OHSU Board Of Directors Responds To Governor’s Proposed Budget Cuts To University

12/07/04    Portland, Ore.

Governor’s proposed budget cuts for fiscal years 2005-07 reduce state support to OHSU almost 40 percent, a cut of approximately $33 million over two years.

The Oregon Health & Science University Board of Directors met Tuesday, December 7, 2004, to discuss budget plans in the wake of news of a massive cut in state support proposed by Gov. Ted Kulongoski in his 2005-2007 budget proposal.

Keith Thomson, chairman, OHSU Board of Directors, expressed grave concern. “The governor’s proposed budget represents a nearly 40 percent reduction in state funding for OHSU — a major loss that will profoundly affect OHSU’s ability to serve Oregonians.”

The Governor’s budget for the 05-07 biennium calls for cutting OHSU’s state funding by $33 million, down from $86 million in the current biennium and down from $123.6 million in the 93-95 biennium. Balancing Oregon’s overall budget would require a cut of less than 10 percent if spread across all agencies that receive state appropriations.

“A 40 percent cut would devastate OHSU’s ability to educate the next generation of health care providers,” said former U.S. Sen. Mark O. Hatfield, OHSU board member. “In my view, it would also signal that the State of Oregon is walking away from its commitment to health care education.”

OHSU is a public corporation, which receives some state support to help accomplish public missions. OHSU’s state support has gone from about 30 percent of its total budget two decades ago to less than 4 percent today.

“When OHSU became a public corporation in 1995, we had a clear understanding with the state that it would need to continue to invest in our public missions if we were to continue to be able to deliver them. We needed a partnership,” said OHSU President Peter Kohler, M.D. “That partnership has produced significant benefits for Oregonians — benefits that I believe need to be preserved moving forward.”

State dollars help support essential public programs that cannot otherwise support themselves. These include care for the poor; education programs for future health care providers — including nurses, dentists and physicians; care for children with serious genetic problems; technical support services for rural clinics and hospitals; and health education outreach programs around the state.

The cuts are proposed at a time when the state and nation face looming shortages of dentists, nurses and physicians. The number of people without health insurance is growing. The state’s ability to provide health care to low-income and uninsured people is declining.

“Our choices about how to distribute this cut are very limited,” Thomson said. “The vast majority of OHSU’s budget is restricted to specific uses. For example, the grants and contracts that we receive to support specific research projects must be used to exclusively fund those projects by law. Likewise, payments we receive for patient care from the government, private insurers or individuals must be allocated to cover the cost of delivering those services, including salaries for nurses and other providers as well as hospital equipment and supplies.”

While OHSU funds the majority of its operations with non-state revenue, the reduction in state support requires changes in those programs most reliant on state subsidies.

“The nearly 40 percent reduction in the state appropriation to support OHSU’s public mission does not represent all of the cuts OHSU is facing from the state,” Kohler said. “The hospitals and clinics appear to be facing an additional reduction of approximately $5 million in health care reimbursements.”

While not representing a final plan, following are steps that OHSU likely would be forced to take if the proposed level of cuts is sustained:

  • Eliminate all state funding for indigent care in the hospital and clinics, reducing care for the poor to the levels provided by community-based hospitals (OHSU currently provides 2 times that level).
  • Eliminate the seven Child Development and Rehabilitation Center programs that are highly dependent on state funds.
  • Eliminate the statewide undergraduate nursing programs, leaving a reduced undergraduate program on Marquam Hill.
  • Raise all tuition in the dental school to the nonresident level.
  • Further increase medical school tuition.
  • Eliminate funding for the majority of statewide rural health education programs, including the Area Health Education Centers.

OHSU is the state’s fourth largest employer, it employs more than 11,000 people, it serves as the catalyst for tens of thousands of additional jobs regionally, and it spurs $2.7 billion in economic activity. About $300 million of the university’s revenues are brought into Oregon from out of state sources. OHSU employees return $37 million back to state coffers from income taxes and other payroll taxes. In all, OHSU earns $27 for every $1 the state invests in it.

Beginning in January, the Legislature also will be reviewing the governor’s budget and developing its own proposals. “We will be working with legislators to advocate for restoration of the funding that supports our critical public service functions,” said Kohler.

 

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