PSU’s Strategic Pathway to Financial Sustainability
Portland State University is embracing an ambitious and inspiring vision for its future, guided by the “Future in Focus” strategic plan. This plan affirms PSU’s role as a welcoming and supportive university committed to providing learners from all backgrounds with access to affordable, high-quality education and the opportunity for a brighter future. As the anchor educational institution in Portland and the region, PSU is dedicated to student success, community engagement and long-term sustainability. Achieving this vision requires that PSU regains its financial footing along with a position of strength and growth, allowing the university to better serve its students, its employees and all of its community partners.
Stewardship at the Core of Our Strategy
At the heart of PSU’s strategy is a commitment to stewardship. Carefully managing our financial, natural, and cultural resources is vital to reaching our aspirations and continuing our important work for our students and communities long into the future. The Bridge to the Future initiative is not a one-time effort but a renewed focus on ongoing stewardship, evaluation and operational adjustment that is guided by our values and informed by data.
Bridge to the Future 2.0
By following the Bridge to the Future plan in FY2024-2025, Portland State University successfully addressed an $18 million budget deficit.
In September of 2025, Portland State University President Ann Cudd and other members of the executive leadership team presented an expanded and extended version called Bridge to the Future 2.0:
Introduction
Like universities across the country and other public universities throughout Oregon, Portland State University is facing a significant and persistent budget deficit, shrinking enrollment and substantially higher operating costs.
Our Future in Focus strategic plan sets a vision for 2030 in which PSU thrives as Oregon's Urban Research University, where every student develops the knowledge and skills they need to successfully engage in careers and the world. We must center that vision of a thriving PSU as our north star while navigating a difficult path to financial sustainability.
A thriving PSU is essential to the future of our students, our faculty and staff, and our community. PSU is dedicated to creating clear pathways and supporting our students through their programs to graduation. PSU provides the talent and innovation that will drive the future of the region’s economy, address regional challenges and contribute to a bold future for Portland that includes world class education, arts and culture. As an anchor institution in Portland, PSU is a key part of the region’s vibrant future.
A thriving PSU cannot survive year after year of using reserves to address a structural operating deficit. During the 2024-25 academic year, PSU leaders introduced the Bridge to the Future financial sustainability plan and took focused action to decrease expenses and increase revenue with the aim of closing an $18 million budget deficit. That effort was challenging, significant, and successful. Had we not taken those steps to reduce our deficit last year, we would be facing an even more urgent financial situation today.
Current Situation
Many factors have converged to create today’s financial challenges. PSU enrollments have been declining since 2010, even while operational costs have increased. Last year, we took action to reduce our expected $18 million operating deficit through a combination of reduced personnel and operational expenses. The actual FTE reduced came to 104.3 and were managed through vacancies, retirements, non-renewals and limited layoffs. We are still assessing the revenue growth realized over summer term and through increased retention.
Despite this progress, the university now faces a new $11 million E&G deficit for FY2025-26. This new shortfall is primarily driven by a combination of higher-than-anticipated personnel costs, including a $4 million increase from state-mandated retirement rates, and approximately $9 million in lower-than-forecast state support. As a result, the Board of Trustees approved a preliminary budget for FY2025-26 with the requirement that management provides an updated plan by September 2025 that reduces the use of E&G reserves for the current fiscal year and presents a strategy to eliminate the entire deficit by FY2027-28.
Our updated forecasts estimate that under the most probable and pragmatic scenario, PSU will need to reduce expenditures by $35 million over the next two fiscal years to close the budget deficit by FY2027-28.
Strategies, Tactics, and Processes
Our objectives will be achieved by implementing two distinct strategies. Each strategy consists of several tactics, which will be put into practice using various processes and a set of guiding principles.
This phased plan, executed through the Instructional Portfolio Rebalancing and Administrative & Fiscal Optimization strategies, will achieve $17 million in reductions in FY2026-27 and an additional $18 million in FY2027-28. The goal is to not only eliminate the structural deficit but also to create a $1.9 million strategic investment fund to support high-growth programs and modernization projects. By FY2027-28, the university projects a positive net financial position and a balanced budget by FY2028-29. These figures are initial estimates and will be refined as the university learns more about the state budget and moves through its various review processes.
Timeline and Results
The provided provisional timeline establishes a clear schedule for implementing the university's financial sustainability plan. It outlines a sequence of actionable steps designed to translate strategic goals and financial targets into reality, demonstrating a commitment to transparency and accountability.
Key actions over the next two fiscal years include:
- September 2025: A revised FY2025-26 budget will be delivered to the Board of Trustees, followed by an employee town hall to share the "Bridge to the Future 2.0" plan.
- Fall 2025 - Spring 2026: The Plan for Institutional Vitality and Organizational Transformation (PIVOT) and the Review of Non-Academic Administrative Structures will move through data collection, program self-assessments, and the final classification of units.
- February - June 2026: The Higher Education Coordinating Commission (HECC) budget report will be shared with the Legislature, leading up to the presentation of the FY2026-27 tuition and budget to the Board of Trustees.
- July 2026 and July 2027: The university will achieve its targeted budget reductions, with $17 million in savings in the first year and $18 million in the second.