SALEM, Ore. -- Citing fears about the nation's unstable economic situation, legislators on Thursday recommended holding back $25 million that had been earmarked for public employees' salaries and benefits.

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Public employees will still get $100 million of the dollars promised to them under their union contracts, and the move should not affect the raises promised to 50,000 workers statewide. But an additional $25 million will wait until at least September, when another quarterly assessment of Oregon's economic picture comes due -- and may be well withheld indefinitely.

A final decision is due Friday, when the full Legislative Emergency Board, which has charge of budget requests while the legislature is out of session, meets in Salem.

The withholding has drawn protests from the Department of Corrections, which stands to lose about $12 million and said some positions will remain unfilled as a result. And the Oregon University System has said the loss of about $6 million could result in fewer course offerings and some faculty positions going unfilled.

But legislative fiscal analyst Daron Hill said Thursday that withholding the money was a prudent choice given some financial unknowns, including the extent of the damage from this summer's fire season, federal cutbacks for social services and a potential end to federal support for timber-dependent Oregon counties.

Lawmakers are also wary that a few of this November's ballot measures -- including one that would mandate stricter sentences for property crimes -- could stress the state budget.

Top Democratic justified their recommendation in a letter signed by Senate President Peter Courtney, House Speaker Jeff Merkley and the co-chairs of the budget committee, Sen. Kurt Schrader and Rep. Mary Nolan which read, "By holding $25 million in reserve, we believe that the Legislative Emergency Board can avoid the need for drastic program cuts across state government while still retaining the ability to deal with shifting sands of an uncertain economic future."

In committee Thursday, Schrader said that Oregon's seven public universities, in particular, can deal with the cutbacks by drawing on reserves totaling about $115 million systemwide.

That's true for some schools, but others will struggle to make up the difference, said Jay Kenton, the university system's vice president for finance and administration, including Eastern Oregon University in La Grande and Southern Oregon. The state board of higher education requires the universities to maintain a reserve fund of between 5 and 15 percent as an economic cushion, he said, and this could bring some schools below that threshold.

In essence, Kenton said, the universities were being penalized for having the foresight to keep some money in reserve.

The holdback is hitting particularly hard at Oregon State University, which has jurisdiction over statewide offerings like the extension service, agricultural experiment station and a forestry research lab, areas that had hoped to get $1 million more than they will actually receive.

Oregon State University president Ed Ray said that means, "not hiring, not buying equipment, that money won't be there for things that were deferred. There's always the issue of, okay, you can keep body and soul together for this year, but what happens next year?"

For its general education programs, the university will do its best to backfill with reserves, Ray said, but that means coming up with enough money to cover 10 full time instructors, who could staff 72 classes, holding 2,250 students.

The Department of Corrections has been preparing for the possibility of cutbacks since the winter, said Nathan Allen, the agency's planning and budget administrator, by implementing a hiring freeze, requiring authorization for all major purchases above $5,000 and eliminating all nonmandatory training. Allen said such actions should shield the agency from having to make drastic cuts, like closing down prisons.

Most state employees received a pay raise of 3 percent about a year ago; the state also covers the bulk of their health insurance premiums. They are due for another raise of about the same amount this fall. Additionally, Gov. Ted Kulongoski approved big raises for managers and agency leaders last year, with department heads getting raises of between 21 and 24 percent.