Tuition and Mandatory Fees Fiscal Year 2017-18 Budget Development

Overview Pressures Process Proposal

Pressures

The State’s failure to fund

Historical Look at State Funding vs. Tuition Historically, total funding from State Aid and Tuition has increased at a fairly consistent average of 4% per year since 2006 Each corresponding decline in State Aid has been met by corresponding tuition increases What are the factors driving consideration of such a large tuition rate increase? As we see in this slide, with each reduction in State funding, Tuition has to make up the loss. For FY 2017-18, we are projecting a decline in state funding, even though the current Governor’s Recommended Budget is essentially a flat budget from the current biennium to the next biennium. The difference is in how the allocation model used by the Higher Education Coordinating Commission or the HECC actually allocated those funds to each university. They use the Student Success and Completion Model, or SSCM. In general, the SSCM favors the larger universities, at the expense of the smaller Technical and Regional Universities.

State model favors the larger institutions This slide is not simple. I apologize for that but it illustrates how the SSCM allocates funds to each of the 7 public universities. To the far right, the Public University Support Fund or PUSF is the fund that when the legislature funds public universities, money is appropriated into. The HECC then allocates those funds out to the 7 public universities, through the Student Success and Completion Model or SSCM. The bars for the PUSF represent the rate of increase in total funds the PUSF will receive, compared to this year, in several scenarios of total funding from the legislature. Since we won’t know how much the legislature will fund the PUSF until June at best, we have shown several possible scenarios. The other sets of bars represent the 7 public universities, who also have a corresponding bar for each funding scenario. The height of their bar represents the expected percent increase that University will receive relative to the current year. If that school’s bar is higher than the corresponding bar for the PUSF, that school is ADVANTAGED through the SSCM. If that school’s bar is lower than the corresponding bar for the PUSF, that school is DISADVANTAGED through the SSCM. Note, for SOU, we are not only disadvantaged in all funding scenarios, we are disadvantaged the most in all scenarios. That is due to a combination of reasons – our low Resident enrollment population, our even lower resident degrees awarded, though that is the result of very low resident enrollment 4-5 years ago, that also occurred at all Oregon public universities, but earlier in the recovery of the Oregon economy, so their degrees awarded numbers are much better than ours. Finally, the challenge is also that the sheer scale between the Regional universities, and the other Larger universities is just such that SOU could almost double our degrees and not have a significant impact in the funding model. $680M $660M

Increasing labor costs SOU total labor = 109% of historical inflation trend The second major factor driving the need for a large tuition rate increase is that our labor is rising significantly next year. Why is that? There are a couple of factors at play here. One is that for Education, which is a service, primarily delivered by highly skilled people, not well suited to savings through productivity improvement such as maybe manufacturing or technology sectors of the economy, Because of that, our labor costs will always rise at rates above the overall inflation rate, which is after all, an average, and to have an average, some sectors of the economy must be above that average, and some will be below that average. Education, Health Services, Performing Arts will be above, Manufacturing, and Technology will often be below that average. However, does that really explain a 9% average increase above the rate of inflation?

PES is more than 2/3 of labor cost increases Salary = 103% of historical inflation trend OPE = 122% of historical inflation trend As you can see in this slide, it isn’t salary so much that is driving our total labor to being the 9% above inflation, but the rising costs of OPE. That accounts for more than 6% of the total 9% increase on the previous slide. OPE is rising so significantly in the next year because of PERS – retirement. The State is under funded due to loses during the recession, and needs to significantly increase the rate we are charged for current employees to make that up. For SOU, it is 7-8% increase in total labor, but we are not unique. All State agencies are facing this same increase, which is why all 7 Oregon Public universities are looking at close to or above double digit tuition rate increases.

Processes

Process: Initial rates formed by Establishing Body Proposed rates presented around Campus ASSOU Senate Faculty Senate University Planning Board Budget Committee President’s Cabinet Proposed Rates + Feedback presented to SOU President President forms proposal, presents to Governing Board After you understand the pressures on the tuition rate, you need to understand the process by which SOU establishes the rates.

Establishing Bodies: Tuition  Tuition Advisory Council Fees Housing Student Incidental Fee  Student Fee Committee Rec Center Fee  Rec Center Steering Committee Student Health Fee  Director, SHWC Building Fee  Legislature Housing Housing Fees  Director, Housing Meal Rates  Director, Housing For tuition and each mandatory fee – here are the establishing bodies. The Tuition Advisory Council has 3 administrators, 2 Faculty, and 4 students who make up that council.

