SOU could run out of cash by July without state’s help
By Holly Dillemuth, Ashland.news
In need of a stopgap for a $4 million shortfall by the end of this fiscal year, Southern Oregon University President Rick Bailey and the university’s cabinet are in Salem today, Tuesday, in hopes of speaking with key state legislators, the Governor’s Office, and the Legislative Finance Office about the need for for at least $15 million in emergency funds said to be needed to help avoid other options, such as a discussion of a “merger” with another institution, according to Bailey.
SOU is asking for a $15 million infusion, state Rep. Pam Marsh, D-Ashland, confirmed to Ashland.news mid-day Tuesday.
The possibility of avoiding a merger was mentioned by Bailey during the regular board meeting in passing as a response to SOU Trustee Barry Thalden’s question about other options for the university aside from a financial request from the Legislature. In a wide-ranging virtual press conference on Tuesday afternoon, Bailey said the topic of even the possibility of “discussions of a merger” were “very sensitive” and considered premature.
“Let us explore a lot of different options and let us look at what’s in the best interest of SOU students, faculty, and staff and then start to put together a contingency plan,” Bailey said.
“I am not going to say that anything is off the table,” Bailey said.
Bailey told Ashland.news about the following cost cutting measures during the virtual press conference:
- A hiring freeze instituted by the university on Tuesday, in addition to travel restrictions, with exceptions.
- Cuts to expenditures for services and supplies, with a supervisor’s pre-approval needed for any spending over $1,000.
- Travel restrictions, with approval of exceptions required by each employee’s supervising vice president or the President.
- Reductions in continuing education and professional development allowances, where possible.
The funding request by the university is aimed at alleviating both the estimated shortfall and the possibility of running out of cash by April, according to one board trustee. The news surfaced during a special SOU Board of Trustees meeting announced Saturday and held Monday, Feb. 2, just over two weeks after a finance meeting on Jan. 15 where trustees asked for more clarity surrounding the cash flow statement.
A Higher Education Coordinating Commission (HECC) analysis said the cash balances for all seven public universities will be “in the red” by 2030.
Bailey said while other institutions across the state are experiencing similar financial positions, he called SOU’s financial position the most vulnerable of the seven state universities.
“Today our university sits at a critical inflection point,” Bailey told trustees. “On the heels of SOU Forward Plan and now currently in our implementation of the SOU Resiliency Plan, there is still a significant cash flow challenge that threatens our capability to serve the needs of the region and state.”
Slideshow
To view the 37-page visual presentation from Monday’s special meeting, click here
To read an SOU news releases about spending cutbacks, click here
As a proactive measure, trustees unanimously approved an expenditure request for a marketing campaign to help boost enrollment, an initiative tagged at $900,000 over three years, to help net more incoming students at SOU in an effort to help their financial situation. The project will be paid for through the university’s property sales, which is said to total $4 million in one-time funds.
The marketing campaign, to be run by Nicolle Aleman, director of marketing at SOU, is aimed at recruiting students using a targeted marketing campaign. SOU officials are hoping that, paired with possible state funds allocated by the legislature, pending request and approval, could help the university avoid “discussions of a merger” for the university.
While not an overall fix, according to Bailey, the marketing endeavor was heavily supported by trustees, some of whom seemed to only learn of the full extent of the university’s cash flow deficiency on Monday night.
Trustees voiced concerns regarding the financial state of the university and the options on hand to solve it.
“According to cash flow, we’re three months away from being in a spot where we literally right now don’t have any contingency,” said Matt Stephenson, an SOU trustee and CEO of Rogue Credit Union. “I just want to make sure I’m understanding.”
Bailey replied, “With the exception of the land sale money.”
Given that the Board of Trustee’s next board meeting is in April, Board Chair Sheila Clough said that it was too long to wait to update the board, hence the Monday meeting. Clough said the urgency to hold the meeting was also propelled by SOU’s cash flow statement and the start of the Oregon Legislative session Monday, Feb. 2.
Prior to Monday’s meeting, Bailey and his team were directed by the board to produce a cash flow statement, one that “does not paint a very healthy picture and one in which we have a very short timeline to figure out what actions we’re going to take,” Clough said.
Longtime Trustee Daniel Santos noted that he recalled that Stephenson’s concerns during the Jan. 15 meeting were met with a suggestion by SOU Vice President for Finance and Administration Carson Howell to speak about the topic “offline,” not during the public session.
