Oregon State University's reserves have put it in a better position to withstand the financial downturn, at least for now, said Jay Kenton, vice chancellor for finance and administration with the Oregon University System.

OSU's reserves stood at

$48 million on July 1, but nearly 25 percent of that will go to offset the bulk of cuts in state funding triggered by the economic downturn, according to data from OSU and the Oregon University System.

"Remember, these are one-time monies. When they are gone, they are gone. And next year will be a different story," Kenton said. He's been instructed by the governor's office to plan for cuts of 20 to 30 percent next biennium, which begins on July 1.

Nancy Heiligman, OSU's associate vice president for finance and administration, said that between cuts announced in December and March, OSU is facing an $18.6 million reduction in state funding this fiscal year because of the recession. About $12.2 million of that is at the Corvallis campus.

To cover a portion of the

$18.6 million in state cuts, OSU will use about $11.8 million from its reserves. About $6.8 million will be saved through keeping open positions vacant and deferring purchases. No layoffs are anticipated.

At the beginning of the year, OSU's ending fund balance was at about 12 percent of its anticipated revenues. "This really buys us a little more time to do more planning for next year," Heiligman said. "About a year ago, we started saving again. We saw the economy was getting worse."

In all, 10 of the 12 colleges at OSU will dip into their reserves.

'Real reductions'

"These are real reductions," Heiligman said, noting that some of the reserves were earmarked for specific purposes, such as facility improvements.

For example, the College of Veterinary Medicine will draw $173,250 from its fund balance. Dean Cyril Clarke said that money was allocated for the replacement and repair of diagnostic equipment, for internal research and for "faculty start-up packages" that allow new researchers to launch projects when they join OSU.

Like other units at Oregon State, the College of Veterinary Medicine won't fill vacant positions and is deferring expenditures, Clarke said.

Kenton said the state cuts are to the general budget for the Oregon University System. OSU Athletics is in the auxiliary budget, so it won't face the same sort of reductions.

OSU athletics gets a general fund subsidy of

$2.5 million from the university, however. "That was not reduced, just because we knew they were taking a cut in the lottery side," Heiligman said.

Only a few athletic programs throughout the nation, including the University of Oregon, break even.

Kenton said the state lottery provides about 1 percent of its revenue to non-revenue-producing sports in the Oregon University System, and that funding will see a decrease this year. For OSU Athletics, the cut in lottery funding amounts to about $75,000.

"We didn't compound that" by asking for an additional cut, Heiligman said. The university's $18.6 million in cuts is about 11 percent of its $172 million in state-appropriated funding for the start of fiscal 2009, he said.

State funding

just one source

OSU's total budget for 2009, including the Cascades Campus, statewide programs and capital construction, is about

$766 million, Heiligman said. Other major funding sources are tuition, donations, grants and the university's housing and dining department.

In the Oregon University System, only Western Oregon University had more reserves, as a percentage of revenue, than Oregon State University heading into the 2009 fiscal year.

The Oregon University System requires its institutions to keep 5 percent of revenue in reserves. However, the University of Oregon and Southern Oregon University saw their fund balances drop below that level because of the March state cuts.

To compensate, the University of Oregon will raise its spring tuition by

$150 for resident students and $350 for non-residents, according to Oregon Higher Education Board minutes.

Southern Oregon University was approved a $420,000 advance from the Oregon University System to help tide it over.

Portland State University eliminated some classes and course sections to tighten its belt, said Di Saunders, Oregon University System spokeswoman.

Kyle Odegard covers Oregon State University. He can be contacted at kyle.odegard@

lee.net or 758-9523.