"The Great Pumpkin is Not Coming"

Some bad news delivered badly:

All seven Oregon public universities would lose state money over the next two years, but some, including Portland State, Oregon State and the University of Oregon, would lose more than others in a distribution plan approved Friday by the State Board of Higher Education's finance committee.

Even with federal stimulus money, the universities will see an overall 8 percent drop in their 2009-11 general fund budget from the previous biennium -- to $820 million. But the decline would be 16 percent for the University of Oregon and 11 percent each for Portland State University and Oregon State University under the distribution plan.

This is obviously a blow to workers and faculty hoping to see some equity in the way cuts strike state workers. What adds insult to injury is the way OUS Chancellor George Pernsteiner delivered the news--mockingly. Noting that universities are going to have to get by with less state support, he chided universities with this one-liner: "The Great Pumpkin is not coming."

In other words: "Quit your whining. Suck it up. You've been living large for a long time, and now the salad days are done."

(PSU faculty and staff, you have been living large, right? Regular raises, salaries competitive with other universities, that kind of thing? Oh, wait.)

You might also find President Wim Wiewel's response less than reassuring. While acknowledging that PSU has "enjoyed" massive growth in the past five years (15%, 3,500 students), that it will experience growth again this year (though the University refuses to use the added revenues from that growth in budget models), and that it has therefore suffered disproportionately, Wiewel offered a tepid, "Everyone has to share in the sacrifice."

These are people's jobs; their lives. These decisions have real-world consequences. You'd think the Chancellor and President would reassure their valuable university faculty that they understand that.

Stay tuned.

Bargaining in the News

Last week, David Steves wrote a clear, fair article in the Eugene Register-Guard about the negotiations between OUS and university workers. It's principally about SEIU's dealings--mainly because the University of Oregon is the paper's focus, and OU professors aren't unionized--but Steves points out the head-scratching difficulty in getting contracts signed:

Until now, a labor agreement by the state’s biggest public employees union and state government smoothed the way for a quick settlement between Oregon’s public universities and its unionized classified workers — mainly those who hold clerical, custodial and maintenance jobs.

Despite the ratification last week of such a contract between the state of Oregon and the Service Employees International Union Local 503, the Oregon University System has so far been unwilling to use the statewide labor contract as a model for an agreement with its 4,000 union-represented classified workers.

As we gear up to put pressure on OUS/PSU for our own contract, this point is central: we want parity with other state workers. If one deal is good enough for Oregon state workers (SEIU-DAS), why should other workers get a worse deal? More to the point, why should university workers, whose paychecks are only partly paid by taxpayers, take a larger hit?

Poll: Oregonians Favor Legislative Tax Increases

We're a long way and a lot of special-interest spending away from dodging this bullet, but a recent poll shows that Oregonians would reject a repeal of the tax increases if the vote were held today...

62 percent of likely voters would vote “yes” to uphold the legislature’s actions, compared to 26 percent voting “no,” with 11 percent being unsure how they would vote.

Grove Insight conducted the poll on July 29 to August 2, interviewing 500 Oregon registered voters likely to participate in next January’s election, should it take place. The poll carries a margin of error of 4.4 percent. Read Grove Insight’s short analysis (PDF)

This is definitely good news. Spending by pro-repeal forces (with deep, deep pockets) will do a lot to balance that number. If it were closer to 50-50, it would foretell doom. But a 36-point margin is a lot of cushion.


Why This Matters
The bargaining team is currently negotiating with the administration to manage a $21-million cut in state funding to PSU. On the admin side, they're understandably concerned about how to manage the risk of this ballot measure. However, this poll suggests that that risk may be lower than the admin calculates--something we'll have to consider as we look at any proposed compromises on salary.

Furloughs, Furloughs Everywhere

After declaring an impasse last week, it looks like the Governor and SEIU have come to an agreement:

Oregon state workers will take 10 to 14 unpaid furlough days during the next two years, under a tentative contract agreement announced Tuesday morning between the state and its two largest workers' unions.

The contract also calls for delaying a scheduled step pay increase for more than a year and deleting a second planned step increase, according to a joint release by Service Employees International Union Local 503 and the American Federation of State, County and Municipal Employees Council 75.

As expected, there will be no cost-of-living pay increases for any workers during the 2009-11 biennium....

The final agreement represents a compromise on both sides. SEIU started negotiations by offering eight furlough days and a cost-of-living wage freeze. Kulongoski countered with a demand of 24 furlough days and a total wage freeze, including both cost-of-living and step increases.

The article goes on to note, in a comment I was going to make myself: "The settlements with AFSCME and SEIU will serve as a model for contracts with smaller state workers' unions, Gov. Ted Kulongoski said in a release Tuesday."