“When we had that conversation, we did not have this (fiscal) model fully fleshed out,” Howell said.
Bailey tried to interject to add his thoughts, but Santos interrupted, trying to get Howell to answer his questions directly.
“In this model, as we’ve got $24 million in cash that we were expecting to start the month of February with … that’s our designated (operations fund),” Howell said.
“So we did not have the money on hand, to meet the cash flow?” Santos asked.
Howell replied the university did not.
“That’s all I need,” Santos said.
Howell told board members during the special meeting of the trustees that the shortfall is due to “insufficient financial reporting.”
“We have been looking at contracting to help us better utilize the (financial) system,” Howell said, “because it is a new system, looking at, can we bring in experts to help us with these reports and developing those reports … to train us how to better use the system?”
Bailey added that the challenge the university faces is due to the cash flow consisting of all expenses together.
“It’s not an excuse, it was harder for us to see, no, there is a real, steady, structural problem,” Bailey said.
During the Monday meeting, Bailey also reflected extensively on the past four years, in which 25% of SOU’s faculty and staff have been cut.
“Any shortcomings that we’ve experienced as an institution we’ve experienced over four years I take full responsibility as the president,” Bailey told trustees.
Some trustees aired frustrations for not knowing the full extent of the issues sooner, as well as concerns with having a request for funding from the Legislature as Plan A.
Santos asked for better planning and better information moving forward.
“The Legislature’s going to be a very hard sell, given the climate that we’re in,” Santos said.
Bailey emphasized that the SOU Forward and the SOU Resiliency plans will account for an overall one-fourth of faculty and staff positions, cuts more comprehensive than any university has undertaken in the state in the last decade.
“By nearly every measure, SOU is now the most efficient university in the state,” Bailey said.
“SOU is not a stranger to going to the Legislature and asking for money, even to asking for a bail out. There’s a difference this time, and when I first met many of our legislators, they warned me: You have to get your house in order before you come and ask us for money. We’ve done that work.”
Bailey said that while the university cost-savings plans have done and are doing what they were designed to do, the university still finds itself in a “precarious cash flow situation” and that’s because of the nature of how and when resources come into the institution over the course of the year, Bailey said.
He also noted that cuts to positions on campus have impacted the clarity of the budget process, something he regrets.
If he had it to do over, Bailey said he would’ve made budgetary positions off limits from staff reductions.
“If we take even a cursory look at the SOU Forward Plan, and the SOU Resiliency Plan, it’s not an overstatement to say that the institution has made … painful, transformative decisions affecting more faculty and staff positions as a percentage of our overall employee base than any other institution in the state by far,” Bailey said. “And, even with those transformative and painful decisions, we still find ourselves in a delicate fiscal state.”
Bailey: SOU faced budget woes early in his presidency
Bailey said he’s been keenly aware of budgetary challenges since his third day as president of the university in January 2022 when he attended his first Board of Trustees meeting.
“All of that (fiscal) picture was based on straightforward calculations of expected budget revenues versus expected budget costs,” he said.
Speaking of SOU Forward, Bailey said: “At the time, and I fully admit this, I had a genuine expectation that the plan would help to arrest the fiscal, structural problem of the institution and it has. And … it has worked to bend the cost curve the way we wanted, but it did not solve the problem fully. In fact, as costs continued to escalate, most of which are explained by factors external to the university, it became clear there was more work to do.”
By the summer of 2025, two years into the implementation of the SOU Forward Plan, Bailey said the university engaged in an even more ambitious and painful campaign known as the SOU Resiliency Plan.
“These decisions were far more complex and far more politically difficult, nevertheless the campus again came together and within two months had a plan that would continue to trim the university (budget) by another $8.7 million by June of 2029,” he said.
He also mentioned that one-time funding, such as $4 million in land sales, hadn’t revealed the full extent of the reality of SOU’s financial situation.
“That’s not an excuse,” Bailey said. “Ultimately, as the president, I’m responsible for both the (fiscal) awareness of our environment and the actions our institution takes.
“As I look back on four years as the president here at SOU, I admit that our awareness has suffered,” he added. “As we began implementation of the SOU Forward Plan, I determined by summer of 2023 that our university’s fiscal awareness would be better served by hiring a new vice president for finance and administration. I still think that was the right decision.
“In three short years, I have served with four different chief financial officers,” Bailey said.
“Sadly, while we’ve endeavored with the best of intentions to increase our awareness and fiscal management, all of that turmoil made our understanding of our fiscal environment cloudy at best.”
