Portland State University’s financial picture is getting bleaker. But university leaders are pressing ahead with a contentious restructuring plan that they hope will get the institution back on track.

“We have a comprehensive plan and we are executing,” PSU President Ann Cudd told trustees at a committee meeting Thursday. “While the next two years will be difficult, I firmly believe we are on a path that will build long-term financial sustainability.”

The university’s full board of trustees is set to hear updates on PSU’s finances and sustainability plan Friday morning.

Last September, the university projected a budget deficit of $35 million by 2027. Four months later, that figure has grown to just over $40 million, according to PSU fiscal documents.

PSU is not the only Oregon college struggling to keep its head above water. Nearly all of the state’s public universities are facing budget shortfalls this school year due to declining enrollment, increasing employee costs and flat support from the Oregon legislature.

Oregon’s Higher Education Coordinating Commission recently approved some controversial recommendations for the Legislature to consider, including possible mergers and degree program audits, to help alleviate some of these pressures.

Driving Portland State’s financial slowdown is weaker-than-expected enrollment this school year. Fall 2025 enrollment, measured by total student credit hours, fell by just over 2% compared to the previous year.

Student tuition dollars make up a huge part of PSU’s operating revenue. Perhaps more notable, nonresident students attending Portland State also saw a steep drop. Out-of-state students — who pay more in tuition — plunged by nearly 9%.

The university has struggled to attract more students for years. PSU enrolled nearly 19,700 students this school year, according to HECC data. That’s down nearly 30% from a decade ago.

Portland State’s leaders are not expecting an enrollment rebound in the years ahead.

Instead, they are redoubling efforts to downsize the institution to align with its enrollment level.

But some faculty and staff are skeptical of the university’s financial sustainability plan, which is overhauling academics and administrative structures at PSU. Hundreds of job cuts could play a major part.

Vicki Reitenauer, a PSU trustee and faculty member, said the university may be juggling too many streamlining initiatives at once. She’s concerned academic programs and faculty could be eliminated in error.

“I’m very worried about this, everything, everywhere all at once situation we’re in,” Reitenauer said in a trustee committee meeting Thursday. “We are likely going to lose faculty who are very much needed going forward.”

University leaders are in the process of reviewing academic programs for possible cuts. Position eliminations and layoffs associated with those are expected to be announced in March. Faculty and staff say they’re in limbo.

PSU Faculty Senate Presiding Officer Matt Chorpenning believes this ambiguity has led to low morale and could prompt some people to leave the university, even if their jobs might be secure.

“In a climate where we’re coming to work every single day — not knowing who’s gonna be here next year — that’s gonna lead people to seek work elsewhere that might not otherwise,” Chorpenning said.

The reorganization could further strain campus relationships. A campus climate report released earlier this month showed there’s already a disconnect between PSU’s top leaders and students and employees.

The survey, which was conducted amid last year’s $18 million dollar budget cuts, revealed that most PSU students did not feel respected by administrators. Faculty respondents said they don’t trust university leaders to lead the institution in the right direction.

Still, Portland State leaders say they must move ahead with their financial sustainability initiatives.

“They are the necessary tools we need to ensure PSU remains a sustainable, thriving urban research university for Oregon through 2030 and beyond,” said PSU Vice President for Finance & Administration Andria Johnson in a statement. “PSU is being proactive. We are moving with purpose.”

News Source : https://www.opb.org/article/2026/01/29/portland-state-university-restructuring-budget/