It's still not clear to anyone how furloughs might be applied to salaried faculty and staff, yet in anther story from the New York Times, that's exactly what members of the Cal-State faculty have agreed to do:

A union that represents 22,000 faculty members at California State University has agreed to two furlough days a month to help close a huge budget deficit at the 23-campus system, officials said Friday.

Members of the union, the California Faculty Association, voted for the furloughs, which amount to a 10 percent pay cut, over the coming academic year. The move was approved by 54 percent of 8,800 union members.

Union officials are still negotiating with system officials about how to carry out the furloughs, which are likely to result in fewer teaching days or administrative duties for faculty members, said John Travis, a professor who is chairman of the union’s bargaining committee.

The chancellor has called for nearly all of the system’s 47,000 employees to take unpaid leave two days a month as part of a plan to address a $584 million budget deficit caused by a 20 percent reduction in state financing. The furloughs could save up to $275 million.

Lots more to come, and I'll try to keep you up to date.

Anti-Tax Ballot Measure Clouds Future

One of the most important developments to watch involves a group of anti-tax activists who are organizing to repeal the recently-passed $733 million tax increases on some businesses and wealthy individuals. The Oregonian's Jeff Mapes is reporting that this coalition is already well on their way:

While Oregon Gov. Ted Kulongoski took roughly three weeks to sign two controversial tax bills into law, the secretary of state's office spent less than six hours Tuesday approving the paperwork that allows opponents to begin gathering signatures to put the tax increases on the ballot.

A broad coalition of business groups and tax activists are hoping to collect some 55,000 valid signatures by the Sept. 25 deadline to put each of the tax measures up to a vote of the people at a Jan. 26 election.

The tax increases were necessary to cover a massive budget deficit caused by the current recession. Mapes is also reporting that the coalition has already raised $200,000 to fund the effort:

Associations representing homebuilders, restaurants, grocers and auto dealers each kicked in $25,000. Several oil distributors kicked in at least $40,000, two beer distributors gave a total of $20,000, Associated General Cotnractors gave $12,500 and the Realtors donated $10,000....

Lori Hardwick, the go-to fundraiser for Oregon Republicans, has been signed on by the anti-tax coalition (which calls itself Oregonians Against Job-Killing Taxes) and $100,000 has already been put into the signature-gathering effort. And, of course, the mastermind behind the campaign is Mark Nelson, the Salem lobbyist and consultant who orchestrated the defeat of the 2007 cigarette tax hike that was put on the ballot by the Legislature.

I will update the blog with info as the effort progresses.

Kulongoski Declares Impasse

Very alarming news out of Salem today: Governor Kulongoski is declaring impasse with SEIU.

Gov. Ted Kulongoski declared an impasse over negotiations with state unions on Wednesday, starting the clock for 37 days until he can legally dictate state workers' pay.

The Oregon Legislature passed a state budget that requires $130 million in general fund reductions for the 2009-2011 biennium. In a budget note, the Legislature estimated that about half -- $65 million -- would come from reducing state workers' compensation. But the governor aims to save $100 million....

While labor leaders say the two sides have agreed on no cost of living increases and a small decrease in health insurance benefits, they have remained at odds on pay freezes and the number of unpaid furlough days that employees must take.

Frane said that the governor's representatives wanted to tie the number of furlough days to state revenues, raising the number if the economy gets worse. The unions want the number to be fixed, she said.
Whether workers will get wage increases for pay steps over the next two years is also under discussion.

More analysis to come. (I'm tying to post this from a cell phone at the AAUP's Summer Institute in Minnesota.

PSU's Tuition Hike: 10%

Yesterday, Governor Kulongoski restored $11.5 million to the higher ed budget (he actually vetoed a last-minute cut by the lesislature). In today's Oregonian, Suzanne Pardington reports that the tuition hikes will range from 3.5% at Eastern Oregon to 15.4% at OU. PSU will have the second-highest hike at 10%.

The biggest Oregon increase is at the UO, where officials rolled a $150 spring tuition surcharge into the new rate. Annual full-time, in-state tuition and fees for UO undergraduates will be 15.4 percent more this fall than last fall.

Officials call it a 7.9 percent increase by adding the spring surcharge into last year's annual rate.

By the university system's figures, the tuition increases average 8 percent for the large universities and 5 percent for the smaller universities, as called for by the Legislature. They also comply with Legislature's caps of 9 percent for large campuses and 6.5 percent for smaller campuses. With differing numbers of credits, those numbers do not reflect what every student pays....

With college costs going up all over the country -- 14 percent at University of Washington and 9.3 percent for University of California -- Oregon students and board members were relieved that it wasn't worse.

