Portland State University’s budget woes are fast becoming a perennial problem. But PSU leaders say they have a multi-year plan that can pull the university out of its years-long financial funk.

Portland State President Ann Cudd expects this plan will come at a cost to the university.

“PSU is facing a future where it’s going to have to operate as a smaller institution than it has over the past decade,” Cudd said at a board finance, administration and audit committee Thursday.

“We cannot reach this vision without breaking the cycle of non-strategic cuts that has plagued us since before the pandemic,” Cudd continued at the meeting. “It hinders our ability to serve students, it distracts us from our academic focus and it just makes everyone who works here feel beleaguered and exhausted.”

The PSU Board of Trustees is scheduled to vote Friday on a 2025-26 budget and a new proposal that aims to close a projected $35 million shortfall by 2027. That projection does not include the $10 million deficit the university is facing this school year. The university plans to fill the gap for the current school year with reserve funds.

These consistent multimillion-dollar deficits do not come as a surprise to the university.

PSU leaders say the funding gaps are caused by persistent and structural problems that many other public universities across the state are facing: rising personnel costs, a decline in student enrollment and a decrease in state funding.

Officials at Portland State say the new plan, called Bridge to the Future 2.0, will address the university’s structural deficit and create a nearly $2 million investment fund.

The latest financial roadmap is a continuation of PSU’s sustainability plan from last school year, when the university closed an $18 million operating budget shortfall. That effort included an overhaul of the school’s administrative and academic structures, early retirement offers and layoffs of 17 non-tenure track faculty. The implementation of these cuts saw significant push back from faculty, staff and students and ultimately led to Portland State’s faculty senate to approve a vote of no-confidence in the previous Bridge to the Future plan.

Even more belt-tightening is on the way. University documents say the $35 million deficit is equivalent to about 220 full-time employees. But the new plan specified that the university will not make “across-the-board” cuts and will instead make strategic changes to academic programs, faculty positions and organizational structures among other actions.

PSU is planning to follow a phased reduction approach over the next two years. The university is targeting $17 million in cuts for the 2026-27 school year and an $18 million cut the following year.

A key part of the Bridge 2.0 plan is a new review component called the Plan for Institutional Vitality and Organizational Transformation, or PIVOT. University leaders say this element of the plan will resolve past reorganization issues and increase transparency.

“We are redoubling our efforts to communicate early, directly and often throughout the year about our efforts to deliver on the plan,” Cudd said. “We’ll be hosting town halls and administrative briefings on a monthly cadence and continue to update the faculty senate every month so that we can share our progress and gather input along the way.”

But some PSU faculty are apprehensive about the university’s plan. At a town hall on PSU’s finances on Sept. 19, faculty voiced concerns about administrators’ decision-making process, the cancellation of courses and continued workforce cuts.

PSU American Association of University Professors President Bill Knight said he is worried that the university’s overall pessimistic tone could impact future enrollment.

“How can we ensure that what we’re doing here directs us towards the kinds of enrollment transformation that would ultimately serve not only our university, but the city, region and state?” Knight said at the town hall. “I would love to reach for that optimism because I feel like there’s so much reason for us to be optimistic.”

News Source : https://www.opb.org/article/2025/09/25/portland-state-univeresity-budget-shortfall/