As COVID-19 Clears Campuses, Oregon Universities Prepare For Budget Crisis

As concern for the spread of COVID-19 grew in March and April, college campuses around the country cleared out. On March 23, Gov. Kate Brown ordered all universities to move to online instruction — that will continue through at least June 13.

Most universities with residence halls have seen students move back home, with few left on campus and schools operating skeleton crews to serve them.

Schools are losing money from lower dorm and dining fees, and enrollment declines. The Higher Education Coordinating Commission reports that spring enrollment at community colleges is down about 20% this semester.

All told, HECC estimates Oregon’s public universities and community colleges are losing $130 million this spring because of coronavirus.

Related: Gov. Kate Brown Details Her Plans For Reopening Oregon

At the same time, schools have been forced to spend money on additional technology and increased cleaning. Without students on campus, most universities have reduced student fees. Oregon State has reduced tuition.

Universities will receive some relief from the federal Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act — $126.7 million for Oregon's private and public colleges. But half of the money going to each school is required to help students, rather than bailing out university and college budgets.

“Every institution is facing some really difficult, really choppy water financially – and that’s true even with the benefit and support of the CARES Act,” HECC Executive Director Ben Cannon said.

So universities are making some tough choices to mitigate those costs.

Most universities have canceled travel. Some universities have implemented a hiring freeze or pay cuts for employees. Citing a projected loss of $25 million, University of Oregon announced layoffs for 282 employees.

Oregon's smaller institutions could be in an even tighter financial spot than their larger peers.

But in some ways, they have been more prepared to move to remote learning.

As a rural university, La Grande’s Eastern Oregon University has a robust online program – President Tom Insko said 50% of students were already online before the pandemic. But going completely remote costs money – money universities may not have the flexibility to spend.

“Public universities don’t operate with margin – we essentially have budgets that are designed to provide the services to students that are desperately needed," said Insko, who also recently took over as chair of the Oregon Council of Presidents.

"We do have fund balances, but they’re extremely minimal.”

That means any large changes in enrollment or state funding hit a university’s bottom line – one that was already compromised by trends felt in higher education nationally – from lower enrollment to less funding.

In addition to additional costs and reduced income from student contributions, coronavirus-related financial losses at the state level could legislators to cut funding to universities.

“If we see cutbacks in state funding for any of our institutions, it will be rather devastating,” Insko said.

In addition to CARES Act funding, the Governor also has $32.5 million from the Emergency Education Relief Fund to split between higher education and public schools.

But those funds won’t be enough to keep Oregon’s universities financially stable - officials say it'll take further changes.

“That’s why we will see additional furloughs, hiring freezes, pay reductions, and layoffs across many of our institutions,” said Cannon.

Insko says EOU is in a “pretty decent financial position” for the short term.

Both EOU and Portland State have told employees no jobs would be cut this term.

Portland State's Board of Trustees recently voted to use reserves to help cover some of the university's losses related to COVID-19. The university said additional cost-saving measures will likely be announced later this spring.

And for many of Oregon’s colleges, COVID-19 exacerbates problems for institutions that were already under significant stress before.

Last year, University of Oregon reported decreasing numbers of international students. In his message announcing layoffs, UO President Michael Schill said it's possible that the university will face an enrollment decline in the fall.

“We will need flexibility to preserve the institution’s long-term viability,” Schill said.

Southern Oregon University in Ashland had already been cutting costs this academic year. At a meeting this week of SOU's Board Finance and Administration Committee, Vice President for Finance and Administration Greg Perkinson outlined the financial impact of COVID-19.

“We talk about flattening the COVID-19 cost-curve – we’ve got some SOU cost-curve flattening to do,” Perkinson said during the meeting.

Factoring in the $1.7 million SOU will directly receive from the CARES Act, the university still needs $2.8 million in the short term. But as the virus continues, long-term impacts to universities could be much worse.

“We'll need more help as we work through this pandemic,” Perkinson said.