Rick Bailey discusses multi-million-dollar structural deficit, plan to demolish Cascade Hall, build hundreds of senior housing units
By Holly Dillemuth, Ashland.news
As part of an approach to address a multi-million-dollar shortfall, and to invest in projects hoped to lead to revenue boosts and more housing opportunities for Southern Oregon University students, SOU President Bailey told Ashland.news on Thursday the university plans to demolish Cascade Hall.
Bailey said there is currently not a price tag on the project, but that demolition, paid for through state funding, would move forward even as the university drafts a request for developer proposals. A construction firm would be tasked with developing the 5-acre property bracketed by Madrone, Oregon and Indiana streets. Bailey said there are “opportunities for hundreds” of housing units on the property.
The project is part of a multi-faceted attempt to address what Bailey has called a crisis for the university, with an approximately $5 million shortfall this year (the difference between expected costs and revenues this current fiscal year), and a recurring deficit of at least $13 million shortfall over the next three years. That’s compared to projected total revenues of about $65 million for the 2022-23 fiscal year, according to a university spokesperson.
“The crisis is real,” Bailey told Ashland.news during an interview in August.
The SOU Board of Trustees in April approved a budget for fiscal year 2022-2023 that outlined a need to cut $3.7 million from the current budget.
“That is a clear requirement for us, to spend $3.7 million less,” Bailey said during an interview on Thursday morning. “But the structural deficit is over the next few years is projected to be $13 million and that’s $13 million in recurring dollars.
“That is our target in terms of where we are going to explore programmatic changes,” he added.
Bailey did not say which programs would be considered for cuts.
He told JPR News that part of the shortfall involves declining enrollment in recent years.
“The challenge is structural, it’s not a one-time (problem),” Bailey said. “What we need to do is adjust the structure of the institution so that we are a stable, long-term, healthy institution and that’s what we’re going to do.”
In an interview with Ashland.news while Bailey was visiting the sister city campus in Guanajuato, Mexico, in August, Bailey discussed the financial woes for the university prior to the beginning of fall term.
“I think SOU is facing one of the biggest fiscal challenges in its history,” Bailey told Ashland.news. “We will come together as a team — board of trustees, students, faculty, staff, community partners, foundation, alumni, all of us — to make some big decisions about who we are as an institution and who we want to be as an institution 10 years, 20 years, 50 years from now.
“There will be some very hard decisions that will have to be made, but I am confident that on the other side of this, we will have a university that is positioned for long-term fiscal stability and we will do it without continually relying on tuition as our one lever to pull.”
Bailey said that throughout the process of accessing costs, “Writ large, everything at the university is on the table, including me.
“As we look at options for ways to bring costs down, everything out of respect and fairness … should be explored,” he said.
Is it a tough place to be as a university?
“Absolutely,” Bailey said. “But I have been here before and I have had to make decisions that were far graver than this in the past. And I recognize that that’s part of my responsibility as the president, so it’s my job to ultimately make sure that institution runs well today but I also have to make sure that we are making decisions so that 150 years from now, we’re still celebrating this university.”
He said he is focused on positioning the university on much better fiscal footing as it moves forward.
“As a university and as a team, we will handle this crisis together,” Bailey said.
Bailey also described wanting to take SOU off of the “hamster wheel” approach to cost-cutting.
From his perspective, colleges and universities throughout the country take a “salami slice” cutting approach where program budgets each take a 5 or 10% cut, making it so every program is worse off.
“And it makes every job of every employee harder because now they have to do more things with fewer resources,” Bailey said. “We have to get off that hamster wheel and the way to do that is to have the uncomfortable conversation of what things the university can stop doing so that it invests precious resources in the things that it is going to continue to do really well.”
“I pledged that I would be the president of SOU in good times and I pledged I would be the president in challenging times,” Bailey told Ashland.news. “And it just so happens that we are in challenging times, and we’ll get through them.
“As we move forward with the challenges we’re facing, integrity, transparency, compassion, all of them have to be at the forefront so that every faculty member and every staff member knows that they are valued, even in the midst of this.”
In an address to employees Tuesday, Bailey shared plans for realignment over the course of the next several months to enable the liberal arts university to sharpen its focus and better prepare students for success.
“You cannot cut your way to prosperity,” Bailey told Ashland.news, something that he shared with employees on Tuesday. “So even though we are engaging and will engage in cost management initiatives, we also have to be willing to invest in our future and look for the things that can grow and bear fruit and be healthy and successful.”
The university has operated for most of its 150 years on a financial model that’s common in public higher education: near-exclusive reliance on a combination of state funding and tuition revenue, according to a news release about the announcement issued by the university earlier this week.
“That model was effective until about 30 years ago, when the balance between those two funding sources began to flip – what used to be about a two-thirds share from the state and one-third from tuition is now the exact opposite,” Bailey said in the news release.
“Our leadership and budgeting teams have looked long and hard at our structural issues, and are confident that SOU’s financial foundation can be successfully re-engineered, but it will take several years to get there,” Bailey said. “Our new, bottom-line fiscal formula must be one in which revenue is greater than or equal to costs for the long-term. While that sounds fairly straightforward, it isn’t always followed.”
Bailey said the university has already begun to address recurring costs, including by making a three-year shift to a new core information system that will improve service and he estimates, will save $700,000 per year. He also shared a goal of making SOU the first public university in the nation to make all of its own electricity on its campus, saving another $700,000 to $800,000 per year. The university’s shift to the Workday information system began last month, and SOU has applied for both state and federal funding for the next steps toward powering the entire campus with its own solar arrays.
In the news release, Bailey acknowledged that changes to SOU academic and support programs will be “complicated,” but he promised transparency and intends to include student, faculty and staff governance groups in the analysis process, along with the unions that represent faculty members and classified employees, according to the release.
“Our guiding principles throughout this process will be to act with integrity, transparency, compassion and humility; to focus on the best interests of our students and the long-term vision of SOU; and to view each step through the lens of JEDI — justice, equity, diversity and inclusion,” Bailey said.
Bailey cited recent examples of how SOU efforts in obtaining grants and philanthropy are already “on the upswing.” Recent grants from the National Science Foundation will pay for cutting-edge research equipment in the university’s Chemistry and Physics Department, and will allow researchers in the Computer Science Department to work with local elementary teachers to develop their students’ computational thinking skills. Just last week, SOU announced a $12 million philanthropic commitment from Lithia Motors and GreenCars over 10 years that will support the university’s sustainability and accessibility efforts.
“The two events actually complement each other,” Bailey told Ashland.news on Thursday. “There’s no question in discussing the structural changes we need to make, that is very, very sobering. But it is not just about how we are going to do that, it’s also about what we are going to invest in moving forward in ways that make the university healthy long-term, and that’s positive.”
The SOU president said that his vision for diversifying revenue to the university, beyond the traditional sources from tuition and state funding, would start with four ideas: expanding solar production as mentioned above; removing Cascade Complex and developing the site into housing for students and senior citizens, and establishing a University Business District that produces partnerships between SOU and neighboring businesses; and creating a training center to help other organizations transition their core information systems to the Workday platform.
“There are undoubtedly more ideas that we have yet to imagine, but these are the handful that we are actively pursuing for now — and we are confident in each of them,” Bailey said. “If just one or two of them pan out, they will be game-changers. If all of them cross the finish line, they will be transformational for the university. Ultimately, I am confident that SOU will reimagine what public higher education looks like, build a fiscally sustainable institution for our students, faculty and staff, and become a role model for the rest of the country — and we will do it together.”
Reach Ashland.news reporter Holly Dillemuth at email@example.com.