Oregon State University is facing a projected $12 million operating budget deficit this school year.
Bryan M. Vance / OPB
Tiny leaks are beginning to form in the Beaver dam that has walled off Oregon State University from the budget problems facing many institutions.
For years, it seemed as though Oregon’s largest university was immune to the financial pressures that were pinching the state’s other higher education institutions. As other schools struggled to keep up with increasing personnel costs and stagnant support from the state legislature, OSU continued to grow, enrolling more and more students even through the pandemic.
But this school year is different.
Even though overall Fall 2025 enrollment grew from the previous school year to more than 38,400 students, OSU failed to meet its own enrollment expectations. Now that loss is pushing Oregon State into the same fragile financial state other universities have been dealing with for years.
“We have been really fortunate to have historic, year-over-year enrollment growth, but that doesn’t mean that we’re not facing financial challenges in a really significant way,” said OSU Chief Financial Officer Carla Hoʻā.
In response, OSU leaders are launching a new cost-cutting initiative they say will help future-proof Oregon State.
OSU’s operating expenses are projected to outpace its revenues by about $12 million, according to quarterly budget documents that will be presented to the university’s trustees Friday.
Like Oregon’s other public universities, OSU relies heavily on student tuition dollars to balance its budget. Over the past decade, revenue generated from enrollment in OSU’s online courses, known as Ecampus, has buffered the university.
But that era of growth is showing signs of slowing down.
Ecampus enrollment is flat for the first time in years, with OSU welcoming nearly the same number of online students in Fall 2025 — over 11,600 students — as the previous year. Falling short of Ecampus enrollment goals represents an estimated loss of about $18 million for the university.
That tuition deficit is playing a large role in OSU’s financial problems, said Hoʻā. But she believes the state’s lack of investment in public higher education institutions is an even bigger issue.
Oregon is far behind other states when it comes to funding its public higher education institutions. Oregon ranks 46th in the nation in per-student state funding for public universities, according to the State Higher Education Executive Officers Association’s most recent finance report.
“We’re not seeing our state funding keeping up with our increases in costs,” Hoʻā said. “Some of those big cost drivers are coming from [employee] compensation and more specifically to the increased costs in our employee benefits.”
The state’s Higher Education Coordinating Commission addressed many of these cost concerns in a university spending efficiency report earlier this month. The agency made some controversial recommendations in that report, such as merging institutions and conducting program audits, to help universities cut costs.
Oregon State has already made significant cuts in anticipation of more state and federal funding cuts to universities and colleges. OSU began a “realignment process” last year to balance its budget, set aside contingency funds and invest in future sustainability efforts. That exercise resulted in nearly $44 million in cuts that went into effect in the current school year, according to Hoʻā.
Trustees are set to discuss a new budgeting plan, called “Strategic Resource Renewal,” on Friday. The crux of the project is to streamline the university’s finances even further, with a focus on what administrators are calling “student-first budgeting.”
The plan is still in its beginning stages, but OSU leaders hope to begin implementation in Fall 2026. Right now, officials say all ideas are on the table, including possible layoffs and academic program reductions. But Hoʻā said budgeting decisions won’t be made without the input of faculty, staff and students.
“We have to be really thoughtful, deliberative and bring in the right voices to make sure we’re making the right decisions,” said Hoʻā.
