The Oregon state university system is enjoying an upside to recession economics — when times get tough, people tend to go back to school. So enrollment is up.

GRANTS PASS — The Oregon state university system is enjoying an upside to recession economics — when times get tough, people tend to go back to school. So enrollment is up.

But with the state continuing to cut support for the seven state universities, tuition, research grants and fundraising have had to make up the difference and now cover the bulk of the bills.

That has taken the sting out of the 9 percent across-the-board state budget cuts ordered this past week by the governor.

"To me, it's the dawn of a new era," said Jay Kenton, vice chancellor for finance for the state university system. "Public higher education — in some ways we have become privatized. Nonintentionally. I think it was just out of necessity, given the amount of state funding that is available."

The universities still have to cut a total of $32 million as their share of across-the-board 9 percent state spending cuts for the two-year budget period. But state funding represents only 18 percent of their combined $2.5 billion budget, so the cuts amount to just 1 percent, said Kenton.

That and a $65 million dip into reserves approved by the legislative Emergency Board is making it possible to go ahead with plans to hire more than 300 new faculty and other staff to meet the demands of a growing student population.

Kenton said if Oregon universities are to continue to compete for foreign and out-of-state students, who pay about three times the rate Oregon residents pay, they need to make sure there are enough teachers so that students get the classes they need to graduate on time — something that has become a problem in states such as California.

"It doesn't do us any good to recruit a kid from Japan if they can't (get the classes they need) and they leave," said Kenton.

The benefits to the universities are not without costs to students. The State Board of Higher Education this month raised tuition and fees at Oregon's seven state universities between 2.6 percent and 6 percent.

The hikes are much smaller than in neighboring California and Washington. University of California and California State University students are looking at a 30-percent jump. The Washington Legislature authorized the state's four-year universities to raise tuition up to 14 percent for next school year, and most are expected to do it.

Enrollment in Oregon systemwide is up 6 percent in the past year to 93,035, and is projected to continue growing through 2015.

Portland State University MBA candidate Paris Hirschberg fits the profile for the students behind the increased enrollment.

With a new industrial engineering degree from Oregon State University, he was hired in 2008 as an engineer at a manufacturer of heating and air conditioning controls, but was laid off in March 2009. With only a year of experience, he did not get so much as a callback for an interview during months of looking for a job. So he decided to improve his resume with a master's degree in business administration.

While he feels the quality of education he has gotten has not dwindled, the cost has definitely gone up. In the five years he was at OSU, tuition and fees went from $4,869 a year to $5,911, according to the Oregon University System website. A year of graduate school at PSU for the 2009-2010 academic year cost $12,675 — up from $10,847 the year Hirschberg graduated from OSU.

He is optimistic about his own future. The mix of an engineering degree and an MBA has landed him a paying internship and a scholarship. He expects to find a job once he gets his degree.

The downward trend in state support is continuing, with a 15 percent cut in state funding expected for the 2011-13 biennium.

Oregon State University has had to be aggressive in finding new sources of funding to plug the gap, said President Ed Ray.

With aggressive recruiting and a program that helps foreign students learn English before starting school, OSU hopes to double the proportion of foreign students to 10 percent, he said.

Nonresident undergraduates at OSU last year paid $19,651 in tuition and fees — nearly three times what residents paid.

Recognizing many students need help paying these increased costs, OSU raised $100 million that gave 2,900 of their 18,000 undergraduate students scholarships, in addition to Pell grants and other sources, Ray added.

At Portland State, research grants won by faculty have grown over the past two years from about $40 million to about $60 million, said Bill Feyerherm, vice provost of research and graduate Studies. Besides paying faculty, that covers new equipment.

The downside is that faculty spend more time chasing grants, and their research follows the goals of the grant providers, he added.

Ray, Feyerherm and others fear that the trend in diminishing state support means it will become more and more difficult to give students with limited financial means a chance to get the education they need to land a good job.