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SOU president plans to ‘realign’ university revenue to reduce burden on students

SOU President Rick Bailey wants to switch up the university's revenue structure for long-term stability.
Courtesy of SOU
SOU President Rick Bailey wants to switch up the university's revenue structure for long-term stability.

SOU president Rick Bailey has plans for the university to have self-reliant energy and other projects to lessen the institution’s dependence on tuition and state funding.

COVID-19 dealt a blow to higher education across the country and in Oregon. With fewer students enrolling and paying tuition, universities and colleges have had to tighten their financial belts. Southern Oregon University in Ashland is looking at a long-term budget hole of $13 million, according to leaders.

SOU is responding by attempting big changes to reduce its reliance on state and student dollars. That “realignment plan” includes the goals of the campus creating its own solar energy, a new information system, a business district and a senior living facility — all in the matter of a few years.

OPB education reporter Meerah Powell sat down with Southern Oregon’s president, Rick Bailey, to talk about the school’s new approach.

Meerah Powell: You announced last month multiple projects to address this current funding model which relies much more on student tuition than state funding. Before we go into the specifics of those individual projects, can you talk a little bit about how we got here. Why now for all of these big new plans?

Rick Bailey: In light of increasing costs, what public institutions do over and over and over again is pull the one lever that they can pull and that’s tuition. Twenty years ago, for universities in Oregon, roughly two-thirds of the revenue streams came from state funding and a third came from tuition. Well 20 years later it’s exactly reversed. That puts more and more on the backs of our students.

What we need to do, I think, as institutions, is change the model, and I think that’s why there’s an urgency to doing this work now.

Powell: We’re still in the midst of an ongoing pandemic and that’s affected almost all of the public universities and colleges in Oregon. Exactly how bad of a financial situation is Southern in as far as fallen enrollment and budget deficits?

Bailey: Without question student enrollment all over the country went down. The other challenge, I think for institutions is that federal money that came in with COVID kind of masked the problem because we were able to use that federal funding to help fill some voids. Well, as that federal funding from COVID dried up, I think it left in very sharp relief the structural challenge that faces us.

What I see for SOU eventually can be a delta between costs and revenues of about $13 million. That’s a big number for us. It’s not looking us in the face this month, but I can tell you that within the next few years it is. So that to me it means as the chief executive, we have to start taking action now to change the model so that we can move forward.

Powell: One of the goals you have in these projects is related to managing costs. In the announcement you put out, reducing annual expenses, also “programmatic realignment” were some of the phrases used. What are those conversations looking like, and how do you plan to do that without compromising the college experience for students?

Bailey: No matter what we do, anytime an institution makes a decision to stop doing something, it is going to affect the student experience. And I would say likely that whatever we decide to stop doing, there will be students who are at SOU specifically for that one thing that we do. So I’m very, very conscious of that. So, as we move forward, the question is how do we mitigate that?

What we’ve decided is here are some guiding principles that are going to help with the work — integrity is always first, right? The team needs to trust that we’re doing this with an open heart and an open mind, and then transparency and collaboration and compassion, all of the other things that build into it.

The other thing we have to do is, anytime you start talking about things that you are going to stop doing to take precious resources and invest them in who we are going to be moving forward, it comes to the question of who we are as an institution, right? We’re at our 150th anniversary. And, and so we’re mindful of 150 years of outstanding service to the region and to students in the region. So we have to honor that history and at the same time look at who we’re going to be for the next 150 years.

Powell: I do want to talk about some of the individual projects within this larger plan. Let’s start with the plan for self-reliant energy. What will that look like?

Bailey: About 10 years ago students at Southern Oregon University imposed on themselves a green fee. Students said, “We want to pay more because we want to start incorporating renewable energy on the campus.” So, because of their work, we now have about 8% of our energy, our electricity, that we make on the campus.

When I got to SOU, the question was: Well, what would happen if we got to 100%?

We would be the first public university in the country that makes all of its own electricity on campus, which is fantastic. But secondly, even if we don’t think about the benefits to the environment, which we should, it will likely save us between $700,000 and $1 million a year. Now, that’s just that’s money that if we had back, we can divert that to direct student support. So the strategy is what if we converted every parking lot to solar covered parking, electric vehicle charging stations, all of that.

The question is how do we fund that? We recently went to Washington D.C. We met with Sen. [Jeff] Merkley. We met with Sen. [Ron] Wyden. We met with Congressman [Cliff] Bentz, all talking about this project. It led to a fund in the current U.S. Senate appropriations bill that if it passes and President Biden signs it, there’s a $2 million piece in there just for SOU to do this work. And I know that that will be a 30- to 50-year payout for us if that happens. So, fingers crossed, but we’ll be well on our way to getting to that goal.

Powell: Your plan also includes building a senior living facility on campus. You said you envision this being a public-private partnership where the university would enter into a business partnership with the entity managing the property. What is that all about?

Bailey: I will confess that initially in my mind the driver for this was the fiscal reality, right? This is a thing that can diversify the revenue streams for the university. But the beautiful thing about this idea is that it has evolved over time.

The idea of a senior living facility at a university isn’t brand new. Arizona State has one. There are a few other institutions that have similar things. I think what we will do at SOU is something really revolutionary, because the goal is now to make those residents, to integrate them into the fabric of the institution in ways that I don’t know that anyone is doing.

The thing that I’ve been thinking about in my mind is when you go into a hospital and there’s always an information desk and there’s usually a retiree who’s a volunteer out of the goodness of their heart. And so I thought what happens if we take that model and blow it up for a university. Imagine on the first week of every term we have all of these residents who form an SOU Auxiliary — optional, voluntary if they want to — but that we give them red SOU polo shirts and golf carts and they’re taking students all over campus and showing them where to go, in addition to being mentors and tutors and sponsors.

Powell: Some of these projects, like a new information system for example, are expected to save Southern money in the long run, but how does the university afford all of that now?

Bailey: We have to be willing to invest in things at the same time, we’re making these very sobering decisions. So I think the mindset is really one of strategic growth and by that, I mean, what are the things that even in the midst of this challenge, we are going to be intentional about investing in knowing that it will pay dividends? Energy is a clear one. The project that you just mentioned in the question, is our Core Information Systems Replacement. Yes, that costs money to do, and it costs one-time money which we don’t have a lot of, but at the same time that alone contractually will save $700,000 a year for the next 30 years. When you do the math that way, we can find ways to invest these precious resources now knowing that it will pay off.

Powell: The heart of this vision is financial stability for the institution. What sort of benefits will students see?

Bailey: First of all, the goal is that they see that there is an intentionality to not using tuition as the way to solve our problems, right? Now let me be very careful to the listeners out there. I am not pledging that we are never going to increase tuition. But, I am pledging that we are not going to make that the sole answer to our financial challenges. We’re not going to do that.

Powell: What’s at stake if this doesn’t work?

Bailey: It’s hard for me to answer that because I am an absolute optimist. This institution has for 150 years had incredible challenges and incredible triumphs. I think that if we don’t do this work, I think that it will put more and more on the backs of students, and that is the tragedy here if we do nothing. But, I want to be very clear that I am completely confident in the future of our institution. I just want to make sure that we are aggressive at changing the model so that the health of the institution is set up for a long time.

Copyright 2022 Oregon Public Broadcasting

Meerah Powell is a general assignment and breaking news reporter for OPB. She previously worked as a news reporter and podcast producer for Eugene Weekly in her hometown of Eugene, Oregon. Along with writing and audio work, Meerah also has experience with photography and videography. She graduated from the University of Oregon's School of Journalism and Communication.