Why the UMaine System is cutting so much

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AUGUSTA — The ongoing program cuts at the University of Southern Maine, the latest round of which was announced Monday, is part of a much larger initiative by the University of Maine System to eliminate some $90 million in spending it can’t afford over the next five years.

UMS Chancellor James Page told the Bangor Daily News last week that no one within the system wants to see any programs or staff cut but that it is necessary, as the state’s public higher education system struggles with a shrinking population of college-aged Mainers and transitioning to an institution aimed creating a workforce for the jobs of the future.

The road between here and there will be rocky and rife with controversy, which student and faculty uprisings at USM already have demonstrated, but Page said that conflict is a necessary byproduct a streamlining process that cannot be avoided.

“What we need to have is a larger statewide discussion on the value of higher education, especially in tough economic times,” Page said. “The presidents and the board of trustees and I have been clear that we’re going to have to make some changes. It’s important for us to move forward toward explaining the whats and whys.”

The causes

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— The overall university system is on track to rack up a $90 million deficit by 2019, based on an annual budget that is currently $529 million. That figure includes contracted increases in salary, rising health care costs and freezes on tuition and state appropriations. Even if some of those factors were eased, the system would still face a structural gap of some $60 million.

— Higher education institutions across the country are struggling. As the cost of education rises, private donations erode and costs increase, there are ongoing cuts at private and public institutions.

— Enrollment has been decreasing since 2007. Maine has the oldest median age in the nation. This fact is causing problems across a number of socio-economic indicators, and higher education is no exception.

— Tuition is frozen. The system is in its third year of holding tuition rates static, which is part of an effort to keep the system priced competitively and at a level Maine families can afford.

— State appropriations to the system have been flat for two years. Lean economic times mean appropriations for the university have been flat, at about $176.2 million, since 2012.

— Facilities are aging. The university system, not unlike most of Maine’s towns and cities, faces a mounting infrastructure maintenance backlog that Page estimates to be more than $430 million. That covers about one-third of the system’s budget.

What’s already been done

— The system has already dug into its reserves. Trustees approved a budget that includes using $11.4 million from the system’s reserves of $15 million. More than half that sum was designed for USM.

— About 150 positions have been eliminated throughout the system. That number includes only the positions identified in the current budget. Hundreds more have been culled over the past decade because of smaller-scale cuts and attrition.

— The fat has been trimmed. The system has been on an austerity kick for several years, cutting budgets and consolidating services in an effort to save money. Information technology and procurement are two areas where savings have been realized. Similar efforts are underway in human resources academics, facilities and finance operations.

Short-term solutions

— The system is asking for more money from the state. After two years of flat appropriations, the university is asking for an increase. One of the biggest jobs for the incoming Legislature will be enacting a biennial budget bill that includes a request, the first time in three years, for an increase for the universities. Specifically, the system is seeking 3.4 percent and 3.8 percent increases for fiscal years 2016 and 2017, respectively. That would increase the state’s annual allocation to $189 million in the second year of the biennium.

— The system is also asking the state to bolster some individual programs. The system is asking the state to kick in about $10.6 million over the next two years for the Maine Economic Improvement Fund, to bring its annual budget to $20 million; and an increase of about $90,000 over two years for the Women, Work and Community program to cover increased personnel costs.

— A proposal is in place to deal with infrastructure maintenance, but it won’t be cheap. For several years, the state has been making payments on a research and development bond for the system, which recently has been paid off. The system is requesting the state continue appropriating $2.5 million a year for 10 years — equal to the annual R&D bond payments — which would be used to pay off a revenue bond of $21 million plus around $4 million in interest.

“There’s no magic bullet that’s going to deliver $90 million over the next five years,” Page said. “The solution is going to lie in a number of initiatives, some of them modest and some of them large. At the moment, what’s out there does not paint the full picture of how we’ll close that gap.”

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