The College of Forestry will reorganize from four academic units into three. The journey toward this decision has been difficult and involved many participants in varying ways and hundreds of hours of work. The next part of this journey starts with a formal request to the Faculty Senate for approval of change and taking the first steps towards making real the next chapter in the College’s 100 year history. As we move forward, it is imperative to make clear how and why we got to this point and to lay out a vision for the future.
The following is a set of questions and answers we hope will clarify the rationale for reorganization and the particular model chosen by the Dean and the Forestry Executive Committee (FEC). We received a lot of very thoughtful input from faculty, staff and students in the College. This input was carefully weighed as we sought a path forward that would best accommodate our needs and position the College for success in the future.
1. Why is reorganization necessary now?
There are two broad reasons. The primary short-term driver is a need to reduce administrative costs as part of a larger strategy to bring College expenses in line with anticipated revenues and avoid a fiscal train wreck. A second factor is that the world in which the College exists is dramatically changing at multiple levels. Reorganization will position us to create new opportunities and will demonstrate to the Legislature and our stakeholders that we are serious about fiscal responsibility and organizing to better meet their needs. That is critical to any new investment in the College of Forestry.
2. How did this fiscal crisis come about?
First, we have not reached the stage of fiscal crisis, but we see it on the horizon and must act now to avoid it.
The past five years or so have been extraordinarily challenging. At almost every turn we found that our revenue stream was incrementally diminishing while personnel costs were rising. This is a common story across the University but it has hit us harder because of our status as a state-wide public service agency. In a nutshell, until this most recent legislative session, legislative appropriations for the Forest Research Laboratory (FRL) have been flat for several biennia and we have no tool such as raising tuition to cover the increased cost of doing business. Receipts from our other major hard funding source, the Harvest Tax, have also been flat. The effects of University budget rebasing, self-funded salary increases, reductions in federal formula and special grant funding, and literally dozens of small nicks here and there have compounded our problems.
This disparity has been growing for several years, but we have buffered its major effects by using cash reserves created from College Forest properties to give us time to adjust. The other state-wide agencies, Extension Service and Agricultural Experiment Station, made very painful program reductions over short periods of time because they did not have those reserves.
We cannot continue to withdraw from our cash reserves at this rate for much longer before they will be depleted and we lose all degrees of freedom. Our projections are that we have only a few years left. As responsible stewards, we cannot and should not look to our College Forest properties for new resources beyond those anticipated in the Forest Plan. For the next several years, those net revenues from College Forests will be minimal.
3. So what has been done so far to meet our fiscal challenges?
When we first identified this challenge about five years ago, we began to tighten our fiscal belt in various ways. For example, the Dean mandated a move to an essential budget model that trimmed significant costs. However, we did not anticipate the rapid unprecedented growth in OPE costs, especially in PERS and health care, nor the litany of other costs that we have had to absorb. The challenges escalated with the close of the 2005 Legislature and a poor Higher Education and FRL budget. In December 2005 the FEC froze vacant positions and developed a plan for significant reductions that has been implemented over the past two years.
The Dean and FEC at that time adopted a 4-point strategy that Hal has spoken to on numerous occasions. Reduce expenditures, increase revenues from several sources including OSU, obtain matching increases to FRL appropriations and the Harvest Tax and be successful in the Capital Campaign.
In planning expense reductions the Dean and FEC made two key strategic decisions to position the College for future success: to protect our ability to deliver all current undergraduate degree programs and to maintain those programs that make the College of Forestry unique in the Western US and North America.
This planning and reducing process has been ongoing. The list of reductions is long and includes the loss of many support positions at the college and department level, reduced operating funds, and a multitude of incremental changes. As a result, we reduced the difference between annual revenue and expenses from over $4.1 million to about $2.4 million in FY 07. This is with an essential expense budget of around $12 million in the College, with 88% in personnel costs.
There is much good news to this story. Hal was successful with making the case with the 2007 Legislature for increased funding and the industry and family forestland owners agreed to a very significant increase in the Harvest Tax. Combined, these two sources increase our yearly revenue by about $1 million. Both are open to further increases, but time will tell on that. The OSU Capital Campaign has kicked off and we should soon see some of the fruits of development efforts. The university administration is increasing our education and general fund (E&G) budget for the first time in many years and the recent salary increase was funded by the Legislature and not our pockets. Including the new revenue sources and further administrative reductions through reorganization, the difference between essential expenses and revenues from all recurring (more or less “hard”) sources in FY 09 is expected to be approximately $1.6 million.
We are not out of the woods, but we are financially in a better place than a year ago. This is the environment in which we find ourselves proposing to save funds and gain the benefits of reorganization.
4. What remains to be done to solve the pending financial crisis?
Reorganization will not resolve our financial shortfall but is one part of a strategy to balance our expenses and revenues. So what else must happen? As Hal has indicated, the strategy is two-fold; increase revenues and continue to seek expense reductions.
