Portland State University President Wim Wiewel faces a common problem for a leader in higher education: Too few students can afford college.

Wiewel's solution is less typical.

Last October, Wiewel unveiled a plan to go directly to voters for approval of a payroll tax on  metro-area employers that PSU now projects would raise $35 million a year.

If voters pass the ballot initiative this coming November, Wiewel says the money would be used as scholarships for Portland-area students, but it could also help ensure the financial stability of the university.

"We're in the business of serving students," Wiewel tells WW. "This measure would allow us to serve more students better."

This isn't the first time an Oregon school has appealed directly to voters for funding. The most recent request was last year, when voters passed a $23 million bond, funded by property taxes, for Blue Mountain Community College in Pendleton.

But no college in the state has ever before sought its own separate and new tax, PSU says.
The measure's language still isn't final. But the election campaign has already begun. The PSU Foundation has hired two of the city's top political consultants, Mark Wiener and Liz Kaufman. The campaign will soon begin gathering about 40,000 signatures to qualify for the November ballot, Kaufman says.

The bold proposal is at a crucial stage: Wiewel needs to gather support statewide for the ballot measure, which would probably join four other money measures on the November ballot ("Billion Dollar Ballots," WW, Jan. 13, 2016).

So far, Portland State University's board has backed the proposal and has the support of at least one prominent real-estate developer.

"If PSU thrives, the city of Portland thrives with it," says John Russell of Russell Development Company, noting that PSU's $52 million endowment is about one-tenth the size of those at older, more established universities in the state. "PSU is handicapped in that respect."

But there's far less enthusiasm among groups that regularly extol the importance of education and even groups whose members might benefit from a new PSU tax.

Among those raising questions are groups whose support PSU will need: local employers, who would both pay the tax and benefit from a better-educated workforce; Portland Public Schools, whose students would benefit from scholarship money the initiative would raise; and public employee unions, some of whose members would benefit from the new revenue.

None of those groups is on board yet—and the Portland Business Alliance has already come out against Wiewel's proposal.

Among the loudest critics are the leaders of large business.

"This year, I expect a lot of money that would have been directed to PSU or other worthy causes will instead be used to battle poorly thought-through tax schemes that have various beneficiaries," says Columbia Sportswear CEO Tim Boyle, "which makes it difficult to consider ideas that may be reasonable."

Portland State has struggled financially in recent years. Although the Legislature boosted the state allocation to the university from $61 million to $76 million last year, Oregon remains among the most stingy states in terms of public funding for higher education.

Enrollment growth has flattened, and the university   became independent in 2014, when lawmakers dissolved the Oregon University System.

For PSU, that meant a chance to fundraise independently and the challenge of competing with its wealthier, better-connected peers at the University of Oregon and Oregon State University for fundraising dollars.

More money could go a long way toward helping PSU undergrads, nearly 50 percent of whom the university says have incomes low enough to qualify for federal Pell Grants.

Student tuition provides the largest chunk of the university's income. All that leaves PSU scrambling for dollars and—as an embarrassing episode last summer showed—sometimes desperate.

As The Oregonian reported last August, a former PSU student named John Fitzpatrick offered the university a $100 million donation. Without establishing whether Fitzpatrick possessed even a small fraction of that amount (he apparently did not), the university prepared a grand public announcement of the gift, only to cancel at the last minute when staffers realized Fitzpatrick's offer was probably bogus.

Wiewel canned his two top fundraisers and turned his attention to a more reliable source of cash—tax-loving local voters.

PSU officials argue the $35 million raised from a payroll tax would go to support low-income students, by providing scholarships and hiring counselors and more faculty.
TriMet is currently the only local government body that raises money through a payroll tax. The transit agency serves hundreds of thousands of riders every day and benefits non-riders by reducing congestion and vehicle emissions.

But the Portland Business Alliance, which represents the city's largest employers, told Wiewel last month that it objected to his plan to bring a payroll tax increase to the ballot in November, in part because the money would go to a narrower pool of constituents.

"A payroll tax is a tax on jobs. It's a bad vehicle. We have a very broad tax that would benefit just one institution," say the business group's CEO, Sandra McDonough. "We would prefer not to see a measure on the 2016 ballot."

Wiewel also hasn't won friends in a year when four other measures are competing for voters to approve new taxes, particularly given that his was the latest idea proposed.

School Board member Amy Kohnstamm, for example, who is working on a proposed bond measure for the Portland Public Schools, calls the PSU measure "ill-advised."

"Our community is really galvanizing around K-12 education," she says, "where our infrastructure has been so sorely neglected."

Unions representing PSU workers, including Service Employees International Union Local 503, aren't ready to commit to the tax plan. They're fighting for an increase in the corporate tax rate through a separate ballot initiative, which backers say would generate $2.5 billion a year for education, among other state services. (Disclosure: This reporter's husband works for the American Federation of State, County and Municipal Employees Council 75, which supports the corporate tax measure.)

"We want to look into more comprehensive reform," says SEIU Local 503 executive director Heather Conroy, who added that the measure could mean PSU gets short shrift from the Legislature if the school gains its own funding mechanism.

"I hope that the PSU president is thinking that though," says Conroy, noting she also hopes "it doesn't let the legislators off the hook for the funding the state should be providing."

Such sentiments may be self-serving for unions. But it's a worry shared by lawmakers themselves: PSU's tactic of going it alone could backfire for the universities across the state because PSU would reduce the urgency for beefing up state funding levels.

"One of the things it's going to do is take some pressure off the higher-education budget because Portland would have taken care of their issue," says state Sen. Tim Knopp (R-Bend),  vice chairman of the Senate Higher Education Committee.

Kaufman, the political consultant shepherding the ballot measure, says the details of the tax will be persuasive.

"When people and organizations see how this money is going to be spent," she says, "it's going to be very hard for them to oppose it."