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SOU president presents plan to address multimillion-dollar deficit

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Southern Oregon University is facing a challenging financial path ahead as it deals with declining enrollment. SOU president Rick Bailey told faculty and staff on Tuesday morning that the school is facing a multimillion-dollar budget deficit.

The university is facing a nearly $5 million deficit in the coming year, according to President Bailey. He told faculty and staff that this number will increase dramatically in the coming years if action is not taken.

“To be very frank with you, I’m looking at, three years from now, a $13 million, four years from now, a $14 million gap. I think our target in terms of programmatic changes is likely at the $13 million mark,” Bailey said.

While Bailey, still in his first year as president at SOU, made no specific mentions of what programs or staff would be cut to close the gap, he acknowledged that 78% of the school’s budget is related to employees.

“So, it’s real,” he said.

Financial challenges are not unique to SOU. Across the board, higher education institutions have been struggling in Oregon and nationwide. According to Ben Cannon, executive director of the Oregon Higher Education Coordinating Commission, which allocates state funding to colleges and universities, the problem largely comes down to enrollment.

“Schools across Oregon are dealing with flat or declining enrollment, which means flat or declining tuition revenue, as well as increased cost pressures,” Cannon said.

He said that despite Oregon’s graduation rates being strong, an overall demographic change means that high school graduation rates will flatten or decline for years to come. And in a competitive market where other states may offer more financial aid, these problems are being felt most by smaller, regional institutions.

According to Bailey, revenue from the state for Oregon's public higher education institutions has remained flat in recent decades. At the same time, he says, increased costs have been made up with tuition.

"So now, two thirds of our revenue is based on tuition. And with student credit hours going down over time, that's two thirds of our budget," he said.

To meet these challenges, SOU President Bailey proposed four “planks” in his plan to address the deficit. They include cost reductions, more aggressive grant fundraising for research, increased philanthropic support for endowed faculty positions and diversifying the university’s revenue. He said tuition increases are not a good option.

Amidst the gloom, SOU recently received its largest ever donation, an approximately $12 million gift from Medford-based auto dealer Lithia Motors. The donation will provide $4 million for a new Institute for Applied Sustainability, which includes faculty positions, $5 million for new scholarships and a leadership development program, and help installing electric vehicle charging stations on campus, among other things.

“If they were easy decisions -- even if they were hard decisions -- someone would have made them by now,” he said.

Erik Neumann is the interim news director at Jefferson Public Radio. He earned a master's degree from the UC Berkeley Graduate School of Journalism and joined JPR as a reporter in 2019 after working at NPR member station KUER in Salt Lake City.