Selling the Furniture to Pay the Mortgage
Portland State and the Austerity Trap in Public Higher Education
I have taught graduate students at Portland State University for 23 years, most of them working professionals who come to class after full days on the job. I have watched this institution promise access and flexibility to the people who need it most, and I have watched it keep that promise through recessions, budget cuts, and a pandemic. In February 2026, I sat through a campus-wide financial briefing that, in the language of data-driven strategy, proposed breaking that promise.
The central narrative was familiar to anyone tracking the fiscal trajectory of mid-tier public universities: enrollment is declining, costs are rising, state funding is inadequate, and reserves are being consumed faster than they can be replenished. The proposed response was equally familiar: classify academic programs by demand and cost, sunset the lowest-performing, consolidate support functions, and hope that a leaner institution can attract the students it needs to survive.
PSU’s enrollment has fallen 23 percent since 2019-20, from 19,210 full-time equivalent students to approximately 14,873. Projections show a further 3.4 percent decline in 2025-26 and an additional 0.5 percent drop the following year, bringing the cumulative loss to 25 percent over six years. The forecast shows no recovery through 2029-30.
The budget picture is severe. Even under the optimistic scenario, the annual Education and General Fund deficit grows from $12.4 million to $31.3 million by 2028-29. The pragmatic scenario reaches $42.2 million. Reserves, which peaked at roughly $125 million in FY2022-23, are projected to fall to $52.6 million by FY2028. That is well below the university’s own target minimum of $86.2 million. PSU drops below its safety threshold within two years.
One point from the briefing deserves emphasis: even small changes in enrollment, a few hundred students gained or lost, translate into millions of dollars in revenue. When a few hundred students generate millions in revenue, cutting programs that bring students through the door comes at an especially high cost.
The restructuring centers on PIVOT, a framework that classifies every academic program as Grow, Sustain, Revitalize, or Sunset. Draft classifications are complete. Fiscal modeling and final determinations are underway, with implementation planned for FY2026-27.
The framework is not unique to Portland State. Variations have been deployed at the University of Vermont, West Virginia University, and dozens of other institutions. The taxonomy differs, but the logic is the same: rank programs by enrollment, cost, and market alignment, then cut from the bottom.
The appeal is apparent objectivity. The problem is that the framework systematically undervalues programs that serve small but financially productive cohorts, while failing to account for the revenue destruction that program elimination can trigger.
Consider a graduate program serving working professionals: evening and weekend scheduling, practitioner faculty, and low instructional costs. Programs structured this way can produce strong contribution margins relative to their cost.
Under PIVOT, these programs may nonetheless be flagged for sunset if their absolute enrollment is modest or if their host department carries legacy costs unrelated to the program itself. The mathematical problem is plain: sunsetting a program that generates net revenue makes the shortfall worse, not better. This is the institutional equivalent of selling the furniture to pay the mortgage.
The standard counterargument is that the savings will be reinvested in higher-growth programs. This assumes the institution can identify and scale replacements fast enough to offset the lost revenue. PSU’s own forecast, which shows no growth under any scenario through 2029-30, suggests otherwise. It also treats faculty lines, student pipelines, and community relationships as interchangeable resources that can be redeployed at will, when, in practice, program elimination erases institutional knowledge and sends market signals that discourage enrollment in other programs. This pattern is not unique to Portland State.
PSU’s predicament is representative of a structural crisis affecting public universities nationwide, particularly urban, commuter, and adult-serving institutions. Between fall 2019 and fall 2024, total undergraduate enrollment declined sharply and, despite recent recovery, remains below pre-pandemic levels at many public four-year institutions. At urban, non-flagship universities like PSU, the decline has been steeper.
State funding has not compensated. Oregon’s Public University Support Fund creates a zero-sum dynamic: PSU’s declining enrollment directly reduces its share of the state allocation. As the briefing acknowledged, PSU’s share has declined because its enrollment has not kept pace with other Oregon universities. Meanwhile, mandatory costs, such as retirement, health benefits, and compliance, continue to rise regardless of enrollment.
The most striking part of the briefing was its discussion of a report by the Oregon Higher Education Coordinating Commission, produced in response to a 2025 legislative budget note. The report’s first recommendation: the legislature should direct HECC to develop proposals for “targeted institutional integration” across Oregon’s public higher education institutions by January 2027.
That phrase, “targeted institutional integration,” is bureaucratic language for merger or consolidation. Paired with the proposed Oregon Higher Education Review Act, which would study a “viable and superior institutional framework,” the recommendation signals that the legislature is questioning whether Oregon needs seven independent public universities.
This is not unprecedented. Pennsylvania consolidated six state universities into two in 2022. Vermont consolidated three of its state colleges into Vermont State University in 2023. For PSU, the HECC recommendation creates a double bind: demonstrate the capacity for self-correction before the legislature imposes structural changes from outside. Yet, despite its data, the briefing leaves critical questions unanswered.
There is no analysis of which sunset-targeted programs currently generate positive contribution margins. There is no modeling of whether cutting programs will accelerate the enrollment decline, driving the crisis. The growth strategy, four pillars covering student success, transfers, program portfolio, and reputation, is presented without targets, timelines, or dollar figures. The briefing states that growth strategies “take time to come to fruition,” yet the enrollment forecast shows no evidence that any will produce results within the planning horizon.
The briefing also notes “significant declines” in non-resident student credit hours. It acknowledges the enrollment forecast won’t be updated until March to account for federal policy impacts on international enrollment. Programs are being classified for potential elimination based on data that, by the institution’s own admission, is incomplete.
The financial crisis is real. The enrollment decline is real. The reserve depletion is real. None of this is in dispute.
The dispute is whether classification-and-sunset represents a sound strategy or a classification error that will deepen the crisis. An alternative framework would rest on three principles.
First, protect revenue-generating capacity. In a revenue crisis, preserve programs that produce positive net revenue regardless of absolute enrollment size. Eliminating a program with a strong contribution margin to address a budget shortfall is not cost reduction — it is revenue destruction.
Second, model enrollment impact before making programmatic decisions. Every eliminated program sends a signal to prospective students, employers, and community partners. These signals have enrollment effects that should be estimated before decisions are finalized, not discovered after.
Third, distinguish between genuinely unviable programs and under-resourced programs. Many “low demand” programs have been starved of marketing, advising, and scheduling support during years of austerity. The question is not only whether a program performs well under current conditions, but whether it would perform well under adequate conditions.
The institutions that emerge from this period strongest will not be those that cut most aggressively, but those that cut most strategically — preserving the revenue-generating programs, community relationships, and programs that prepare for jobs.
Portland State, with its urban mission, adult learner population, and deep ties to Portland’s economy, has assets most universities would envy. The question is whether its restructuring process will recognize those assets for what they are — or classify them out of existence.
The students who built Portland State’s reputation did not arrive as line items on a spreadsheet. They arrived as working parents, career changers, first-generation students, and immigrants looking for an institution willing to meet them where they were. That willingness is not a cost to be cut. It is the mission itself.