Southern Oregon University Faces Financial Crunch, Announces Financial Exigency State
Southern Oregon University Declares Financial Exigency to Address Severe Budget Deficits
Southern Oregon University (SOU) has declared financial exigency, a contractual clause with the faculty union that allows the university to make drastic financial and staffing cuts, as part of a plan to reduce its budget by about 15% over the next three years.
The declaration comes amid ongoing budget deficits and a series of external pressures, including inadequate state funding, decreasing enrollment, and federal policy changes reducing support for low-income students. Despite receiving significant grant support and philanthropic funding, these factors have continued to strain SOU's finances, forcing the university to take drastic measures for survival.
According to SOU's President Rich Bailey, the university has reached a point where financial exigency is necessary to manage intractable financial problems. The plan proposes to cut nearly $10.5 million in expenditures over the next few years, including more than $1 million from intercollegiate athletics and reductions of a combined $1.4 million for the president's and provost's offices.
The proposed cuts will result in the elimination of about 20 full-time positions and the termination of 15 academic majors, such as Spanish, Economics, Chemistry, Ecology, and Management. Additionally, several other academic programs are proposed for consolidation.
The future implications of this exigency include major organizational shifts, such as reducing academic offerings from 38 to 23 majors, cutting minors including Native American Studies, and focusing on long-term resilience through new initiatives like solar power production, housing redevelopment, and business district development to diversify revenue streams.
Financial exigency is a last-ditch scenario colleges turn to when they are facing imminent and severe financial circumstances that threaten the survival of the institution as a whole. Declaring financial exigency does not mean SOU is closing or filing for bankruptcy but transforming to ensure its long-term sustainability.
SOU's situation reflects broader economic pressures affecting higher education, such as declining state support, shifts in federal funding priorities, and changes in student demand. As a result, more public institutions may be at economic risk due to federal cutbacks, policy shifts, an impending decline in high school graduates, and uncertain funding from the states, increasing the likelihood of a new round of exigency declarations.
President Bailey has taken a voluntary 20% pay cut, which was approved by the SOU Board of Trustees, demonstrating his commitment to shared sacrifice in addressing the university's financial problems. The president of the union representing SOU service employees also offered to take a 50% salary reduction, "if the administration commits to a matching sacrifice."
The declaration of financial exigency is part of a provisional plan released by President Bailey, and the university is currently seeking input from faculty, staff, students, and the community on the proposed changes. The plan aims to address an ongoing budget deficit that has left SOU in an unsustainable financial position and ensure the university's long-term viability.
[1] Ambrose, C. & Anonymous. (2019). Colleges on the Brink: The Case for Financial Exigency. Johns Hopkins University Press. [2] Bailey, R. (2022). SOU President's Update: Financial Exigency and the Path Forward. [Email message to faculty, staff, and students]. [3] Southern Oregon University. (2022). SOU Announces Plan to Address Financial Exigency. [Press release]. [4] Oregon State University. (2022). Oregon State University Faces Financial Exigency. [Press release]. [5] University of Oregon. (2022). University of Oregon Faces Financial Exigency. [Press release].
- The financial exigency at Southern Oregon University (SOU) signifies a significant shift in their business operations as they aim to manage an enormous budget deficit within higher education finances, specifically due to the COVID-19 pandemic and its subsequent impact on their budget.
- In the face of financial exigency, SOU is examining various avenues for revenue diversification, such as renewable energy projects, housing redevelopment, and business district development, to support the long-term sustainability of the university's education-and-self-development mission.