This is all very useful. Over the summer, members of both the AAUP and university bargaining teams will be working together to figure out how to manage the cuts. Our negotiations have been hampered because we've lacked actual numbers. Now that they're coming in, we can see where we stand.

Kulongoski Reverses Legislature's Limit on Tuition Hikes

This is big. From today's Oregonian:

Gov. Ted Kulongoski plans to veto the Legislature's last-minute whack of the state's public universities to avoid double-digit tuition hikes.

The governor will announce his plans before the State Board of Higher Education meets today to set tuition rates, likely preventing a showdown between the Legislature and the board over the increases.

This is a reversal of the legislature's 11th-hour $11.5 million cut to higher ed just before the end of this year's session. All of this has direct bearing on our negotiations with the university.

With the governor's line-item veto expected, university officials now plan to limit increases to 9 percent at the three large universities and 6.5 percent at most small universities, following the Legislature's limits.

Tuition increases will partially make up for a cut of nearly 10 percent from the university system's $893.2 million 2007-09 budget. To get to the $807.5 million budget for 2009-11, the universities also plan to cut pay, jobs, classes and campus services.

I'll watch this closely and see what develops in the next few days.

Tax Hikes in Jeopardy? [Updated]

This has been an entertaining week in Salem. On Tuesday, the House passed two bills that would raise $733 million--tax hikes for wealthy individuals and businesses. For cash-strapped public institutions like ours, this was good news. On to the Senate and then to the governor for a quick signature.

But wait!--yesterday, Senator Mark Hass stepped across the aisle to stand with Republicans and the two bills failed to pass. Haas said he wants the tax increases to sunset after the recession ends. A stunned Democratic caucus retired last night wondering if the deal was dead.

Maybe on life support. Today the Oregonian's Jeff Mapes reports that there's behind-the-scenes wrangling, but no plan yet:

That's an important point to Democratic leaders, who are promoting the hike in corporate taxes as not only necessary to get through the recession but as part of increasing fairness in the tax system. They've argued that the state will be digging out of the budget wreckage for years to go come and that business should contribute its fair share.

Plus, if the Senate changes the tax package, it has to go back to the House. And who knows what the politics there are like after all the fuss about Republican Bob Jenson's decision to defect from his caucus and give Democrats the crucial 36th vote they needed.

Stay tuned.

Update. The bills have passed, and not temporarily. The Statesman Journal reports:

After a one-day delay, the Oregon Senate voted today for an increase in corporate income taxes that will produce an estimated $261 million to balance the next two-year state budget. House Bill 3405, which goes to Gov. Ted Kulongoski, passed on an 18-11 vote. All Democrats voted for it; all Republicans against it. One Republican was excused.

The one-day logjam was broken when Democratic Sen. Mark Hass of Beaverton agreed to vote for the bill in exchange for another bill, pending in the House Revenue Committee, that would divert money from permanent increases in the corporate tax after 2012 into the state’s general reserve fund.

Good news!

PSU Budget Update

Last week, following the legislature's release of the final budget numbers, Lindsay Desrochers addressed the campus in two meetings to discuss what the deficit means to Portland State. For those of you who went to a similar meeting a month ago, the news will be familiar. Those numbers were essentially the same ones PSU is still working with.

Numbers
Below are the numbers the university is working with to balance the budget. These include assumptions about both the actual deficit and the solutions--but they're working assumptions. Raising tuition is subject to approval, for example. So while these may well change, they're the best, most current numbers we have.

Losses
State reduction of 22%_____________________$28.4 million
Tuition revenue loss (capacity loss)_________$.8 million

Compensation
Tuition increase (13% res, 10% non-res)____$13.5 mil
Salary/FTE reductions (4.6%)________________$3.9 mil
Overhead charge increase (4%)_______________$1.2 mil
Summer session contribution increase_________$.5 mil
Campus closures, other reductions___________$2.0 mil
Services and supplies reductions (3%)________$.5 mil
Academic (instructional) reductions________$1.86 mil
Admin and Academic Support reductions_______$4.0 mil
Other admin reductions/revenue offests_____$1.74 mil


Looking Forward
It's worth noting that the salary reductions are a cut made by the state based on a calculation of PSU's total payroll. The $3.9 million figure represents 4.6% of that total, and the state will just take that off the top. How PSU manages to distribute those losses is another matter.

The AAUP collective bargaining team is moving forward with a list of priorities to protect the membership as we face these cuts. These include working to keep jobs on campus, preserving health coverage, shielding lower-paid members, and demanding a "snap back" to current wages--preferably with a cost of living adjustment. We also expect the the university to provide full disclosure and complete transparency about financial and budetary issues. Importantly, with any talk of salary cuts or freezes, we will expect the administration to address the other issues on our list for bargaining, including workload, working condition, and job security for fixed-term faculty. And finally, after the deficit has been addressed, we would expect that the university restore salaries first, before spending money on other projects or objectives.

