What’s Driving the Budget Shortfall?

Q1: What is driving the university’s current budget shortfall?

The university faces a $25–30 million structural deficit in its Education and General fund (E&G) budget beginning in the 2025-26 fiscal year (FY26). This shortfall is because expenses are growing more rapidly than revenue. During the 2024-25 fiscal year (FY25), the E&G fund was balanced; revenue was sufficient to cover expenses. Net tuition revenue accounts for almost 80% of all E&G fund revenue, but it is projected to grow by only 2.5%. In contrast, compensation costs—nearly 80% of E&G fund expenses—are increasing at 7.1%.

Some of the factors contributing to this situation include:

1. Non-resident enrollment is falling short of targets, affecting tuition revenue.
2. State support is increasing only modestly (2.8%), far below the rate of cost growth.
3. Costs tied to compensation and retirement programs continue to rise.
4. Federal executive actions have created uncertainty around international student enrollment.

Pre-existing budget challenges in some units compound these issues.

Q2: (NEW) How much of the university’s budget is being reduced?

The E&G fund budget is projected to have a $25 - $30 million structural budget deficit. The university is assessing options for expense reductions that will help to bring expected revenue and expenses to a balanced position by FY2027. Unfortunately, as almost 80% of the E&G fund budget is invested in people, these actions are expected to include layoffs of both faculty and staff.

Q3: How much will different areas be expected to reduce their budgets?

At this time, the university anticipates average budget reductions of:

• 4% for administrative units
• 2.5% for schools and colleges

These reductions are in addition to any internal measures already underway in units with pre-existing shortfalls.

Importantly, these are not across-the-board cuts. Reductions will be made strategically and thoughtfully. Some units may see smaller or larger adjustments depending on a range of factors.

Q4. If non-resident new student enrollment will be down, does this mean the university will have fewer students enrolled overall this coming year?

Not necessarily. While we are currently projecting a decline in new non-resident student enrollment, which has a significant financial impact due to higher tuition rates, we expect a record number of Oregon resident students to enroll this fall. The final total enrollment figure will depend on “summer melt” (when a student who provides an enrollment deposit doesn’t matriculate in the fall for classes), continuing student retention, and other variables. However, it’s important to note our budget challenge is not just about headcount. It’s about the balance of revenue associated with different student populations.

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How Will Budget Decisions Be Made?

Q5: How will decisions about budget reductions be made?

We will make budget reductions in a strategic way, guided by the necessity of addressing the structural deficit and the principles and priorities outlined in the Oregon Rising strategic plan, while remaining true to the core mission of the university. We are committed to meaningful consultation throughout this process and are working through established structures and leadership teams in schools, colleges, administrative portfolios and with the University Senate Task Force on Budget Reductions. We are working to balance the importance of consultation with the need for confidentiality.

Q6: What is the timeline? When will we know which positions (or searches) might be impacted?

As of August 19, here is the planned sequence of events for the coming weeks:

• August 11-29: Deans and Vice Presidents provided recommendations to the president and provost for consideration. Appropriate steps that align with institutional guidelines and procedures will conclude before Labor Day. This will allow for those directly affected to be informed as soon as possible. Please note that the School of Law, which operates on a semester system, is following an earlier timeline.
• Week of September 7: Another message will be sent to the campus community outlining specific plans of action. Employees affected directly by the budget reductions will be notified of their job status.

Any decisions that affect positions or searches will be made with great care, in accordance with university policy and, when applicable, our collective bargaining agreements. Our goal is to support our students, employees, and extended university community while minimizing disruption to university operations and supporting our employees through whatever changes may come.

Q7. Is there an approximate number of positions that equate to each percentage by which the budget is reduced?

There is no simple formula to translate a budget percentage reduction into a specific number of positions. Budgets vary significantly across units in how funds are allocated. Some areas are more personnel-heavy, while others may have larger non-personnel expenses. In many cases, unit leaders will look at a mix of strategies to meet their targets, which may include reducing operational costs, holding vacant positions open, or restructuring programs. We know people are concerned, and we are working to minimize impacts to positions wherever possible.

Q8. Will auxiliaries (i.e., self-sustaining units) need to make cuts also?

Auxiliary units, such as Housing, Dining, and Athletics, are financially self-sustaining and not directly funded by the E&G (Education & General) budget, where the $25–30 million deficit exists. However, many auxiliaries are already managing their own financial pressures because of changing demand, inflation, and rising labor costs. While they are not subject to the same reduction targets as E&G-funded units, they are actively reviewing their budgets and may make adjustments to maintain long-term sustainability.

