Oregon HB 4124: Enabling Major University System Overhaul for Cost Savings and Enhanced Affordability

Understanding the Challenges Facing Oregon's Public Universities

Oregon's seven public universities—Eastern Oregon University (EOU), Oregon Institute of Technology (OIT), Oregon State University (OSU), Portland State University (PSU), Southern Oregon University (SOU), University of Oregon (UO), and Western Oregon University (WOU)—are at a crossroads. For years, these institutions have grappled with declining enrollment, skyrocketing operational costs, and insufficient state funding, creating a perfect storm that threatens their long-term sustainability. Full-time equivalent (FTE) enrollment across these campuses dropped by 7% from 85,171 in the 2013-14 academic year to 79,103 in 2022-23, a trend exacerbated by demographic shifts, economic pressures, and competition from alternative education paths like online programs and workforce training.

At the heart of the issue are personnel costs, which account for 70-80% of education and general (E&G) spending. Wages and salaries grew by 26% from fiscal year (FY) 2017 to 2024, while benefits—particularly retirement contributions, up 63%, and health insurance—have surged even faster. This has led to operating expenses per FTE student ballooning 66%, from $28,154 in FY2015 to $46,793 in FY2024, far outpacing inflation. Meanwhile, Oregon ranks 46th nationally in per-student state funding for public universities, leaving institutions heavily reliant on tuition, which now makes up 64% of revenues.

Universities have responded with belt-tightening measures. PSU, for instance, faces an $11 million deficit this year and has implemented $35 million in net reductions through FY2027-28, including cutting 106 staff positions while bolstering academic support. SOU has slashed 25% of its workforce over four years amid enrollment drops. Despite these efforts, fund balances have shrunk from 21% to 17% of revenues, with projections showing deficits could exhaust reserves in 3-4 years without intervention.

These pressures aren't unique to Oregon but hit harder here due to chronic underfunding post the 2011 dissolution of the centralized Oregon University System (OUS). That shift granted individual governing boards more autonomy but also fragmented efficiencies, leading to duplicated programs and administrative redundancies.

📊 Insights from the HECC Spending and Efficiency Report

The Higher Education Coordinating Commission (HECC), Oregon's oversight body for post-secondary education, released its pivotal report, Spending and Efficiency in Oregon Public Universities, in December 2025, adopted on January 6, 2026. Mandated by the 2025-27 biennium budget (Senate Bill 5525), it analyzes trends from FY2015-2024, revealing both progress and pain points.

Positive strides include improved degree productivity: completions per 1,000 FTE rose 5.4% to 267.7, and completions per $100,000 spent jumped 58% to 1.7. Net tuition prices for aid recipients have grown slower than inflation thanks to state and institutional aid, enhancing affordability for low-income students. Facility conditions improved, with the Facility Condition Index (FCI) dropping from 20% to 9.8%.

However, stark inefficiencies persist. Institutional support spending doubled per FTE to $4,600, while instruction and research shares fell from 43% to 37% of budgets. Staffing increased 9% (1,191 FTE) amid enrollment declines, yielding student-to-staff ratios of 5.4 (vs. national 4.4) and student-to-faculty of 18.6 (lower than peers). The number of programs offered swelled 47% to 1,309, raising duplication concerns.

• Personnel benefits as a percentage of wages climbed from 50% to 56% in E&G funds.
• Pension contributions alone hit $249.1 million in FY2025, growing 7.6% annually.
• Shared services via the University Shared Services Enterprise (USSE) plummeted, from 32 to 6.2 FTE staff.

The report urges "bold actions" like targeted integrations, periodic program audits under ORS 350.075 and 352.089, separate salary pools for essentials, and IT infrastructure bonds. It projects revenues growing 4.1% annually to $2.69 billion by FY2031, but expenses at 4.8% to $2.85 billion, signaling deepening shortfalls.

For more details, review the full HECC report.

