In light of significant economic and demographic uncertainty, it has never been more important to exercise fiscal stewardship and to carefully weigh both costs and investments needed to operate a leading research university.
As of December 2024, the University of Oregon is facing financial challenges. In our Education and General (E&G) fund budget, expenses are greater than revenue and projections show these expenses will grow at a faster pace than revenue.
If these projections prove accurate, this will create a structural deficit.
There are many causes for this including dramatic increases in state-mandated retirement (PERS) and healthcare programs, insurance and utilities cost, most of which are rising at a faster pace than net tuition revenue. For the next two years alone, school districts and colleges will pay $565 million more into the state-mandated pension program, compared with the 2023-25 biennium. These increases would more than erase any proposed increases to state funding for higher education.
As we take steps toward a more secure future, we must balance the needs of faculty, staff, students and other stakeholders while making critical investments required to remain a great public university. As we move forward, we are taking the following principles into consideration in our decision-making.
1. Our people are — and will remain — our biggest investment
Our faculty and staff are the heart of the University of Oregon. The passion and commitment of our talented faculty and staff make us the community we are and provide our students with the exceptional experience of a great public university.
That is why, even with limited state funding, we invest 80% of our E&G budget in our people. We strive to provide our people with competitive and comprehensive total compensation packages, including generous retirement and healthcare benefits, tuition benefits, and progressive leave policies, because we know investing in our people contributes to their peace of mind and is an important means of investing in our shared future.
These critical resources enable our faculty to provide outstanding education to our students while conducting groundbreaking research. We seek to reward and compensate our faculty and staff fairly and appropriately within our existing financial means.
While faculty and staff will always be our biggest investment, we must also invest in research, student scholarships and other components that allow us to serve our mission as a comprehensive research university. Recent investments have included the purchase and refurbishment of the UO’s campus in Portland, home to many academic programs across six of our colleges, and significant refurbishments of Huestis Hall, Friendly Hall, Villard Hall and University Hall. The University has also invested in critical infrastructure, including cybersecurity, to protect the scholarly work and personal information of our faculty, staff, and students. These necessary investments all contribute to an environment in which faculty, staff, and students can be successful and supported.
Faculty salaries compared to AAU
As the university considers salary increases for the next collective bargaining agreement (CBA), we take into consideration the impacts the cost and value of health insurance and retirement contributions, as well as cost of living, so that pay used to benchmark faculty earnings when compared to our AAU public peers is more reflective of total compensation. This analysis indicates that the UO is currently at 98.3% of average total compensation for faculty compared to our AAU public peers.
Healthcare
UO withholds 5% of a faculty member’s health insurance premiums from their salary regardless of which health plan they choose and whether they are covering only themselves or their entire family. Our AAU public peers withhold an average of 19% to 25% of premiums from their faculty members’ salaries depending on coverage category. This difference has a significant monetary impact on take-home pay of our employees.
Cost of Living
The cost of living in Eugene is lower than the average of our AAU public peers. A data set on comparative cost of living at the local level developed by MIT places the Eugene area cost of living at approximately 95% of its AAU public peers.
Retirement
The UO, like other public employers in Oregon, has a more generous retirement contribution program compared to peer institutions. This reduces the amount employees need to withhold from their pay every month in order to build retirement savings.
When looking at just the defined contribution plan at the UO (the Optional Retirement Plan), the maximum employer contribution for a new faculty member’s retirement plan at the UO is 12%, while the average maximum employer contribution of our AAU public peers is 8.4%. PERS, the defined benefit pension plan available to faculty, represents an even larger investment in compensation by the institution, and includes both a pension component and employer-funded individual savings plan that invests 6% of the employee’s salary in a retirement account in addition to funding the pension component of the program.
Total compensation and benefits
Any discussion of compensation must also take into account the value of UO benefits that extend beyond salary. These are outlined below.