Q9. What are the university-wide tactics being considered for reductions, such as work-share, early-retirement incentive, hiring freezes, etc.?

We are not implementing measures such as hiring freezes or travel freezes across the board as they only result in temporary cost savings, and we need to make structural, recurring changes to our budget. Individual units may take actions like this to mitigate individual unit issues.

Workshare is not a solution to our situation. The last time the university used this program, there were pandemic-related federal funds available to supplement employee payments. Those no longer exist. Additionally, the university is a reimbursing employer, which means we directly pay the state for the cost of unemployment insurance benefits granted to our employees. Under the workshare program, the university also continues to pay for a participating employee’s normal benefits. The combination of these factors means any savings are minimal, and participating employees would experience a greater disruption than the last time the program was administered at the university.

The University is currently assessing other university-wide tactics that could be used to achieve cost savings.

Q10. (NEW) What kind of consultation process has been followed to decide where reductions will occur?

Since spring 2025, the president and provost have led an extensive consultation process. This has included a university-wide town hall with more than 1,000 participants, as well as consultations with deans, vice presidents, the University Senate Task Force on Budget Reductions, the Provost’s Council, and departmental leaders. These conversations balanced consultation and respect for employee voices with the confidentiality required in sensitive personnel matters.

Q11. (NEW) Are budget cuts targeting the humanities?

We are proud of the UO’s longstanding traditional strength in the humanities and social sciences. The need to reduce recurring expenditures over the long-term means we have limited options but to reduce program offerings. We are working to preserve as much of the diversity of our course and program offerings as we can to effectively serve our students interests and needs and fulfill our mission as a public research university on a sustainable path well into the future.

Q12. (NEW) What is the UO doing to support students who are pursuing a major (or minor) in a program that may be reduced or eliminated?

We are striving to implement budget reductions in a manner that limits harm to our education and research missions, while prioritizing the student experience and areas with robust demand.

While potential program reductions and closures are difficult and may be disruptive, they will not result in any current UO students losing their ability to complete their existing degree path. We are committed — and required by federal law — to creating academic "teach-out" plans to ensure that all currently enrolled UO students can complete their existing program of study, should we decide to close or phase out any programs.

For programs that are being reduced, the university’s academic leadership has determined, through a consultative process, that they can continue to serve all existing students with a lower degree of staffing.

Goal #1 in the Oregon Rising strategic plan is to enhance pathways for students to achieve timely graduation. We remain committed to that goal despite any budget reductions.

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How Will This Affect Jobs and Pay?

Q14: Will there be layoffs?

Given the magnitude of the budget gap ($25 million - $30 million) and the fact that personnel costs make up 79% of the E&G fund expenditures, we anticipate that it will be necessary to reduce positions to balance the budget on a recurring basis.

Any changes will be handled with clarity, compassion, and adherence to labor agreements and policies.

Q15: (NEW) Which employee groups will be impacted by budget reductions?

Because personnel costs account for approximately 80% of the Education and General (E&G) fund, all employment groups may be affected by reductions. This includes faculty, officers of administration, SEIU-represented staff, graduate employees, and some student worker positions. Every member of our community supports our mission in meaningful ways, so we are working to ensure that no single employment group bears a disproportionate share of reductions, while prioritizing the student experience and maintaining the university’s core mission.

Q16: (NEW) What policies allow the university to reduce faculty and staff?

A majority of university employees, faculty and staff, are represented by unions whose contracts contain provisions that address reductions and the manner in which they are conducted when financial needs arise. For faculty, these provisions cover both represented and non-represented faculty. Those employees who are not represented by unions are covered by university policy that also addresses how such reductions may occur.

No new policies are being implemented. The university is utilizing the tools and processes expressed in existing policy and collective bargaining agreements to realign its expenditures with available revenues.

Q17: (NEW) Is student employment being affected by budget reductions?

Student employment numbers regularly fluctuate based on the changing needs and budgets of different hiring departments across the university. As the budget reduction planning process is implemented across the university, various units may cut back on student worker positions, reduce facility hours which may impact staffing, or delay hiring students and other staff until they know what funding will be available. Final budget decisions will be made university-wide in September.

Q18: Will executives take pay cuts to offset the budget deficit?

