In an effort to create a financially sustainable university system in Maine, UMS Chancellor Richard Pattenaude last week announced a six-month process aimed at spurring “major transformative changes”.
In a meeting with trustees on Jan 11, Pattenaude predicted that without significant restructuring of the UMS system, Maine’s seven public universities would face a $42.8 million budget shortfall over the next four years. This grim assessment of future finances has forced system administrators to stop looking at small cuts in specific areas, and rethink the way the UMS is run as a whole.
“Incremental cost-cutting-both by our seven universities and within the shared service functions provided by the System office-will not do enough to attain financial sustainability,” Pattenaude told the trustees.
The Chancellor’s presentation, called “New Challenges, New Directions: Achieving Long-Term Financial Sustainability.” suggests working alongside the seven university Presidents, and calls for a 12-person task force to assess the UMS infrastructure, and bring their cost-cutting proposals to the system trustees in July.
“Although negative financial and demographic forces challenge us, the work ahead should be viewed as an opportunity,” said Pattendaude. “The result will be strong universities, clearer objectives, and more measurable outcomes.”
This news comes as the UMS is still scrambling to cut $34.2 million to balance the current fiscal year’s budget. USM, which had been told to cut $2.7 million to help with this deficit, was still $900,000 short of goal as of Jan 20th.
“We must consider elimination of programs and services that are not critical to our mission,” said President Botman at a Faculty Senate meeting last November, in response to the growing budgetary gap across the state’s public university system.
The predicted budget shortfall of $42.8 is based on several factors. Enrollment is expected to stay stagnant as the number of Maine high school graduates begins to decline.
Operating costs are also expected to rise 5.0% per year, due to increasing energy and health care costs. As USM’s CFO Dick Campbell notes, “as we become a more electronically based society, it drives up energy costs.”
A state appropriation of -2.7% for Fiscal Year 2010 also means that the UMS will have a less money than the previous year, followed by an anemic 0%, 1%, and 2% increase for 2011 through 2013.
The Chancellor’s cost saving plan targets three specific “arenas of action.” – administrative student and financial services, academic programs and services, and structure and governance.
Administrative, student, and financial services are the day-to-day support services that keep the university running, and cover everything from financial management to IT, facilities management, student billing, and loan processing. According to Pattenaude’s report, work in this arena can begin quickly by consolidating services, and rethinking the way they are performed. Cost savings targets for this arena are between $17-20 million.
One idea already in the works proposes sending out student tuition refund checks electronically, instead of through the mail, saving the system thousands of dollars in postage.
The second arena of action, academic programs and services, will be handled on a slower-paced timetable, to ensure that the quality of education does not suffer. The proposal aims to save between $8 and $10 milion by eliminating or combining redundant or under-enrolled programs and courses,
This arena also addresses enrollment and graduation targets for each of the seven universities, suggesting that “continuous enrollment growth at every university is not a viable budgetary strategy” in a state with declining high school graduation rates, and a growing community college system.
“Given present economic realties, we are going to see big changes in business, government, higher education, and in the local school system,” said Campbell. Viewing the problem from a new angle is the best way to create rapid change, he explained.
The third arena of focus is that of the UMS’s structure and governance, a system, which has remained virtually unchanged in its 41 years. A task force on reorganization will consider the size and role of the Chancellor’s office, the structure, funding, and oversight of system-wide services, as well as collaboration among universities in an effort to trim another $3-5 million from the budget.
Changes in UMS’s structure could mean a very different public university system in coming years, but Pattenaude is careful to mention that “the underlying assumption is that UMS will continue to consist of seven institutions with specific missions, all operating within a single System.”