President Schill lays out bold new vision for UO’s future

Just kidding, he’s decided to bet UO’s future on the same failed policies that got us to this point. Today’s Open Mike:

Dear University of Oregon colleagues,

Conversations I regularly have with students, faculty, staff, donors, and community members often go one of two very different ways. The vast majority of conversations are incredibly positive and optimistic. They are about the excitement of opening the Phil and Penny Knight Campus for Accelerating Scientific Impact, hiring new faculty and academic advisors, opening new buildings and residence halls, celebrating the football team’s Rose Bowl win, or making programmatic investments in prevention science, environmental humanities, data analytics, and more. They focus on this transformational time for the university and its bright future.

But I have other conversations with some who are rightfully concerned about budget cuts made over the last few years, rising PERS costs, the annual drumbeat of rising tuition, and how we can best make the case to state lawmakers to boost state funding for the university, which currently receives the second lowest state assistance per student of any of our 64 AAU peers despite several years of state funding increases.

So, which is it? Is the UO a financially challenged school that struggles to balance the budget, keep tuition low, offer fair compensation to our employees, and provide strong student support services? Or, are we a school with sufficient resources to construct new buildings, hire more professors, and invest in new, cutting edge research and teaching programs? The answer is that we are both.

I want to use this Open Mike to talk through the factors that contribute to what sometimes feels like a tale of two universities. I believe the positive things happening at the UO and investments we are making will begin to address some of those persistent challenges. Bear with me, though, because these are complicated issues to explain, and solving many of our challenges is something that will take patience, determination, discipline, and a stiff spine.

Let’s start with the education and general budget, sometimes called the E&G budget, which is overwhelmingly comprised of tuition and state funds. This year it is estimated to be around $554 million. We also have separate auxiliary budgets for parts of the university that must generate and live within their own revenue sources to fund operations—areas such as housing, food services, the health center, and athletics. The goal is to have each of these auxiliary budgets break even so that they are not drawing on precious tuition or state dollars. The E&G budget funds most of the educational costs of the university as well as most financial aid. It covers everything from faculty and staff salaries to heat and water for academic buildings. This budget is continually under pressure because the primary sources of revenue (state funding and tuition) are often insufficient to fully fund increases in compensation or inflation.

Now, there are three other important funding streams: sponsored research, donations from alumni and friends of the university, and borrowing for capital expenditures. Sponsored research—which in fiscal year 2019 equated to $126 million in grants, contracts, and competitive awards—is restricted by contracts or grant agreements to pay for specific projects or research activities. Each year, the university raises approximately $200 million in philanthropic donations. Almost all of this money is also restricted by contracts (known as gift agreements) to purposes the donor specifies. When it comes to buildings, sometimes those restricted donations are matched with state-paid bonds (Knight Campus) and sometimes donor funds, state bonds, and/or our own borrowing are used to construct the building (Tykeson Hall, Pacific and Klamath hall renovations). On occasion, student fees support capital projects (the EMU, Health Center expansion) and once in a while we borrow 100 percent of the capital costs ourselves (Bean Hall and Walton Hall renovations).

If the E&G budget is starved for revenue, then why can’t we just take some money from the donations and borrow that to fund the construction of these new buildings? Money is money, isn’t it?

Alas, the answer is no. None of these one-time sources of revenue (restricted donations, state-funded bonds, our own borrowing) can be used to pay on-going operating expenses or to reduce tuition. If I were to authorize the use of state-allocated construction dollars for employee compensation, it would break the law. If I were to take restricted donations and use them for another purpose, then the university could be sued by the donor for breach of contract.

Surely, though, couldn’t I convince the donors who make restricted capital gifts to instead give money to keep our lights on and pay our employees? It turns out that this is every president’s dream—a big gift that is entirely unrestricted. But, with some notable exceptions, it is almost always a dream. Donors give to the UO because they love our university. Major donors also want to use their giving as a way to help the university get better and, in some cases, transform itself. It is the rare donor who responds to a request from a president to help him tread water or avoid sinking.