Health Insurance Programs through the Public Employee Benefits Board (PEBB) | Comprehensive health insurance benefits are provided to all eligible faculty, with 95% of premiums paid by the university. For a faculty member with health insurance covering their entire family, the most expensive premiums would cost a little over $138 monthly. The university would pay a little over $31,490 annually on the faculty member’s behalf for these benefits. In-network standard deductibles on all available plans are no higher than $250 for an individual and $750 for a family if the faculty member participates in the Health Engagement Model. Eligible nine-month employees continue to receive benefits during periods in which they are not on contract. All figures are for calendar year 2025. Details on benefits can be found here. |
Dental and Vision | Comprehensive vision and dental benefits include dental plans with no deductible or deductibles no higher $50 for an individual and $150 for an entire family. Vision plans include $10 copays and allowances for frames/lenses or contacts for the entire family. For a faculty member covering themselves and their family, vision and dental premiums would cost about $31 per month. The university would pay a little over $2,300 annually on the faculty member’s behalf for these benefits. All figures are for calendar year 2025. |
Working Year | The university has a nine-month base contract for most full-time faculty, with the ability for faculty to engage in outside compensated employment both during the academic year and during summer when they are off contract. Additional compensation is available for summer teaching and research. |
Retirement Programs | Eligible employees have a generous defined benefit (pension plan) with an additional 6% of salaries set aside by the university in an individual savings plan to augment their pension benefits. |
Retirement Programs | Due to the university’s retirement match, for an employee to have 16% contributed to their retirement account, an employee must only put in 4% of their own salary. Comparing this to other AAU publics, to get to a 16% contribution would require 7.56% of salary. |
Retirement Programs | The university sponsors additional tax-advantaged voluntary retirement plans, including 457 and 403(b) plans. Voluntary retirement details can be found here. |
Tuition Discount | 70% tuition discount on the first 12 credits for up to two dependents, meaning that faculty have access to world-class education at significantly reduced rates for their children and family members. |
Progressive Leave Policies | Progressive parental leave policy which includes fully paid 12 weeks of full parental leave as well as a term with reduced teaching responsibilities. |
Sick Leave | Eligible faculty earn sick leave. There is no limit on the amount of sick leave that may be accrued. |
Sabbatical Leaves | Eligible Career and Tenure Track faculty have access to sabbatical leave, which can be as long as a full academic year, while receiving at least 60% of pay (full year) and full benefits after 18 terms (generally six years) of service. |
2. Preserving access to a University of Oregon education
We are committed to making a University of Oregon education accessible to all Oregon students, particularly first generation students and those from low-income backgrounds. To do so, the University of Oregon must carefully allocate resources and limit cost increases. This is why we make a guarantee to each undergraduate student cohort to freeze tuition for five years, for all students, from their initial enrollment.
Unfortunately, due to a declining birth rate in the early 2000s, the pool of 18-year-olds (potential college-bound individuals) across the U.S. has declined by nearly 23% from 2007-2023, per the CDC. In addition, Oregon is already a low-population state, and has one of the lowest birth rates of any state, according to 2022 data from the CDC, further limiting the number of potential in-state students who could be admitted to the UO.
Given our very low state appropriation, out-of-state tuition subsidizes the cost of a UO degree for our Oregonian students. This means that the University of Oregon must be successful in recruiting students from out of state in an increasingly competitive national environment.
3. We must face our structural funding constraints
The UO delivers excellence on par with our peers among the nation’s top public universities, despite having far fewer resources than almost all our peers. Simply put, the UO is not funded the same way, nor at the same level, as nearly every other Association of American Universities (AAU) or Big Ten university.
In fact, the state of Oregon is ranked 44th out of 50 states in funding per full-time equivalent student at four-year universities (State Higher Education Executive Officers). Within the state of Oregon, the University of Oregon receives the lowest level of state appropriations — on a per-resident student basis — of all public universities in the state.
Preserving our commitment to academic excellence, while also ensuring a strong future, requires careful allocation of resources — now and into the future.
Public Education Appropriations per Student FTE by State at Four-Year Institutions, FY 2023 (Cost of Living Adjusted)
Comparative University Funding
FY 2024 | EOU | OIT | OSU | PSU | SOU | UO | WOU | Total |
|---|---|---|---|---|---|---|---|---|
Fundable Students | 1,532 | 2,531 | 17,936 | 12,276 | 2,395 | 12,794 | 3,061 | 52,526 |
PUSF Funding | $23.2M | $34.3M | $159.2M | $119.8M | $27.5M | $92.4M | $33.1M | $489.5M |
PUSF Funding | $15,161 | $13,532 | $8,874 | $9,760 | $11,482 | $7,224 | $10,803 | $9,318 |
Total FY 2024 | $25.7M | $38.1M | $301.1M | $131.1M | $30.0M | $97.0M | $35.8M | $659.1M |
Total State Funding | $16,760 | $15,056 | $16,798 | $10,683 | $12,352 | $7,584 | $11,699 | $12,548 |
State Appropriations per Student FTE Among AAU Publics (FY2022)
4. What about alternative funding sources?
Endowment and gift funds
Thanks to generous alumni and donors, the university receives donations and gifts, but university spending of donor money must be consistent with the donors’ intentions — which is often targeted at specific projects or scholarships for students rather than operating expenses. Endowments have a specific legal structure and a host of restrictions in terms of what they can and cannot be used for.
Large gifts such as those for buildings and facilities are important for attracting students and researchers and maintaining the competitiveness of our university. This supports our mission and helps to ensure that students find studying at the University of Oregon a compelling value. But these restricted resources cannot be repurposed for operating needs.
Athletics Department funds
Most collegiate athletic programs across the country are subsidized by their respective institutions. We are different
The UO Athletics Department is one of only a handful of programs in the U.S. that is self-sufficient, receiving no funding from tuition or any state general funds and, in fact, pays an overhead assessment of over $4 million per year to the university and also covers the full cost of all scholarships for student athletes. Athletics Department revenues and expenditures equal each other and do not generate a surplus.