We have a long way to go, and I'll keep you posted as things develop.

The Number is in: Oregon's Deficit at $3.8 Billion

For the past several weeks, all discussion about furloughs, pay cuts, and layoffs have been put on hold until we got a final forecast from Oregon State Economist Tom Potiowsky. It's in, and the number, though huge, isn't quite as bad as people expected.

The gap is less than had been feared by many legislators, but there’s bad news, too. Lawmakers will still have find $350 million in cuts before the current two year budget period ends in June. Lawmakers hope to end the 2009 session by June 30, one day before the new two-year budget cycle starts.

They have the most discretion over spending personal and corporate income taxes and lottery proceeds, all of which are down in today’s forecast.

The gap between projected income and current services was estimated at $3.3 billion in the previous forecast issued Feb. 20.

Legislative budget analysts have said it would take $16.7 billion to continue programs at the current two-year level, which does not account for mid-cycle hiring of state police troopers and others, phase-in of programs and increased costs such as medical care. But lawmakers already cut more than $300 million from the current budget of $15.1 billion back in March. Other potential cuts were averted through use of federal economic-recovery funds and state funds other than reserves.

Legislative budget writers already were planning for a gap of about $4.4 billion.

Now we just need to wait and see what the number means for Portland State University. The legislature had told agencies to prepare for 30% cuts, but it appears that worst-case scenario won't come to pass. We'll enjoy our silver linings where we can find them.

Update. The university has already planned meetings to discuss the budget with the PSU community. See below for details:

The University Budget Team, Vice President Lindsay Desrochers and Provost Roy Koch invite you to participate in one of two public budget meetings to review preliminary 2009-10 budget recommendations. The University Budget Team will take comments and answer questions from all participants. All members of the University community are urged to attend one of the two sessions. These recommendations will be forwarded with campus feedback to President Wiewel.

Thursday, May 21
Smith Memorial Student Union
Vanport Room 338
11 - 1 pm

Friday, May 22
Smith Memorial Student Union
Vanport Room 338
12- 2 pm

Wim Wiewel on the Budget

Yesterday afternoon, PSU President Wim Wiewel, along with VP Lindsay Desrochers, addressed an overflow audience about the current budget situation. (It really was overflow--they had to remove a wall to accommodate all the anxious staff in attendence.) He had prepared a nice Powerpoint Presentation, the slides of which were provided to attendees--flip through it if you want more detail than this post provides.

Where We Are
The current situation is this: recently, the state legislature asked PSU to develop a 30% budget reduction scenario (a third of the PSU budget comes from the state, or $234 million). President Wiewel said flatly that this isn't possible; in addition, it appears to violate the terms of the federal stimulus. PSU is actually planning for cuts of 20-22%--which is worse than their worst-case scenario of a few months ago. To meet these cuts, PSU is developing a strategy that includes:

• Tuition increases (13% resident undergrad, 10% for grad and non-residents).
• Differential tuition.
• A potential 4.6% reduction in salaries (the state's request). Unclear whether this means furlough days or actual cuts.
• Staff reductions. Likely, 40-50 FTE, but could go up to 120 (out of 3,500).
• Campus closures during holidays, reductions in travel, equipment, and so on.

Bottom Line
In her discussion of the budget issues, Lindsay Desrochers noted that the salary reductions are a "bargainable issue." Neither the state nor PSU can mandate cuts (without declaring exigency, which is another matter altogether--one not discussed yesterday). Since we don't know how bad the situation is or will get, no one could discuss actual numbers.

Later, during Q&A, someone asked what the practical difference between salary cuts and FTE reductions were. President Wiewel, who was impressively candid throughout the meeting, responded wryly: "Practically, it means you have less money in your pocket." He elaborated, mentioning that for salaried workers it wouldn't make much difference; however, there are so many categories of workers at PSU that it would depend on individual situations. He also noted that SEIU had offered to take furloughs.

Finally, Linday Desrochers, responding to a question, did say, "there will be cuts" to jobs (I considered titling this post "There Will Be Blood, but it seemed a little melodramatic). President Wiewel was optimistic that the churn of employees might mitigate this somewhat, but again, it's too early to tell.

I was impressed with the candor and collegiality of the presentation. It never seemed like we were being managed or that it was a PR effort. Things are bad, and President Wiewel appears to want to keep the community as informed as possible with news as it develops.

If you want more detail about the budget or budget process, the PSU Budget page has a lot of detail. If you'd like to comment or ask questions, send those to budgetcomments(at)pdx.edu.