Proposals

Tuition Rates 2016-17 Tuition Rates: Resident Undergraduate EOU SOU PSU WOU OIT OSU UO $146 $151.46 $156 $155.33 $167.63 $193.68 $198 2017-18 Proposed Tuition Rates: Resident Undergraduate EOU SOU PSU WOU OIT OSU OSU CC UO $154.76 $169.58 $170.04 $170.86 $182.72 $201.42 $204.40 $218.99 The President has not decided on what tuition rate she will propose, but the Tuition Advisory Council recommended up to a 12% tuition rate, which is what the $170 represents for Academic Year 2017-18

Tuition rate is calculated at 15 SCH, for Resident Undergraduate students

How SOU compares UO SOU OSU CC OIT WOU PSU OSU EOU Annual dollar increase based on 45 Student Credit Hours (SCH) per year for an undergraduate student

Student Incidental Fee 2016-17 Incidental Fee - comparison PSU EOU UO SOU OIT WOU OSU $221 $255 $300.75 $320 $325 $341 $362.81 2016-17 Incidental Fee - Historical Year 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 Rate $304 $307 $263 $301 $320 $343 The students have recommended a 7% rate increase for the Incidental Fee, primarily because they are facing the same pressures in their labor increases as the University is. PERS rates for Labor 2.5% increase for S&S Minimum wage for Student Labor

Rec Center Fee Referendum allows rate = $95 in year Center opens Year 15-16 16-17 17-18 Rate $35 $75 $95* Because the Rec Center will open next year, and per the student approved referendum establishing the Rec Center, the fee can raise as much as $95 in the year it opens. The Rec Center steering committee has not yet met, so it is still not determined if they will raise it this much yet. Referendum allows rate = $95 in year Center opens * Rec Center Steering Committee meets Tuesday, Apr 11 to set the 2017-18 Student Rec Center Fee

Student Health Fee 2016-17 Health Fee - comparison PSU SOU WOU OSU EOU OIT UO $129 $130 $131 $142.50 $150 $173.75 2016-17 Health Fee - Historical Year 12-13 13-14 14-15 15-16 16-17 17-18 Rate $116 $119 $123 $130 $137 The Student Health and Wellness Center Director has recommended a 5% rate increase for the Health Fee, primarily because they are facing the same pressures in their labor increases as the University is. PERS rates for Labor

Housing

Through significant effort, Housing is recommending very modest rate increases, primarily because Ashland is already a very high cost place to live, so they are doing all they can to keep increases low next year, despite having the same labor increases as the rest of the University is experiencing.

Impact Resident Undergraduate SCH/ Year FY17 Rate Annual Fy18 Rate % Inc. $ Inc. Annual $ Annual Inc. $ Tuition 45 151.41 6,813.45 169.58 12.0% 18.17 7,631.10 817.65 Building 45.00 135.00 0.0% - Health 130.00 390.00 137.00 5.4% 7.00 411.00 21.00 Report to HECC 7,338.45 11.4% 25.17 8,177.10 838.65 Incidental Fee 320.00 960.00 343.00 7.2% 23.00 1,029.00 69.00 Rec Center Fee 75.00 225.00 95.00 26.7% 20.00 285.00 60.00 Housing: Shasta Double 2,655.00 7,965.00 2,708.00 2.0% 53.00 8,124.00 159.00 Dining: Red Plan 1,825.00 5,475.00 1,880.00 3.0% 55.00 5,640.00 165.00 Total Cost to Attend 21,963.45 5.9% 23,255.10 1,291.65 Western Undergraduate Exch. SCH/ Year FY17 Rate Annual FY18 Rate % Inc. $ Inc. Annual $ Annual Inc. $ Tuition 45 227.12 10,220.40 254.37 12.0% 27.25 11,446.65 1,226.25 Building 45.00 135.00 0.0% - Health 130.00 390.00 137.00 5.4% 7.00 411.00 21.00 10,745.40 11.6% 34.25 11,992.65 1,247.25 Incidental Fee 320.00 960.00 343.00 5.0% 23.00 1,029.00 69.00 Rec Center Fee 75.00 225.00 95.00 27.0% 20.00 285.00 60.00 Housing: Shasta Double 2,655.00 7,965.00 2,708.00 2.0% 53.00 8,124.00 159.00 Dining: Red Plan 1,825.00 5,475.00 1,880.00 3.0% 55.00 5,640.00 165.00 Total Cost to Attend 25,370.40 6.7% 27,070.65 1,700.25

Feedback? Final note – No, SOU is not projecting large cuts to address this challenge. Remember, SOU has undergone two retrenchments in the past 10 years, and an additional reduction in Administrative and Classified positions in 2012-13 as well. There are few places to cut that wouldn’t have even greater negative impact on either enrollment, recruitment, student progression, or faculty/staff retention. We believe that to take these cuts would create greater damage to SOU and greater lost revenue than would be saved.