ASHLAND, Ore. — When Ulysses McCready was in fifth grade, a group of Southern Oregon University music students hauled instruments to Orchard Hill Elementary School to help get local kids excited about joining the middle school band. It worked on McCready, who picked up the flute and soon fell in love with music.
“That day I was like, ‘I am going to be in SOU’s music program one day,’ ” they said.
A decade-and-a-half later, McCready, now 26, transferred from a local community college to Southern Oregon, in Ashland, both because of that childhood exposure and because it’s the only four-year university in the region and they needed to stay close to their family.
But the university’s financial troubles have disrupted their first two years. They enrolled as a political science major and became fascinated with gender and women’s studies, only to see both programs being phased out. They joined the wind ensemble and pep band, only to see the music department placed on the chopping block this spring, as university leaders cut millions more dollars from the budget.
Now McCready and other students say they are considering transferring out. Southern Oregon’s financial picture is that grim.
The school has been struggling financially for years with decreasing enrollment and increasing costs. This year, a surprise $15 million hole in the budget — the result of an ineffective budgeting strategy and computer problems, officials say — meant that SOU was at risk of not making payroll or paying the electric bill by February 2027 unless it got a bailout from the state. Without financial help and major cuts to the budget, this 150-year-old public university would have to close, its leaders said.
Across the country, financial pressures have battered many colleges, forcing some small private institutions and for-profit schools to close. Public colleges have also faced challenges, and some large systems have closed branch campuses or merged with other institutions. But Southern Oregon is one of the first public regional universities to face serious risk of closure.
For now, the university’s doors remain open thanks to emergency, one-time funding from the state. Before sending the money, however, the state required that university leaders balance the budget. To do that, they had to find a way to cut $20 million — about one-fifth of the roughly $100 million annual budget, administrators said.
On July 21 — after a fraught spring term, a controversial set of cost-saving recommendations from an outside consulting group, several town halls and raucous student protests — leaders unveiled a final plan that will cut $20 million by sunsetting a major, eliminating 61 faculty and staff positions, increasing class sizes and cutting more than $1.5 million from the athletic department.
Earlier cuts eliminated eight majors, 11 minors, one graduate program, the undergraduate honors college and a total of 151 full-time faculty, staff and administrator positions. Once the new cuts are made, the university will have lost a total of 212 faculty and staff positions in four years, and eliminated a total of nine majors, including chemistry, Spanish and international studies.
It seems clear the university has no “Plan B,” said Ben Cannon, executive director of Oregon’s Higher Education Coordinating Commission, the state agency that manages funding and policy for public colleges and universities.
“There’s not someone out there — whether the legislature or another institution or philanthropist — that we are aware of that seems ready to swoop in and pick this place up if it’s unsuccessful with transformation,” Cannon said. Closure, he said, is “a practically unthinkable outcome, and yet, it’s not evident what else would occur.”
Drop cap
The university, which has existed under various names since 1872, is a landmark in Ashland, an artsy city of about 22,000 people, about 14 miles from the California border. The university is among the biggest employers in the largely rural region.
Ashland is a relatively wealthy and highly educated city, but many of the surrounding communities that SOU serves are not. For many students who live between the University of Oregon (to the north), Oregon Institute of Technology (to the east) and California State University, Chico (to the south), SOU is the public four-year university closest to home, and the most affordable. Roughly 30 percent of the student body comes from California, in part because students from five counties in northern California are eligible for in-state tuition rates at SOU.
Data collected in The Hechinger Report’s new College Financial Health Tracker show that between 2019 and 2024, SOU’s revenue fell 9 percent, after adjusting for inflation, compared to an average of 1 percent at all public colleges in the country. In the same period, enrollment at SOU fell 11 percent, compared to an average decline of 4 percent at all public colleges.
The decreasing revenue puts a greater strain on SOU than it might on other colleges because the state has been stingy with its support. Oregon allocates $9,672 per student — only about 80 percent of the national average of $12,082 per student, according to the State Higher Education Executive Officers Association.
Richard J. Bailey, the institution’s president since 2022, had already made major cuts under plans called SOU Forward, in 2023, and SOU Resiliency, in 2025. His latest plan to save the university is called SOU Vitality.
Bailey said he saw structural problems in the SOU budget almost immediately upon taking the job and initiated the first round of financial cuts during his first year. Less than two years later, in the fall of 2025, he declared that the university was in “financial exigency.”
But those cuts weren’t enough. This February, Bailey alerted the board to the current cash flow problem, which came as a surprise to the board of trustees.
Yet, “I don’t think that was a drastic surprise,” said board chair Sheila Clough. She acknowledged the university has been operating on a tight budget for at least the last eight years, and in that sense, she said, this crisis has been a long time coming.
In an interview, Bailey said that he hadn’t done a good job of looking at the institution’s finances beyond the education and general fund, which he said accounts for two-thirds of the total budget. He said he didn’t pay close enough attention to other budget items, such as athletics or housing.