This is a fair and important question. Executive compensation is based on national benchmarks and is designed to attract and retain leaders with the skills to navigate institutions through complex challenges such as those we are facing now. We do not intend to reduce compensation for any of our employees, including those with negotiated pay increases or announced salary programs.

Q19. Will salary increase commitments to faculty, classified staff, OA, and other labor groups be reversed?

The university intends to honor the commitments it has made regarding salary increases for faculty and officers of administration this October, to classified staff in the existing collective bargaining agreement, and with other labor groups such as GEs and student workers. These increases are part of multi-year agreements and equity efforts.

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How Are We Responding and Communicating?

Q20: How can I share cost-saving or revenue-generating ideas?

Ideas are welcome and encouraged. The university invites ideas for cost savings and revenue generation via this Qualtrics idea submission form. All form submissions will be reviewed by institutional leadership. You may also share ideas specific to your own work area directly with your unit leader or supervisor for consideration.

Q21: How will the university keep the community informed?

We are committed to regular updates.

President Karl Scholz and Provost Chris Long sent their most recent joint message Monday, Aug. 18, as well as a joint message to campus staff and faculty on Tuesday, May 20, 2025 and another joint message on Friday, May 30, 2025.

A university-wide town hall was held on June 9, and updates will continue this fall through school/college/division-specific meetings, public board meetings, and the StrengtheningUO website.

Q22: What efforts are being made in the enrollment space to attract more out-of-state/international students in the future?

Out-of-state and international students are vital to our academic community and crucial to our tuition-driven financial model. Our team in Enrollment Management, including the Office of Admissions, works diligently year-round to recruit an outstanding class from across Oregon, the U.S., and the world. We are actively investing in strategies to enhance recruitment and yield in specific areas, including:

• Targeted recruitment campaigns in key domestic and international markets, informed by data and trends.
• Increased use of financial aid and scholarships to remain competitive in an increasingly cost-sensitive national landscape.
• Strategic partnerships with high schools, counselors, and community-based organizations outside Oregon to build awareness of the UO brand earlier in the student pipeline.
• Evolving and outstanding campus visit and virtual tour experiences that highlight the academic excellence, campus culture, and unique opportunities available at Oregon.
• Closer collaboration between Enrollment Management and University Communications to launch a brand awareness and advertising campaign in key markets across the U.S. in alignment with Enrollment Management’s out-of-state recruitment targets.

We know this is a long-term effort, and we’re committed to doing this work strategically and persistently. The goal is not just to increase headcount, but to attract talented students who will thrive here. Our athletic excellence and membership in the Big Ten Conference are also powerful drivers of national visibility, helping to elevate the University of Oregon’s profile among prospective students across the country and around the world.

Q23. Will budget reductions affect the implementation of Oregon Rising?

Oregon Rising will be a driving force in determining how we navigate this moment. While it won’t be the sole guide for every decision, it offers a shared framework to inform where we invest, what we protect, and how we prioritize. As a tuition-driven university, our future depends on attracting and supporting students. That means we must always be focused on what best serves our students, including timely graduation, career-connected education, and meaningful academic and co-curricular experiences that help support flourishing students. Oregon Rising helps us stay centered on those goals, even as we make difficult choices.

Q24. (NEW) Why is the university moving so fast to implement these budget reductions?

Over the last few years, the board has regularly discussed the longer-term budget challenges that the University is facing. For the last several years these have included the potential negative impact on revenue of lower than planned non-resident enrollment as well as increases in mandatory retirement costs. Some examples, going back to Fall of 2023 are included below from the annual budget modeling presentation to the board:

• Long-Term Projections Model Scenarios (Fall 2023)
  • Slides on Page 40
• Long-Term Projections Model Scenarios (Fall 2024)
  • Slides on Page 80
• Long-Term Projections - Education & General Fund (June 2025)
  • Slides on Page 47

After several years of closely monitoring enrollment and cost trends and publicly highlighting these issues at board of trustees meetings, it became clear this spring that the university would not meet its incoming non-resident enrollment target. When combined with increasing compensation and benefit costs, it became clear that we had a structural long-term deficit that must be remedied. The board of trustees directed the president to initiate a plan to eliminate the projected deficit and put the university on a solid financial footing so that we may preserve the academic and research mission and protect the student experience for generations to come. Following the board’s directive, the administration communicated in the spring that the process to address the deficit was beginning, and planning and consultation has occurred for several months.

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