UMS eyes financial challenges

Posted Dec. 17, 2008, at 9:23 p.m.

BANGOR, Maine — Though the University of Maine System and its campuses have taken steps to curb costs and boost revenues, the global economic crisis that is coming to roost in Maine means major changes must still occur to ensure the system’s long-term sustainability.

In a memo issued Wednesday to faculty and staff, Chancellor Richard Pattenaude cited three key reasons for the system’s predicament:

• Dramatic increases in the cost of energy and health insurance, two large expenses over which the system has no control.

• A decline in the number of high school students, a trend projected to continue for the next several that could affect tuition revenues.

System spokesman John Diamond noted that the collapse of global markets also has cut into income from investments and may further eat away at tuition as students may take fewer courses or defer school until the economy improves.

• Economic struggles at the state level that have hindered its ability to increase financial support for higher education.

Pattenaude noted that while developing this year’s budget, which took effect July 1, he and campus presidents cut $19.1 million systemwide, reducing operating costs and freezing pay for 59 senior administrators.

“Everyone was affected at all levels of our system,” he said.

Despite that, the system had to increase tuition and fees “to ensure that our students received the quality education they expect and deserve.”

More recently, the system was asked to dig deeper.

Last month, facing a budget shortfall of $100 million to $150 million, Gov. John Baldacci ordered nearly $80 million in curtailments to state programs, including an $8.3 million cut in UMS’s funding.

Pattenaude said even those steps might not be enough.

“The trustees, presidents and I believe that in light of these factors, our current manner of operation is not financially sustainable over the long run,” Pattenaude wrote in Wednesday’s memo.

“The need for transformational change will be a major topic of the [Jan. 11-12] board of trustees meeting. The focus will be on the conditions we face and then how we might move forward,” the chancellor said.

Meanwhile, several UMS campuses are trying to reduce expenses without cutting staff.

The system’s flagship campus in Orono, which last month was asked to trim $5.4 million from this year’s operating budget, has imposed a variety of measures but is not looking at layoffs, according to spokesman Joe Carr.

Those steps include “a stringent hiring process” for any vacant positions, limits on controllable costs such as for overtime, travel, meals and equipment purchases, and energy conservation measures, Carr said.

In a step unrelated to the governor’s November mandate, the campus privatized its student health center, eliminating the equivalent of about 20 fulltime jobs. The move is expected to save about $1.4 million a year.

At the University of Maine at Machias, there likely will be personnel changes in coming years, spokesman Erik Smith said. Smith said Wednesday that UM Machias cut 1½ positions this year at its outreach center in Calais and is working on a financial plan for the next four years.

But it’s too early to tell what that plan might mean for employees, he said. The school hopes to have a better idea about its future staffing levels by February.

“It’s safe to assume there will be some changes in personnel,” Smith said.

Spokespeople at both the University of Maine at Presque Isle and the University of Maine at Fort Kent said Wednesday that university officials at their schools were looking at ways to cut expenses but that no layoffs are expected at this time.

BDN reporters Jen Lynds in Houlton and Bill Trotter in Ellsworth contributed to this report.

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