That isn’t to say that donors don’t care about the high cost of college or the importance of faculty research. Many, many donors give to scholarships. In our current campaign, we have received over $373 million in gifts for scholarships, student support, and student success initiatives. Of that, $245 million is for scholarships. Similarly, we often receive gifts to support faculty research and teaching in the form of endowed chairs. These gifts do not usually cover the salary of faculty members, but instead support summer compensation, research expenses, and graduate students. The gift of Penny and Phil Knight to create the Knight Campus was an unusual and wonderful gift; its endowment yield (along with federal contracts) will pay for faculty start-up costs, salaries, as well as the new campus’ facilities and operations. Over the long term, as we near completion of our $3 billion campaign goal and our institutional endowment continues to grow, I believe the returns generated by the endowment can play a role in helping stabilize the funding challenges we face from tuition limitations and cost increases not covered by state funding.

A related concern I have heard was that even if new buildings on campus are not funded out of the E&G fund and thereby don’t affect tuition or salaries, their maintenance would. It takes money to heat and cool buildings; we need to pay staff to keep them clean and in good working order. For a number of new capital projects—such as the Knight Campus, Hayward Field, and new residence halls—operation and maintenance costs will either be charged to the gift or to the auxiliary that built them. They will not burden the E&G fund. But it is true that we will need to fund a portion of the day-to-day expenses of Tykeson, Pacific, and Klamath halls out of tuition or state funds, which is completely appropriate.

The UO needs to invest in the future. Indeed, one of the reasons we needed to invest in renovating our science laboratories over the past five years is that most hadn’t been touched since they were built. To be a great research university—to attract and retain top faculty members, to provide world-class education to undergraduates, and to train graduate students—we must provide facilities and equipment that allow the people inside them to produce knowledge. And to fulfill our commitment to students that if they come here they will graduate in a timely fashion, we must provide them with a place to get advising. If the maintenance of these facilities or some of the debt service hits our E&G budget, that is a good investment that benefits our students and faculty.

Let me finally turn to the place some members of our community have suggested could relieve the pressure on the E&G budget—athletics. I would like to start by clearing up a misconception—that the athletics department doesn’t already pitch in to relieve pressure on our educational budget. It does. Many of our peer institutions waive tuition for student-athletes. We don’t do that at the UO; athletics pays full tuition for the resident and nonresident athletes, which equates to about $12 million annually that flows back to the E&G budget. They also contribute over $3 million in administrative overhead each year. In recognition of the unusual schedules and time constraints that student-athletes encounter, the UO provides about $2 million per year out of the E&G budget for academic support services. The vast majority of universities in the United States subsidize, sometimes deeply, their athletics departments. We are one of the lucky few—the only public institution in Oregon—that has a self-sufficient athletics department.

Taking money from athletics could come with side effects, particularly if it were to have a negative impact on the playing fields or courts. Prior to my time here at the UO, I might have said that would be okay. But, as president of the UO, I see day after day what athletics means to our university. Not only does it enrich our student experience and provide a rallying point for our alumni and community, but it also provides us with a powerful front porch to the rest of the nation. Those benefits were driven home quite poignantly by our recent win at the Rose Bowl, which drove measurable increases in traffic to our recruitment and admissions websites. Although the UO is increasingly recognized for all of the wonderful faculty and research going on in Eugene, athletics remains one of the principal ways prospective students first hear about the UO. And those students, especially those drawn to the UO from outside Oregon, serve as the central lifeblood of our operating budget. A strong athletics program is synergistic with our academic program and, through its impact on enrollment, actually benefits our efforts to keep tuition low and fund decent wage increases for our faculty and staff.

