Support and Debt Service
Biennium General Fund Support Increase (Decrease) in General Fund Support from 2007-2009 Operations Debt Service

2007-09 2009-11 2011-13 Total

Operations

Debt Service

$ 827,119,559 $37,756,473 $ - $ - 760,990,188 59,482,045 (66,129,371) 21,725,572 708,700,000 93,000,000 (118,419,559) 55,243,527 $ (184,548,930) $ 76,969,099

Source: State of Oregon Legislative Fiscal Office Analysis of the 2011-13 Current Service Level available at http://www.leg.state.or.us/comm/lfo/2011-13/2011-13_csl_education.pdf

As illustrated in the table, OUSs rising debt service burden has had a crowding out effect on the level of General Fund support available for operations. The data suggest that if its debt service requirements had not increased during the past six years, as much as $77 million in annual General fund support could have been directed towards current operations. This raises an obvious question: Why build what OUS may not be able afford to operate without otherwise unnecessary increases in student tuition and/or unwise and unfair reductions in wages and benefits for its workforce?

Budget Imbalance: Students and Employees Pay the Price

Public higher education creates an affordable avenue for advancement to higher-earning jobs, especially for students in the middle and lower income strata. Affordable higher education has
5

Oregon University System 2010 Annual Financial Report, Schedule of Changes to Capital Assets, Page 14. 6 Ibid, Note 8 Long-term Liabilities, Page 32

the potential to level the playing field. Sadly, however, the choices that OUS has made regarding administrative staff and capital construction have created inequities within the system and hampered its ability to make quality higher education affordable to all. The universities have also raised tuition substantially, increasing the burden placed on students and their families. As the following table demonstrates, the proportion of total revenue derived from student tuition and fees has increased by over 29% since FY 2003, from 24% of total revenue to 31% in 2010. The basis for this growth in tuition revenues can be found in both increasingly high tuition and rapidly growing enrollment. Table 6: Tuition and Fees as a Share of Operating Revenue and Total Revenue
Fiscal Year Tuition and Fees Total Total non- Total Tuition and Tuition and (in $1,000) Operating Operating Operating and Fees as a Fees as a Revenue (in Revenue (in Non- Percent of Percent of Total $1,000) $1,000) Operating Operating Revenues Revenues (in Revenues $1,000) $ 385,983 432,363 476,344 496,510 469,939 496,157 542,276 627,911

2003 2004 2005 2006 2007 2008 2009 2010

$ 1,177,993 1,199,443 1,284,866 1,348,370 1,191,659 1,251,837 1,368,681 1,531,704

$ 418,766 406,389 399,723 438,830 479,574 514,182 443,125 473,732

$ 1,596,759 1,605,832 1,684,589 1,787,200 1,671,233 1,766,019 1,811,806 2,005,436

33% 36% 37% 37% 39% 40% 40% 41%

24% 27% 28% 28% 28% 28% 30% 31%

Source: Oregon University System Annual Financial Reports for the years ended June 30, 2003 through June 30, 2010 available at http://www.ous.edu/factreport/operreport#1

As the following table shows, average system-wide undergraduate tuition and fees have more than doubled since 2001. At the same time, enrollment has risen sharply, resulting in huge increases in workload for classified staff and faculty. (Enrollment grew by as much as 29% for individual universities between 2005 and 2010 and by 20% system-wide. In 2010 alone, systemwide enrollment grew by 6%. )

Table 7. Growth in Tuition Rates By University

Oregon University System Schedule of Annual Tuition Rates

Fiscal Year/Amount Campus EOU OIT OSU-Corv OSU-Casc PSU SOU UO WOU AVERAGE (unweighted) Change from prior year $ 2001-02 $ 2002-03 2003-04 2004-056 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 7,046 7,889 7,600 6,459 7,764 7,215 8,789 8,076 7,605 7.10% Cumulative Increase 94.60% 113.10% 90.60% 80.60% 108.70% 103.00% 115.90% 120.70% 103.50%

3,621 $ 3,702 3,987 3,576 3,720 3,555 4,071 3,660 3,737 $

4,028 $ 4,143 4,328 3,600 4,125 3,907 4,723 3,920 4,097 $ 9.60%

4,840 $ 4,443 4,869 4,452 4,758 4,152 5,039 4,305 4,607 $ 12.50%

5,508 $ 4,974 5,319 4,923 4,761 4,697 5,670 4,332 5,023 $ 9.00%

5,654 $ 5,347 5,442 4,986 4,961 5,005 5,805 4,551 5,219 $ 3.90%

5,841 $ 5,919 5,643 5,130 5,210 5,233 5,970 4,818 5,471 $ 4.80%

6,072 $ 6,093 5,911 5,319 5,765 5,502 6,168 5,982 5,852 $ 7.00%

6,240 $ 6,297 6,187 5,496 6,147 5,718 6,485 6,318 6,111 $ 4.40%

6,456 $ 6,570 6,727 5,796 6,764 6,252 7,430 6,813 6,601 $ 8.00%

6,639 $ 7,260 7,115 6,120 7,130 6,795 8,190 7,566 7,102 $ 7.60%

Based on full-time undergraduate resident base tuition and fees. Full-time has been defined as 15 hours since 2004-05; prior to that, there was a 12-18 hr. tuition plateau for undergraduates. Source: OUS Budget Operations Division, Academic Year Fee Book, 2001-02 through 2011-12.