Bailey: More cuts possible, acknowledges they are damaging
Bailey also noted that the implementation of a software platform called WorkDay, utilized by the university, also presented challenges.
“So where do we go from here?” Bailey said. “In my estimation, the actions we’ve taken as a university, while dramatic and while certainly helping to address the structural problems of the institution, will still leave us with cash flow challenges by the latter part of the current biennium. And we’re the first institution to face this crisis since the breakup of the Oregon University System.”
The challenge now, Bailey said, is in becoming “so efficient that we risk becoming completely deficient, that we cut our way to irrelevancy.”
“We will always need to fight the tendency to become bloated or top-heavy,” he added.
“I don’t think there will not be more opportunities for strategic cuts, I do, but I also genuinely believe that large-scale cuts at this point, after SOU Forward and the SOU Resiliency Plan, will damage the institution’s ability to provide fundamental student services, relevant academic offerings, and an economic prosperity engine for the region and the state. Put simply, we have done the work the state has needed us to do. We have answered the call. We need now to ask the state what it prioritizes and then do the work of exploring with them our future options together.”
Stephenson voiced concerns multiple times regarding the university’s need for a contingency plan aside from going to the Legislature during the meeting, which he attended virtually.
“We’re looking down the barrel of a gun that is three months away,” Stephenson said, referring to the cash flow statement.
“I do not envy your position,” Stephenson said. “I agree that the first step we should be taking is screaming at the top of our lungs for funding.”
“We need to have a contingency plan if the state doesn’t show up,” he added.
The enrollment push, coupled with hope that the Legislature can come to the university’s aid financially, is hoped to help right-size the financial state of the university, despite attempts by SOU Forward and The Resiliency Plan to do so, the latter which was unveiled in summer 2025.
Trustee Dee Anne Everson said she believes the enrollment campaign will highlight to the state Legislature how the university is investing in its own future, with even more potential if the state can help, too.
“In marketing, it is what Gen Z demands right now,” Aleman said, of the specific marketing campaign. “They want that hyper-personalized experience, otherwise it’s, ‘Don’t waste my time.’ They don’t want to hunt for information, they want it to be sent to them and they want it to be customized for their experience.”
Everson, who filled late Trustee Bill Thorndike’s position, made a motion to approve the resolution, which was approved unanimously.
Bailey noted he doesn’t want the board to think that marketing will solve all of their financial problems.
“I think it will help bring more revenue and I think it is a more than reasonable assumption that the money we’re investing is going to have a much greater return on investment,” Bailey said.
“If the state doesn’t transform the way it supports universities, I can’t give you that guarantee that all of a sudden we’ve solved all our problems. It’s a sobering thing to say and it’s not just SOU, it’s all seven of us.”
How much will the university ask for?
Board members and cabinet members declined or were unable to comment on the amount that the university would be asking for following the meeting, though trustees discussed multimillion-dollar asks, starting with well over $10 million, in the public session on Monday.
Bailey declined to comment via phone Monday evening until a virtual media interview on Tuesday afternoon.
Janet Fratella, SOU’s vice president of university advancement and SOU Foundation executive director, said the estimated $4 million shortfall by the end of the fiscal year on June 30 is based on a projection SOU has made for the university.
“In the budget, it’s what is projected to be an end of fund year, minus four, but that’s an estimate,” Fratella said.
Comments from Fratella came following an executive session, which the reporter attended.
“I think they’re just going to go talk and test the temperature (of the Legislature),” she added of the cabinet’s trip to Salem.
Bailey said during the meeting that more information regarding next steps for the university would likely be known by the end of the week, when he agreed to the board’s request to provide a short-term cash flow plan as well as a plan to “bring in the right staff” in budget accounting to provide additional assurances and transparency surrounding SOU’s financial statements.
It was unclear if this followup with the board would be during another board meeting or if it would be done so virtually.
Public comment was not taken at the meeting, but Clough encouraged those wishing to submit a statement to the board to email trustees at [email protected].
“Our entire board receives that information,” Clough said.
This is a developing story and more information will be added as it becomes available.
Reach Ashland.news reporter Holly Dillemuth at [email protected].
1:30 p.m. Feb. 3: Added SOU’s ask amount per Rep. Marsh.
2:50 p.m. Feb. 3: Removed quote from Janet Fratella saying SOU’s ask amount was unknown.
4 p.m. Feb. 3: Updated with information out of President Bailey’s Tuesday afternoon news conference.
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