House Bill 4124: Catalyzing Systemic Overhaul

Enter House Bill 4124 (HB 4124), introduced in the 2026 Oregon legislative session and currently before the House Education Committee, with referral to Ways and Means. Cosponsored by Rep. Pam Marsh (D-Ashland), whose district includes SOU, the bill declares an emergency and directs HECC to undertake a comprehensive study of the post-secondary system's condition. By December 2026, HECC must deliver recommendations for a "viable and superior institutional framework," covering:

• Distinct missions and objectives of each public university.
• Opportunities for collaboration, restructuring, or integration, from shared services to mergers.
• Academic program alignment with workforce needs and duplication elimination.
• Current affordability strategies and improvements.

Marsh emphasized urgency: "We do not have time to sit around and twiddle our thumbs. We have to turn this system quickly." The bill builds directly on HECC recommendations, aiming to restore public and legislative confidence eroded by "unconstrained costs." Track progress at the official HB 4124 overview page.

Exploring Potential Transformations: Mergers, Shared Services, and More

HB 4124 opens the door to transformative changes. HECC could propose programmatic partnerships, administrative cooperatives, or full mergers, prioritizing regional alignments like EOU, SOU, and WOU in southern Oregon or OIT with PSU. Shared services—HR, payroll, IT—could yield millions in savings, as OSU's Workday implementation projects $10.8 million.

Periodic reviews would sunset low-enrollment or duplicated programs, ensuring resources focus on high-demand fields like healthcare, tech, and sustainability. While controversial, these mirror national trends: universities nationwide consolidate amid similar pressures. Oregon's post-OUS model, while empowering locally, amplified redundancies; reintegration could recapture economies of scale.

Universities are already adapting: PSU rebalanced its instructional portfolio, SOU pursued partnerships, and system-wide cuts total $85.1 million for FY2026, eliminating 180 positions. Yet, without state-directed integration, fragmented efforts risk uneven outcomes.

Voices from the Frontlines: Stakeholder Reactions

Reactions are polarized. Proponents like Marsh argue the status quo is untenable: "Our system has lost the confidence of the public." HECC's Ben Cannon supports: "New strategies to contain costs... to deliver affordable, quality education without burdening students."

Universities push back, citing underfunding. SOU President Rick Bailey warns: "Efficiency is a tool, but not the destination... We'll subtract our way into irrelevance." Faculty Senate Chair Dennis Slattery adds: "Caring is not efficient." SEIU's Sage TeBeest echoes: "The real pain point is chronic underfunding." Concerns center on eroded independence, job losses, and program cuts harming rural access.

Students and faculty from all seven campuses have voiced governance frustrations in past hearings, urging investment over austerity. Advocacy groups call for balanced approaches tying reforms to funding boosts.

🎓 Student Impacts: Balancing Affordability and Access

For Oregon's 79,000+ public university students, reforms promise relief from rising costs. Net prices have stabilized via aid like the Oregon Opportunity Grant, but gross tuition hikes outpace inflation. Successful integrations could lower per-FTE costs, freeing funds for scholarships and preventing fee spikes.

Risks include disrupted programs or campus closures affecting rural students at EOU or SOU. However, workforce-aligned offerings could boost completion rates (already up) and employability. As one example, OSU's Ecampus grew enrollment 16%, showing online hybrids' potential in consolidations.

Prospective students should monitor changes when exploring university jobs or degree paths, as reforms reshape offerings.

Career Implications in a Reformed Landscape

Higher ed professionals face uncertainty but opportunities. Administrative consolidations may cut redundancies but create specialized roles in shared services. Faculty could shift to high-demand programs, with faculty positions emphasizing interdisciplinary work.

Explore higher ed career advice for navigating transitions, or check higher ed jobs for openings amid restructurings. Rate experiences at Rate My Professor to inform peers.

Photo by Kelly Ziesenis Carter on Unsplash

The Road Forward: Implementation and Watchpoints

With HB 4124 in committee, 2026 session outcomes will shape HECC's study. Success hinges on collaboration: increased state funding (recently 5.4% annual) paired with efficiencies. Watch for 2027 legislation on mergers or incentives.

Optimistically, reforms could position Oregon's system as a national model—affordable, efficient, workforce-ready. Stakeholders urge equity: protect rural access, prioritize Pell-eligible students (22.4% FTE drop in full-time over decade).

Share your views in the comments, connect with peers via Rate My Professor, pursue higher ed jobs, or access career advice. For job postings, visit post a job or university jobs.