120,000 110,000
Headcount Enrollment

Actual and Projected Fall Enrollment

100,000 90,000 80,000 70,000

99,561

60,000
0 50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Actual Projected

Source: OUS Future and Historical Enrollment, http://www.ous.edu/factreport/enroll/futcur#hist.

Meanwhile, OUS has severely limited or reduced compensation for classified staff and faculty. During the 2009-11 biennium, classified staff members were required to take as many as 16 mandatory unpaid furlough days, amounting to a pay reduction of as much as 3.1%. (Members of the classified employees, the lowest-paid employees in the university system, were the only group consistently required to take furloughs.) Also, while raises for the administrative staff in 2009-11 were widespread, as discussed above, classified employees received no general cost-ofliving adjustments and their scheduled step increases based on longevity were frozen from October 1, 2009 through September 30, 2010. 9

As a result, total compensation for OUS classified employees in relation to employees in comparable jobs in the external labor market dropped from 98.2% of market in 2008 to 92.6% of market in 2010.* (Total compensation for faculty, in relation to peer universities, stands at 90% of market, according to OUS.)
*Source: Oregon University System Classified Employee Salary Survey, 2008 and 2010; Fox Lawson & Associates..

Making Matters Worse: Lack of Transparency

To make matters worse, the Oregon University System, whether intentionally or unintentionally, fails to make information sufficiently accessible to allow for public oversight and scrutiny of many of these administrative practices. For example, lack of clarity about categorization of employee types (e.g., supervisory, managerial, and non-supervisory) makes it much more difficult to arrive at a precise number reflecting the universities ratio of non-supervisory staff to supervisory or managerial staff. Similarly, OUS is unable or unwilling to identify which administrators have received raises in the past fiscal year or biennium. At this time, the only salary information that OUS is able to provide centrally is a list of current salaries. Adopting more systematic centralized processes (as well as procedures) for tracking such information is needed to allow for adequate transparency.

Short-Run Solutions: Shifting Resources to Front-Line Services

First of all, even acknowledging the inadequacy of State support for public higher education, its financial picture is not nearly as bleak as OUS paints it. For example, in its June 22, 2011 Operating Budget Summary, OUS represented that it would lose approximately $140 million in State General Fund support in 2011-13 ($683.3 million in FY 2011-13 versus $823.6 million FY 2009-11). However, OUSs $823.6 million figure for 2009-11 distorts the change in recurring support by including $70.8 million in one-time federal stimulus funds and $59 million in General Fund debt service7. A true comparison between FY 2009-11 and FY 2011-13 would actually show a decrease of only about $10.5 million (from $693.8 million to $683.3 million). Also, operating expenses for FY 2010 came in well under budget. According to the State of Oregons Comprehensive Financial Report for FY 2010, OUS operating expenses were budgeted at $2,170.7 million, but ended up at only $1,963 million, resulting in savings relative to budget of $189 million. Total operating revenues for the University System Fund increased by 11.9% in FY 2010, while operating expenses increased by only 2.4%. As noted above, enrollment increased by 6% in 2010-11 and is expected to increase by over 3% in 2011-12.

Oregon University System FY 2010-11 Budget Report Summary Attachment A-4 page 2

10

Even more significantly, the States 2010 Financial Report indicates that OUS had accumulated $252 million in unrestricted net assets as of June 30, 2010. (The term unrestricted net assets refers to assets owned by the universities which are not subject to external restrictions regarding their use or function and are not tied to a specific purpose by donation or specific funding source. These assets are potentially available to be used as a source of financing in future budget cycles.) Diverting a relatively small portion of these unrestricted net assets and budgetary savings to funding for support staff and faculty would go a long way towards addressing the access and quality issues discussed above, both by improving compensation and increasing staffing levels.

Conclusion: Time to Examine and Re-Prioritize at OUS

On September 6, 2011, Governor Kitzhaber delivered a speech at Springfield addressing the state of the schools in Oregon and calling for systemic change to increase graduation rates and improve outcomes for students. The following is an excerpt from Kitzhabers speech. "The fact, that we do not currently have all the resources we need does not negate the imperative for deep systemic changes in fact it only increases the urgency. We may not be able to do more for a while, but we MUST do better, now. We must improve our systems and invest in proven practices that can improve results from students today and increase resources for teachers." In light of the Governors call for better use of resources in our education system, and drawing upon the research in this report, we conclude with the following recommendations: 1. OUS should reverse its long-standing trend toward shifting resources from education and direct-service positions to high-level administration and place a higher priority on quality education and services in its expenditures and allocation of resources. 2. OUS should ensure that the values of Oregonians are reflected in equitable treatment of all university employees. If reductions are required, OUS administrators should sacrifice as much, if not more, than faculty and front-line workers. 3. OUS should adopt policies promoting greater financial transparency. 4. The Oregon Legislature should consider applying a legislative restriction on the number of administrators that universities in the Oregon University System may employ comparable to the limitations on supervisory ratios established in 2011 by HB 2020. 5. The Oregon Legislature should authorize and conduct a thorough review of the spending priorities of the Oregon University System.

11