OHSU Plans for Cuts as State Reduces Its Support for Education and Service Programs

09/27/01    Portland, Ore.

Legislature reduces allocation used to purchase services from OHSU

Responding to cuts imposed by the governor's budget and approved by the Oregon Legislature, Oregon Health & Science University will trim $10 million over two years from the budgets of education and service programs that depend on state support. The OHSU Board of Directors approved the plan on Thursday, Sept. 27, 2001.

The plan includes increasing tuition at the School of Medicine and School of Dentistry; forming partnerships with other institutions to educate medical technologists and emergency medical technicians; downsizing the OHSU nursing program at the Oregon Institute of Technology in Klamath Falls and eliminating several rural nursing education sites; closing the dental hygiene program; cutting state funding support for the Columbia-Willamette Area Health Education Center; and scaling back services at the Child Development and Rehabilitation Center.

Only programs that receive state funds are affected. The reductions begin in the 2002 fiscal year, which started July 1, and will be fully implemented by 2003.

Once the legislative session ended in July, OHSU began exploring how to minimize the impact of the cut on students, employees and the community. To that end, OHSU has developed partnerships to continue some programs and explored ways to increase revenues as well as trim costs. In addition, students currently enrolled in programs slated to end will be allowed to graduate, and all current-year contracts with faculty will be honored.

Since becoming a public corporation in 1995, OHSU has maintained programs and its public mission while relying on significantly fewer state dollars. A further $10 million cut for the biennium, however, can only come out of services and programs.

"Unfortunately, the university cannot accommodate a reduction of such magnitude without eliminating some of our programs," said Lesley Hallick, Ph.D., OHSU's provost. "The funds cut by the Legislature were essential to OHSU's ability to operate at its current size, scope and quality level. As a result, we made the difficult decision not to allocate reductions across the board, potentially weakening all programs. Instead, we have recommended a strategy of specific program closures, transfers and tuition increases that will allow us to strengthen the core programs of graduate medicine and dentistry, and to enhance the capacity to produce both undergraduate and graduate nurses."

The university now receives about 5 percent of its budget from state dollars as partial funding for specific public services. Like most businesses, OHSU earns the majority of its operating budget (95 percent) from its activities and services. OHSU's research enterprises are not supported by state dollars, and only 2.4 percent of its two hospitals' operating budgets come from state funds.

"The 2001 Legislature did many good things for OHSU," said OHSU's president, Peter Kohler, M.D. "It approved the merger with Oregon Graduate Institute and passed the Oregon Opportunity bill, which will provide bonded capital to invest in OHSU's biotechnology research infrastructure. But, much as we are grateful for these actions to position us for the future, the fact remains that the state decided to provide less support for services and education. That requires us to adjust programs accordingly to continue the high-quality health care delivery and education programs Oregon needs. Just as the state has to make difficult decisions with its limited budget, so does OHSU."

The Oregon Opportunity bill will allow OHSU to borrow as much as $200 million at favorable interest rates to build research capacity for biotechnology growth. These one-time dollars, which come from the tobacco settlement, are designated for research expansion. They may not be used to cover ongoing operating costs of education and other public service programs.

In planning for the cuts, OHSU is striving to build for the long term. "It is critical to keep OHSU's programs strong as we build for a future in which research and education play an increasing role in diagnosing, preventing, treating and curing diseases," Kohler said. "Through a long, deliberative review process, in which we examined programs and budgets in minute detail, we believe we are managing these cuts as reasonably as possible under the circumstances. And we hope some of the affected programs will be transferred to other institutions."