Oregon Universities Warn They Could Burn Through Funds in Just a Few Years as Costs Soar and Enrollment Falls

Oregon’s public universities are caught in a growing financial squeeze, with spending rising faster than revenue, a trajectory that could drain institutional reserves within three to five years.

The warning comes from a new report issued this month by the Higher Education Coordinating Commission (HECC), which points to wages and benefits as the primary cost pressures.

The commission also highlights expanding administrative and support costs, even as student enrollment continues to decline.

The report, entitled ‘Spending and Efficiency in Oregon Public Universities,’ states that the overall growth in spending has exceeded consumer-based inflation.

However, it is consistent at other national higher education institutions and other public, labor-intensive entities in Oregon. The rising cost of wages and benefits, specifically pension contributions, is a major contributing factor.

HECC Advocates a Significant Shift in Spending Priorities

However, a significant shift in spending priorities is highlighted, with administrative costs growing disproportionately.  Spending on instruction and research has dropped from 43% to 37%, while spending on public service and institution support has grown from 14% to 19%.”

Despite enrollment declines, the system has added programs and reduced student-to-staff ratios, raising concerns about efficiency.

The report states that the ratio has declined by 15% from 2013-14 to 2022-23, leading to fewer students per staff member. Staffing at Oregon public universities grew nine percent, while the number of students declined by seven percent.

Here is the student to staff slide HECC points to as an efficiency red flag:

The report identifies a decline in shared administrative services as a lost opportunity.

“The annual growth rate for institution support spending over the past decade is almost double the overall growth rate for operating costs in general.” The report points out that one way for universities to improve cost efficiency is to manage the cost of institutional support.

Universities Have Elected to Perform More Administrative Duties In-House Instead of Using Shared Services

Over the past decade, universities have chosen to perform more administrative functions in-house, resulting in the shrinkage of University Shared Services (USSE) and fewer services offered.

Data shows that spending on core activities such as education and general accounts are growing annually at a faster rate than associated revenues.

“On the current path, universities will be forced to continue to make substantial cuts annually or, in aggregate, fund balances will be completely exhausted within an estimated three to five years.”

Mounting Pressures Across the Entire University System

The HECC concedes that there is no simple or obvious path forward, adding that one campus alone cannot solve the problem. Instead, it pushes for universities to adopt more shared services and coordinated program decisions to slow cost growth and stabilize budgets.

Oregon’s public universities are losing ground to out-of-state competitors as a tuition-dependent revenue model drives away in-state students who increasingly choose cheaper or more prestigious options elsewhere, accelerating the enrollment decline.

Federal IPEDS (Integrated Postsecondary Education Data System) shows 6,526 first-time Oregon residents enrolled in colleges outside the state in Fall 2024.

That out-of-state flow matters because every lost student is also lost tuition revenue in a system already struggling with enrollment declines.