Bailey said the issue was complicated by a difficult transition between software systems, during which problems arose with the transfer of financial and payroll data from one platform to the other. That led to a “lack of awareness and granularity” of financial information, Bailey said.
The lack of detailed information meant that the scope of the problem didn’t become apparent until late January of this year, Bailey said. Three days later, he met with the board to tell them.
“I'm responsible for everything that happens at the institution, so I accept full responsibility for not having the full awareness of just how dramatic and grave the challenges really were,” Bailey said.
Ruth A. Johnston, vice president of the consulting arm at the National Association of College and University Business Officers, said she’s never heard of a college losing sight of its finances during a software transition, but “anything is possible.”
After the board learned about the budget shortfall, Bailey and other leaders went to the state capitol to ask for help. The legislature agreed to grant $15 million in emergency funding, so long as leaders found a way to balance the budget. As a part of the deal, SOU leaders are required to provide monthly financial reports and quarterly cash flow projections to the state.
The success of the Vitality plan depends in part on whether enrollment projections are accurate, Bailey said, both for new students and returning students.
At a meeting of the board of trustees, Sophia Smith, a sophomore who serves as student body president, called the ongoing financial crisis a failure of their leadership.
“If these reductions and eliminations must occur, then ensure that they are the last that we see of you,” Smith said. “I beg you to break the cycle of failure.”
Smith, who came to SOU from the Portland area, said repeated cuts are painful to students, and “it would be, at this point, less cruel to close our doors entirely.”
The financial crisis has indeed taken a toll on students. Rumors swirled in the months between the announcement of the budget shortfall and the final cuts being announced.
Vincent Ghiglieri, who just graduated with a bachelor’s degree in business, said that between the two rounds of cuts while he was in school and the looming cuts this spring, the university felt like “a dead man walking.”
He came to SOU from Shady Cove, a river town of 3,000 people, because it was the closest and most affordable four-year option. He was also drawn by the music program — he wanted to major in business, but he didn’t want to give up playing the trumpet. He graduated with a minor in music, which, as a result of last year’s budget cuts, will not be offered to future students.
Ghiglieri said that the uncertainty this year “made it seem like the school is done and they were just about to shut everything down and call it quits.”
Like McCready, some students have considered leaving SOU altogether.
First-year student Natalya Smith said that during winter term, she asked professors to write her letters of recommendation so she could apply to transfer. After the university secured the emergency state funding and Smith learned that the criminology program was unlikely to get cut, she changed her mind.
“Then it turned into like ‘OK, I’m staying and I’m going to fight for this institution,’ ” Smith said.
Students formed the Save SOU Coalition, and the university chartered a bus to take students to the state capitol to lobby for the emergency funding.
Some, like Tylar Penney, took it upon themselves to do research about higher education funding and suggest ideas to leaders. A sociology and anthropology major, she said her vision involves restructuring the university’s core curriculum and merging certain disciplines to reduce overhead costs.
At an emergency student town hall in early June, Penney hammered Bailey with questions about his plans and her ideas about how to preserve all the academic programs and still save money.
Even though the state has made it clear that it won’t provide another bailout or increase baseline funding to SOU, Penney said it can’t hurt to ask.
“It shouldn’t be on students and families to fund institutions that were never designed to be profitable,” Penney said. “Public universities are like public transportation. This is a public service, it’s not a business.”
State Rep. Pam Marsh, who earned her bachelor’s degree from SOU, sponsored a bill that requires a study of the finances of all the state’s four-year institutions. But when SOU’s financial crisis was revealed, Marsh said, “It changed all the conversations from ‘How can we do this work, systemwide?’ to ‘How are we going to make sure that SOU can pay its bills for the next year and a half?’ ”
Still, her bill passed. Marsh said preliminary recommendations from the study are due this fall so that proposals can be considered for the 2027 legislative session.
“SOU’s credibility took a blow,” Marsh said. “We need to climb back out of that hole and prove we can manage ourselves and that we have a vision for what we want to be and a pragmatic way to get there.”
Dennis Slattery, a business professor who has been at the university since 2004, said in an interview that Bailey needs to do a better job of holding the university’s financial leaders accountable.
“We have an issue of trust within SOU right now,” Slattery said. “And of course we do — budgets are being cut, people are being cut. It’s mind boggling that you’re not tracking how much money you got in your pocket and if you could pay your bills.”
Slattery told the board that he had surveyed the faculty senate on their confidence in university leadership and “there was not a wholesale lack of confidence, but there are a lot of questions.”
While he understands that cuts are necessary to balance the budget, he said they will mean that the university is asking fewer people to do even more work. He’s worried about whether this strategy will be sustainable.
“As we continue to cut more and more — if cutting is the only strategy we have of dealing with this — we’re just going to cut ourselves into oblivion,” Slattery said.
This story about Southern Oregon University was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education.