HECC Adopts Report on Spending and Efficiency at Oregon Public Universities, Recommends Changes to Protect Student Access and Success
Salem, OR - Today, the Higher Education Coordinating Commission (HECC) voted to adopt a report on Spending and Efficiency in Oregon Public Universities and to transmit its findings to the Oregon Legislature for the 2026 session. The report analyzes trends in student costs, university spending, staffing, and efficiency across Oregon’s seven public universities, and proposes targeted recommendations to help ensure long-term vitality and affordability. Cost efficiency is important for public higher education given the significant financial impact on students and their families. It is a timely issue given slow enrollment growth, state funding limitations, and other challenges facing Oregon’s public institutions.
In a letter to the Commission on January 2, 2026, Governor Tina Kotek cited challenging budget realities and encouraged the HECC to provide clear and coordinated leadership to Oregon colleges and universities. Governor Kotek said in the letter, “Higher education across the country and in Oregon is at a critical moment for its future growth and sustainability… Oregon’s higher education institutions must be prepared to make difficult decisions that preserve affordability and access for students while maintaining long-term institutional stability.”
HECC Executive Director Ben Cannon said, “This report faces the facts: costs are rising faster than revenues, and demographics point to limited enrollment growth. While Oregon public universities have a strong track record of efficiency, we can keep college affordable and sustain excellence only if we work together—leveraging shared scale where it helps, and focusing investments where they matter most for students.”
Greg Hamann, chair of the HECC, said, “Each of Oregon’s independent public universities is essential to its community, and to our State as a whole. The Legislature and the HECC must ensure that we create the conditions where all seven are not only able to continue to serve in those essential roles, but also to actively adapt as the needs of their community, our state, and the students we collectively serve change. Partly, this is about state funding. But it’s also about organizing and operating our public institutions more systemically—not by re-creating a state system, but through greater levels of coordination and partnership, and collective purpose.”
The report responds to a directive to the HECC from the Oregon Legislature to assess cost efficiency at the universities in conjunction with the passage of the 2025-27 biennium higher education budget bill (Senate Bill 5525, 2025).
Priority recommendations adopted by the HECC
The Commission emphasized five actions for legislative consideration that would significantly improve efficiency while protecting access and student success. The report recommends that the Legislature:
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Plan for targeted institutional integration by January 2027. Direct the HECC, in consultation with public universities and community colleges, to develop proposals ranging from deeper shared services to formal affiliations or mergers—prioritizing institutions that signal interest and ensuring academic access is maintained or enhanced.
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Establish periodic program review and renewal. Require public university degree programs to demonstrate value, mission alignment, non‑duplication, minimum enrollment/financial sustainability, and equitable impacts—paired with clear guardrails and ample time for corrective action.
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Create a separate salary pool for essential compensation increases. Appropriate a biennial state fund to support reasonable, predictable compensation adjustments across institutions.
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Prioritize replacement of major IT infrastructure in capital planning. Use state-backed bonding where appropriate to modernize core systems, strengthen cybersecurity, and enable interoperable platforms that reduce administrative costs.
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Continue funding targeted sustainability and integration initiatives. Building on the $25 million investment made during 2023-25 aimed at improving the long-term financial sustainability of the Technical and Regional Universities (TRUs) and Portland State University, expand one-time investments that help universities streamline programs, improve student success, and share administrative functions—scaling evidence-based projects statewide.
Major findings from the report
The analysis draws on HECC, Integrated Postsecondary Education Data System (IPEDS), audited financial statements, and national sources, and covers trends over the past decade. It provides detailed analysis on specific cost efficiency topics, as requested by the Oregon Legislature.
Key statewide findings include:
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Affordability improved for many students. Published tuition and fees increased faster than inflation over ten years, and Oregon relies more on tuition than national peers. However, for students receiving financial aid, the average net price grew slightly less than inflation, and affordability rates improved—reflecting increased state and institutional aid.
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While spending growth outpaced inflation, increases were comparable or less than other Oregon public sector entities. Public university operating expenses rose 59 percent from fiscal year 2015 to fiscal year 2024 (about 5.3 percent annually), driven largely by personnel costs, including retirement benefits. Spending per full-time equivalent (FTE) student increased 66 percent, influenced by enrollment declines and fixed costs. Other Oregon public sector entities experienced similar personnel-driven cost increases over the same time period.
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Shift in spending mix. The share of spending on “institutional support”—defined as administrative functions like communications, legal, financial, accounting, procurement, IT, and similar business services—rose and is an outlier compared to other categories. Meanwhile, the combined share of expenditures for instruction and research fell from 43 percent to 37 percent. Managing administrative costs is a major opportunity for efficiency.
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Staffing trends and ratios. Staffing grew while enrollment declined, leading to lower student-to-staff and student-to-faculty ratios than national averages. Context varies by university and includes mandated services and compliance requirements.
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Productivity indicators improved. Degree productivity (completions per 1,000 FTE students) and completions per $100,000 in spending both increased, suggesting improved cost effectiveness even amid overall cost growth.
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Shared services have diminished. Use of shared administrative services (such as through University Shared Service Enterprise—USSE) declined over time, which may represent a lost opportunity to control institutional support costs.
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Recent actions and outlook. Universities have enacted budget reductions and modernization initiatives; the latest data in the report extends through fiscal year 2024 and notes planned fiscal year 2026 reductions and staffing actions across the system, underscoring the need for structural efficiency.
The report does not analyze academic quality and notes that complex trade-offs may exist between improving cost efficiency and sustaining or enhancing student access and success. For example, efforts to improve quality and address completion gaps, such as by increasing instructional staffing levels or enhancing student support, may reduce cost efficiency as measured by this report.
Next steps
The HECC will submit the report to the Legislature and work with institutional and community partners to advance policy options that promote affordability, access, and long-term sustainability for every Oregon public university.
About the report
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Title: Spending and Efficiency in Oregon Public Universities (December 2025)
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Availability: Adopted by the HECC on January 6, 2026; prepared in response to a 2025–27 budget note directing an assessment of spending and cost efficiency and submission to the 2026 Legislature.
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Data sources: HECC Office of Research and Data, HECC Office of Postsecondary Finance and Capital, IPEDS, audited financial reports, national benchmarks.
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