If you have stayed with me thus far, you can see there is no silver bullet for our fragile operating budget. It isn’t lost on me that the UO can appear to be two universities—one in which new, gleaming buildings and ambitious programs grow and another where tuition goes up and expenditures need to be reduced or at least controlled.

Ultimately, it is vital that we make sure that the investments we are making pay off, because these are the programs, people, and initiatives that will set the UO up over the long term to solve our budget and operational challenges. The research and teaching that will take place in these buildings will enhance the reputation of our school, add new and innovative curricula, and fuel enrollment growth in what promises to be an evermore competitive environment. The focus and attention given to student advising and career counseling in Tykeson Hall will enable us to achieve our mission of student success with similar reputational advantages. These changes may not happen next year or even in the next five years, but I believe the steps we are taking now and the excellence we are building will position the UO to move into a new era of financial stability in the future.

My hope in writing this Open Mike is to be as transparent as possible about this challenging issue. On that topic, we have recently launched a new transparency website to provide our community with easier access to all of our financial, student, employment, and other data. We also try in the FAQs to answer similar questions such as the one posed in this Open Mike, albeit more briefly.

In closing, I have great hopes and aspirations for our university. I am excited about working with those of you who, like me, see the endless possibilities of our university as we get better and better. The effort will require hard work, not silver bullets. But it is achievable.

Michael H. Schill
President and Professor of Law

Tagged , . Bookmark the permalink.

19 Responses to President Schill lays out bold new vision for UO’s future

  1. New Year Cat says:

    ” If I were to take restricted donations and use them for another purpose, then the university could be sued by the donor for breach of contract.” Ah, but that is apparently not the case if the donor is not alive and the trustee objects — remember Marion Dean Ross funds?

  2. uotechmatters says:

    Link to transparency website: https://transparency.uoregon.edu/

    • JadedIT says:

      Transparency, like the new IT Org chart… so transparent, nobody can see it! The new “Oregon way”…

  3. oldtimer says:

    The inability to articulate a unifying vision for the university, in which every part can see its role on the whole is a mortal failure.

  4. Eternal Skeptic says:

    Seeing the lengths to which Schill ties himself in knots to support the Great Hegemony of Football — essentially saying that football can have whatever it wants, forever — is sad and pathetic.

    • uomatters says:

      President Frohnmayer and President both agreed that it was possible to use athletic department funds to provide support to the academic side. Frohnmayer, in 2004, signed off on a joint admin Senate report, for which recommendation 1 was:

      SUMMARY OF PROPOSALS:

      1. The Task Force and the Athletic Department recommend a voluntary financial
      contribution by athletics to the Presidential Scholarship fund. 9
      This voluntary contribution will help symbolize the mutuality of the
      relationship between athletics and academics.
      https://darkwing.uoregon.edu/~uosenate/dirsen034/finalreportATF04.pdf

      In 2014 Gottfredson proposed a funding mechanism – take it from the Duck media contracts.

      • thedude says:

        Key question.

        1. If the athletics want us to recognize we benefit from their success (there’s a good paper from Michael Anderson showing this), will they admit they NEED us too. Parents are not willing to write 30k tuition checks just because there’s a football team. I love the fact that the UO quarterback is recognized nationally for his BRAIN. I hope he goes to the NFL, and washes out after 2-3 years brain in tact, and comes back to UO to get his Ph.D or to become faculty. That would be the greatest student athlete success.

        • UnbiasedEstimator says:

          I thought the most offensive line was: “The goal is to have each of these auxiliary budgets break even so that they are not drawing on precious tuition or state dollars.” In what world does it make sense for the athletics budget to break even? They are a student extracurricular and their success should support the university’s academics.

        • Dog says:

          quick prediction (and I have a pretty good track record on this but who believes this or cares)

          I don’t think Justin Hebert is an NFL quarterback at all (and its
          not clear if Mariotta is going to remain one). Three cheers for
          Dan Fouts who I actually saw play ….

