President works to boost savings without further cuts, but likely will take more than a dozen years to reach reserve fund goal
By Holly Dillemuth, Ashland.news
Southern Oregon University is on the low end of reserves across all seven public universities in Oregon and President Rick Bailey is trying to find a way to boost the numbers in the next two decades.
The university’s Board of Trustees held off on implementing a financial stability target for its reserve fund near the end of its April 19 regular board meeting – which at the time of the meeting would have required the board to aim to have enough money to operate the university for a full fall term in their reserves going forward.
“The goal is to build up the reserve for financial stability,” said Daniel Santos, in a phone interview last Wednesday. “Trustees aren’t asking for cuts to do this, we’re more holistic,” he added. “We need to (improve) enrollment, retention, all these other revenue-generating steps as well.”
Currently SOU has the lowest amount of reserves among all seven Oregon public universities: an estimated kitty of between $6 million and $7 million currently, according to SOU President Rick Bailey in an interview with Ashland.news earlier this week. The goal, pending board approval, is to generate an estimated range of $20 million to $22 million for a rainy day, though how the university will do that is still open for discussion.
With the budget for the university’s current fiscal year, 2023-24, at about $64 million, according to a prior report, that means the aspiration is to grow the reserve from about 10% to more than 30% — still below national nominal norms.
“What does it cost for SOU to pay salaries and to keep operations running for a full fall term?” Bailey said. “And when we hit that target, we’ll likely be far closer to what the national standard should be.”
Early in the trustee’s board meeting, SOU Associate Professor Bret Anderson, who also sits on the university’s institutional budget committee, shared concerns with the proposal as it stands.
“Yes, we are all for financial resilience,” Anderson said. “Yes, we want to be able to weather things, but this proposal makes me nervous — like a lot nervous.”
Anderson shared with the board that it isn’t the goal of reaching a place of stability that worries him, but he is concerned that efforts to build a “storm-resistant ship” could potentially help “sink the ship.”
“Growth and innovation are now unintentionally sensed as threats to our budget,” Anderson said.
Anderson suggested that the board of Trustees “sleep on it.”
Bailey assured those in attendance that his goal was not to seek cuts to bolster the reserve fund.
“We know that we have the lowest percentage of revenues of any of the seven (public) universities — that’s a problem,” Bailey said while addressing trustees on April 19. “We need to be more resilient that way — and at the same time, the answer shouldn’t be ‘let’s just adopt austerity measures.’ I can tell our faculty and staff here in the room are exhausted with that. We need to be entrepreneurial and we need to be willing to commit resources to things that come up.”
Bailey said he will host a campus conversation in the Rogue River Room of the university’s Stevenson Union at 12:30 p.m. Tuesday, May 21, to hear more from students, staff and faculty on how the university should move forward in regards to their reserve fund.
“For us to ensure that the university we love is vibrant for the next 100 to 150 years,” Bailey said, “we also need to make sure that we have enough fiscal resilience as an institution to thrive long-term, and so I do think it’s important to have a discussion about, and a pathway for, how we’re going to start to put these pieces in place.”
He also emphasized how sensitive the issue is and promotes cautious and thoughtful steps forward.
“With everything that we’ve been through, there are enough exposed nerves that we need to be very careful about how we move forward,” Bailey told Ashland.news. “I think the discussion at the board meeting really spoke to an anxiety … there could be a fear that that now becomes a tool for me or other administrators to now kind of ratchet down and use that to now create more cuts … because we have to start putting more money in the bank. That’s not the goal with this.”
With SOU currently having the smallest percentage reserve amount, Bailey reassured the public that having the lowest amount in reserves isn’t necessarily “an existential threat.”
“I think the aim is to try and find a pathway that makes us more resilient so that we can weather future storms,” Bailey added.
“We would like to set the target so that it’s always rolling. What did it cost to run the fall term last year? That’s the target now for reserves. Every year it’ll adjust.”
In accordance with best practices set in place by the National Association of College and University Business Officers, universities aim to have 40% of their operating annual budget in reserves in the bank, Bailey said.
He believes that metric isn’t being followed to the letter by almost any university in the country right now, let alone in Oregon.
Bailey would like to see SOU reach the national standard, or close to it, in terms of operating annual budget in reserves, though he couldn’t say yet how or when, though the end goal is up to trustees to decide.
Trustees are looking at the target date of 2038 to have as close to 40% of its budget in reserves in place as possible.
“You can’t do this overnight,” Bailey said. “It basically gives us a long-term goal.”
Trustees may discuss the financial stability target at its next board meeting on June 21, and/or in October.
Reach Ashland.news reporter Holly Dillemuth at [email protected].
