PORTLAND, Ore. -- Portland's largest employer announced likely layoffs along with a hiring and wage freeze Monday.

Oregon Health and Sciences University officials said they faced a $35-million budget shortfall in 2009.

Patient visits are up about one-percent in the last year, but the budget projected an increase of 6-percent. Officials said there has also been a dramatic drop in elective surgeries.

OHSU said staff reductions or layoffs will likely be necessary, but they won't say how many people might be laid off or what units will be hit.

The university will freeze all new hires and won't fill positions that employees vacate through 2010.

OHSU currently employs about 13,000.

It will also seek to end leases for space in buildings it doesn't own across the area.

The university will freeze all salaries of non-contract employees, but said they do not plan to cut any programs completely.

"OHSU managers responded very well to earlier calls for cost-cutting and cash conservation," said OHSU President Dr. Joe Robertson. "As volatility continues in global markets, it is now clear that we are facing a financial challenge that will be measured in years rather than months.”

"Although this belt tightening is extremely difficult for us, it is less than what many other employers in Oregon have had to undertake," Robertson added. "While we are one of the largest organizations in the state, our sole focus remains our own residents' needs. All of our missions are dedicated to preserving and improving the health of Oregonians.