University President Dave Frohnmayer presented the Oregon State Board of Higher Education with an ultimatum Friday: If the University is to continue fulfilling its mission, the board must either provide more state funding or create an autonomy oriented governance structure.
“He was basically saying, ‘If you look at the private institutions, they’re succeeding,’” said Di Saunders, Oregon University System communications director. “There’s important lessons to learn from the privates that we need to better understand.”
That governance structure, however, would not replace state investment, she said.
“They would still need that state revenue as well as the changes in governance to be able to fulfill their mission,” Saunders said. But, “they need some relative freedom to operate.”

The proposed governance structure would allow the University to operate more like a private institution. One possibility Frohnmayer mentioned is freedom from price controls: The University would charge higher tuition and then allocate that extra money to scholarship aid for needy students, providing more predictable revenues and broader access for students. As it stands now, the University must be granted permission from OUS before raising tuition rates.
Additionally, Frohnmayer said the University should be allowed to retain the interest earned from tuition – an issue also being examined by the Oregon Student Association for the upcoming legislative session. Currently, the state receives the interest and may use it for anything paid for by the state general fund. There is no requirement that the interest be spent on anything related to higher education.
“It’s money that students have provided to the institutions that campuses feel should be reinvested in the students,” said Saunders.
Frohnmayer noted that while the University receives more funding from outside sources such as private donors and out-of-state tuition than other comparable universities, philanthropy cannot feasibly replace state funding.
The University is still at the bottom of the list as far as per-student funding goes: The state invests $3,232 per University of Oregon student, whereas its five peer institutions selected by OUS – the Universities of Iowa, Michigan, North Carolina, Virginia and Washington – receive an average of $10,036 per student.
Saunders said the state has in recent biennia assumed students can make up the funding gap, but they can’t. While public institutions are receiving less and less state funding, “they’re still held to the same type of state scriptures and not able to do what private institutions do to help them be successful.”
Private institutions’ tactics include more flexibility in obtaining credit, the ability to borrow money independently and constitutional corporation status – the ability to set long-term policies without micro-management from the state – similar to that of California’s public universities.
Frohnmayer touted the University’s strengths and accomplishments at the meeting, but said the state’s current contribution to the University’s budget, 13 percent, is simply not enough.
The University receives more than twice that from tuition revenue alone, and it boasts the highest graduation and retention rates in the Oregon University System.
But Frohnmayer said the notion of public higher education is a visionary one that has been tied to Oregon’s mission from the beginning, and it remains crucial. Without financial stability, things like tuition-dependency and faculty recruitment and retainment issues put the University’s mission in a vulnerable position, he said.
George Pernsteiner, OUS chancellor, responded to Frohnmayer’s points by reminding him budget cuts have impacted Oregon university infrastructures to the point where it will take more than one biennia to make up for the loss. Still, Pernsteiner supported Frohnmayer’s suggestion of state funding in addition to fewer public institution restrictions.
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