THERE'S A NEW PLAN in the works to turn Portland State University (PSU) into a privately managed corporation, in light of ever-declining state funding.

At the center of the discussion is a report by former University of Oregon President Dave Frohnmayer, issued last November. It urges the conversion of Oregon universities to "public corporations," each with a board of directors controlling day-to-day operations and finances. Not everyone is thrilled about the prospect.

"Money for jobs and education, not for corporate profitization!" shouted a group of around 20 PSU students protesting that idea on campus on Friday, January 29.

Student Leah Kutz said she's worried that the university would favor profits over education: "The industrial science departments would grow and benefit, while the humanities would be cut."

Absolutely not, says David Yaden. He's a member of Governor Ted Kulongoski's Oregon State Board of Higher Education (OSBHE), which is currently considering proposals for statewide restructuring of the higher education system.

"This is not at all because of business investment," says Yaden. "There is no worry about corporate America taking over the universities."

But there has been significant input from business and anti-tax interests. John von Schlegell, managing director of the private equity firm Endeavour Capital, wrote to Governor Ted Kulongoski in August imploring him to create a single corporation in charge of all the state's universities. The corporation's board, he said, should "not include [faculty or students] currently in the academy." The corporation would "develop its own... revenue and expense autonomy."

Interestingly, von Schlegell has supported the de-funding of public education very recently. If Measures 66 and 67 had been defeated by voters last month, state education funding would have seen drastic cuts, and von Schlegell—who served on the OSBHE for five years before retiring in June—contributed $5,000 to the campaign against the measures. His Endeavour Capital colleagues gave another $16,000.

Meanwhile von Schlegell's firm has also invested in two post-secondary institutions, one of which is a Christian institute in Arizona that converted from a nonprofit to a for-profit model in 2004.

Von Schlegell did not return the Mercury's inquiries by press time.

His proposal and others are making their way through the OSBHE's Governance and Policy Committee, and could see enactment by the 2011 legislature at the earliest. Check for updates.