  5. solidcitizen says:

    A long time from now, if everything works out, there’s a chance we might be able to provide you all decent salaries, but don’t count on it.

  6. Richard Bohloff says:

    Phil Knight’s Schill is doing a good job of protecting his precious athletics dollars. LIke Gollum, the sports arena is his ring.

  7. Sun Tzu says:

    UO Matters played an important campus role when it was first established in the Frohnmayer era to publicly call out poor administrative decisions and highlight power-hungry and mediocre administrators. That, however, was when faculty had a modicum of influence on university decisions through an occasionally functional shared governance system. Ten plus years and 5 University Presidents later, shared governance is dead, the University President has consolidated all decision-making to his small circle of non-academic subordinates, and faculty have become faceless employees to be dealt with solely every couple of years at bargaining time. Instead of working with faculty, staff and students to improve our university, we have a sheltered President who fools no one with missives on “excellence” while looking for his next job, a mean-spirited Provost who verbally denigrates non-STEM departments as well as individual faculty, staff and students on a regular basis, and a laughable “independent board” who care more about their lunch menus and free athletic tickets than academics. In short, the complete corporatization of the University of Oregon has occurred during our watch and sadly there is nothing we can do about it anymore. As a result, UOM has been reduced to a “bitch & moan” site where the disaffected/disenfranchised can complain about small things beyond their control while the University continues its 25+ year academic decline. This site, once useful, has long since passed its sell-by date and no longer has any impact on campus policies or direction. Perhaps it is time for UOM to close shop and for those who comment here to direct their considerable energies and efforts towards making positive changes where change is actually possible?

    • Eternal Skeptic says:

      Since, “sadly, there is nothing we can do about it anymore,” perhaps Sun Tzu could describe “where change is actually possible.”

      Genuinely curious to hear the answer, since the summary is spot-on.

      • Sun Tzu says:

        To: Eternal Skeptic
        RE: What can be done?

        Think local, as in:

        1) Improve your department’s external academic standing and internal political standing. The former is obvious, however the latter is particularly crucial now that the future of all departments is in the hands of Johnson Hall pencil pushers who have no clue and even less interest in your department or your work. For example, a certain social science department has been consistently treated like dirt for the past 20+ years by central administrators for no apparent reason other than they don’t like the subject. Several humanities departments have imploded due to internal bickering and this has been used as an facile excuse by JH to reduce long term support. Then there are the language departments, most of which have no central administrative advocate and are rapidly withering. None of these departments have a chance of getting a larger share of the University funding pie without multiple administrative allies high and low on the org chart.

        2) Develop new and nurture existing interdisciplinary programs. The future of academia is not in siloed, historic academic subjects. Make and grow connections with local colleagues with similar interests. Then make links with similar programs in other universities. These connections will be noticed by the deans and deanlets who will want to show off your program to their higher ups and take credit for your efforts. Although annoying, who really cares what they do as long they leave you alone to pursue your work without second guessing your every move and breathing down your back like an asthmatic Darth Vader (e.g., current Science deanlet).

        3) Focus on scholarship. Forget about being a good University citizen. No one else is. Be like 99% of Science faculty and reject all committee and other service appointments, except in your department, and pursue your research. Write papers, articles, books and give invited talks and present at meetings. Apply for any/all available grants. Administrators will stop hounding you, your department head will write glowing annual reports and you will be left alone in blissful peace. Side benefit? Larger merit raises.

        4) University governance = black hole. Administrative committees/assignments are even worse. “Nuff said.

        5) Enjoy teaching. Like it or not, you are at an undergraduate liberal arts university. Many students are actually interested in your classes and many are actually smart cookies. Don’t view teaching as if it was a visit to your gastroenterologist. Relax, enjoy and you might actually have some fun.

    • Dog says:

      I do remember speculating on this blog that the College of Science initiative was most likely being pushed by Phillips who desired to be the first dean of that Unit.

Leave a Reply

Your email address will not be published.