On the revenue side here is what will be pursued:
Reducing expenses further must be considered, but that will be tough to do while maintaining the capacity for success with our current mission. It is very clear that we cannot reduce our way into fiscal balance. The size of the deficit is nearly 75% of the current annual essential budget of our largest departments. Some potential options might include:
5. What if this plan doesn’t work and we are not able to balance expenses and revenues in the next several years?
Frankly, we don’t know at his point. The College Forest reserves give us some time to explore options, seek new revenues and realize the potential from reorganization. If our fiscal imbalance cannot be significantly resolved we will have to revisit those strategic decisions about degree and program retention and then have a much broader strategic discussion about the right mission for a smaller College. By implementing cost reductions now through reorganization and other means we demonstrate to constituents and the University administration that the College is doing its part to remain fiscally viable and meet the needs of students, employers, and stakeholders.
6. Why was the chosen reorganization model selected?
The Dean and FEC considered various approaches to reorganization and chose to not merge existing units but to dissolve three academic departments and reconstitute two. The reasons for selecting the specific reorganization model include the following:
7. Why did we not select the two-unit model?
In the spring of 2007 the Dean and FEC considered a plan to merge departments into two schools, or larger units of some nature. WSE/FE and FR/FS mergers were studied in some depth although other options were considered as well. In the end, the two unit merger of essentially FS with FR and FE with WSE was considered along with the two 3-unit models. Some of the reasons for the decision not to select this two unit model include:
8. Why was the alternative 3-unit model not selected?
The Dean chartered a faculty committee in August 2007 to develop alternative 3-unit models. Those were discussed in several public forums and eventually two alternatives emerged with greater favor than others. The alternative not chosen by the Dean and FEC was effectively a merger of FS and FR, while leaving both WSE and FE unchanged. Some of the reasons this model was not chosen include:
9. Will reorganization foster or accentuate perceptions of a cultural divide in the College?
No, we don’t believe so. Foremost, both new departments have a mixture of disciplinary strengths in growing trees and understanding forest productivity, and assessing and using the forest for diverse goals. The concentrations differ. The FERM unit will concentrate on developing means to produce and manage resources for multiple goals. The FES unit will concentrate on understanding how forest ecosystems tick and the services provided by forested lands for humans and other species. The ways in which the subjects are approached will differ in the departments, but the management goals (FERM) are very similar to the services provided (FES): in both departments these goals/services can include production of goods (wood, biomass, fish, game, etc.), and services (watershed protection, balanced forest health, recreation, aesthetic backdrops, carbon sequestration, soil protection, habitat, etc.). Thus, we believe the disciplines are well mixed by the proposed reorganization, and in fact, better mixed than the other organizational models that we considered.
Secondly, the reorganized departments are expected to provide new ways for people to collaborate in research and teaching by virtue of the new missions and the new proximities.
Third, the walls between departments will be low. For example, a mix of people from different departments will deliver some of the undergraduate curricula. The graduate programs now in place will be unchanged (until they choose to evolve), and the graduate faculty responsible for those will come from multiple units to a much greater degree than now. It must be an important goal to keep these walls low.
The purpose of this FAQ is to answer some common questions about reorganization of the College and help all understand the environment we are in and the challenges we face.
All successful organizations must reinvent themselves periodically. University colleges typically do that by evolution; in our case the time scale is being accelerated by fiscal reality. Our imbalance between expenses and revenues has been building for some time, but is now at a critical point. The good news is that our financial reserves give us flexibility and we are making progress, albeit painfully, especially for those directly affected. The challenge in front of us is still great, but not nearly as great as two years ago.
As we reinvent ourselves, it is very important to keep our eyes on the future. The decision was made to maintain visible strength in our core areas and programs; it is a calculated risk that reorganization will help position us for future success and increased revenues. The two new units, combined with the existing strengths of WSE, provide some exciting opportunities for crafting new partnerships and sharing innovative ideas. We are counting on the College’s most important asset – its people – to capitalize on this opportunity and move the College forward.
The College of Forestry has a rich and proud history. It has served Oregon, the nation, and world with knowledge and graduates for 100 years. These same stakeholders are looking to the College for critical contributions in the future, but within the context of a rapidly changing world.
What can you as an individual do now? We hope that you will commit yourself to making this reorganization part of a successful reinvention of the College of Forestry. It will be hard work and will require patience, flexibility and openness to new ideas and colleagues. We encourage all to begin to build new communities of interest and strengthen existing ones, establish a shared mission for the future, encourage dialogue and creativity to build strong linkages across department boundaries within and beyond the College, and to foster communication and respect for the strength of diverse ideas that provide capacity for the College to be a global leader.