Oregon State University's Board of Trustees Friday approved a budget of more than $1.3 billion for the next fiscal year, beginning in July.

The board is asking university leaders to prioritize funding toward recruiting and retaining students and faculty and promoting diversity and inclusivity. Other key priorities include advancing construction on the OSU-Cascades campus in Bend.

THANKS TO OUR SPONSOR: Become a Sponsor

How the university will balance its budget remains unclear, while facing flattening student enrollment and a potential lack of additional funding from the state.

Gov. Kate Brown's proposed 2019-21 budget noted no additional funding for the state's Public University Support Fund.

Related: Startup University Challenge: How To Scale Up, Without Losing What Works

THANKS TO OUR SPONSOR: Become a Sponsor

OSU budget planners have projected a budget gap of about $18 million at the Corvallis campus, despite an upcoming tuition increase of more than 4% for resident undergraduate students at both the university’s Corvallis and Bend campuses.

This gap is an increase over the $12.7 million budget gap discussed during last month’s OSU board meeting. Budget planners gave two reasons for that increase. First, the university’s insurance rates are increasing in the new fiscal year by an estimated $3 million, mostly driven by property insurance. “This is over a 250% increase,” the operating budget report states. Second, fewer non-resident undergraduate students enrolled than projected.

Budget planners also urge the university to consider other issues including “slow growth in biennial budgets from the state, tuition increases under 5%, declining enrollment in Corvallis … .”

For the gap, the budget report suggests solutions including a reduction of $8 million to $9 million in personnel expenditures. This could include eliminating vacant positions, but also cutting jobs such as 60 full-time unclassified positions, 15 full-time classified positions and about 20 graduate assistant positions.

The proposed operating budget is just an estimate of OSU’s financial situation for the upcoming fiscal year. The report states there are many uncertainties in addition to unclear state funding and slowing enrollment.

“University expenses are rising due to increases in state-mandated benefits and insurance premiums as well as other expenses,” an OSU news release states.

The university will also be gaining new leadership, as OSU President Ed Ray is stepping down next year. Ray has been the university's president since 2003 and is Oregon's longest-serving public university president.

Recruitment efforts for a new president will be underway this summer and early fall with the selection of a new president expected in early 2020.