SOU builds reserves ahead of schedule

After just one year of rebuilding financial reserves, Southern Oregon University met its three-year goal, leading university officials to conclude that the problem that plunged the school into retrenchment is over.

"I think our fund balance problems are behind us now," said Craig Morris, interim vice president of administration and finance.

The retrenchment plan developed during the spring of 2007 aimed to bring the fund balance up to 4.7 percent of the operating budget by the end of the first fiscal year and 7.5 percent within three years. The school hit 7.6 percent at the end of the first year.

Morris attributed the strong performance to careful adherence to the retrenchment plan and anxiety over a decrease in state funding, which led to more conservative budgeting.

In February, the Oregon legislature warned the state universities that money promised in the compensation bill, which covers $1.5 million in salary and benefit cost increases at SOU, could dry up.

"We immediately went into a mode where we strategically started to build our reserves as much as we could without cutting positions," Morris said.

In the end, the state cut the compensation bill funding by just 20 percent.

The budget approved by President Mary Cullinan in July projects an ending fund balance of 6 percent at the end of the current fiscal year.

The Oregon University System recommends that universities keep their fund balances between 5 and 15 percent. Instead of trying to increase reserves even more, SOU plans to use additional surplus to fund new programs and increase enrollment, Morris said.

"Good businesses are constantly looking at investing and saving," he said. "You need to strike a balance between investments and saving. It's a cycle."

New programs should boost enrollment and create more budget surplus to allow the school to continue the cycle. Since the retrenchment process was announced, SOU has added a Saturday MBA program, a management of aging services program and an outdoor adventure leadership program, among others.

SOU adopted a budget process known as responsibility centered management last year, that allows departments to budget based on revenues they generate, giving them more of a vested interest in increasing enrollment, Morris said.

"I'm very confident that it is the model for us in terms of making connections between revenues and expenses and the margin that that generates," he said.

In addition to the retrenchment plan, the university has also been developing a recruitment and retention plan, a strategic plan to guide future investments and a campus master plan done every ten years to develop infrastructure.

"The approach our president is taking us on is very deliberately following our plans," he said.

Staff writer Julie French can be reached at 482-3456 ext. 227 or

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