From: Office of Human Resources <firstname.lastname@example.org>
Date: Fri, Feb 21, 2014 at 2:27 PM
Subject: President’s Letter to UMaine Community
February 21, 2014
Dear Friends and Colleagues in the UMaine Community:
Facing uncertain times in 1941, Winston Churchill addressed students, faculty and staff at the Harrow School, his boyhood alma mater. As I am writing to provide you with an update and context for the upcoming months of difficult budget decisions, I thought his words would be particularly relevant:
“… this is the lesson: never give in, never give in, never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense …”
The relevance of those words is particularly applicable as we continue to implement the principles of the Blue Sky Plan as an effective modelto maintain academic and research excellence within a context of financial sustainability despite long term, external financial influences that continue to challenge us. As many of you are aware, we are facing some complex issues related to our budget this coming year, FY 15. Our clear goal over the next two months is to bridge the immediate FY 15 budget “structural gap” and then, using Blue Sky thinking, aggressively and strategically, address FY 16–FY 19 longer-term issues. That thinking can preserve the value and educational quality characteristic of UMaine.
Based upon recent questions and comments that we have heard from the UMaine Community, the following information is offered in the hopes of providing clarity, context — and encouragement.
I do not understand how the financial “structural gap” could be so large after all we have done with the Blue Sky Plan?
The “structural gap” refers to the lack of sufficient revenues to balance our university expenses at UMaine and throughout the University of Maine System. The major reasons for this gap include:
- For the past three years, the State of Maine has held appropriations to the University of Maine System flat or with small net reductions,
- The University of Maine System Board of Trustees, with a focus on student affordability, froze tuition and fee revenue for in-state undergraduate students from FY 13 through FY 15,
- Past declines in enrollment at UMaine prior to 2012, catalyzed by the declining high school demographic, resulted in significant revenue loss,
- The recent results of collective bargaining have increased compensation. Although the final contract was larger than was budgeted, we support these outcomes that increase salary and streamline benefits in support of a healthier workforce. However, since about 70% of our Education and General (E&G) budget dedicated to our workforce is traditionally supported primarily by tuition and appropriations, the size of the structural gap increased significantly.
Therefore, the collective impact of the above causes, coupled with FY 15 campus priority needs, resulted in an initial structural gap for FY 15 of approximately $24M (including new compensation).
The Blue Sky Plan was created as a growth model to develop new financial resources in support of academic and research excellence, and to address the evolving structural gap. Going into FY 15, primarily due to the successes with enrollment management, we increased revenues significantly for the first time in a number of years at UMaine by about $11M from gross tuition revenue. This revenue growth has enabled us to address about 45% the total structural gap above. Without the success of the Blue Sky Financial Model, UMaine would be facing a fiscal crisis. After accounting for this increased revenue and existing budgeted compensation (about $2.5M), our current structural gap for FY 15 is approximately $11M. This represents approximately 4.8% of our annual budget.
Comparatively, the composite structural gap for the entire University of Maine System is 7% ($36M) of the total UMS budget, with the individual campus budget shortfalls ranging from 4.6%–15.1% of their individual budgets.
How will we address the $11M structural gap?
Janet Waldron, UMaine Senior Vice President for Administration and Finance, working closely with Provost Hecker and the UMaine leadership team, continues to ably lead our campus discussions to address the shortfall. Priority FY 15 needs were established and include increased levels of compensation, previously committed support for faculty and staff positions across the campus, student financial aid, System costs/reinvestments, and ongoing needs, such as graduate student stipends, enrollment management support, maintaining library acquisitions, fuel and electricity needs, essential facility maintenance and repair, and student affairs support. The total for these priority needs, after accounting for new revenue and previously budgeted compensation, comprises the current $11M structural gap.
Current budget meetings are under way with all areas of the campus to understand needs and the implications of potential reductions. Senior Vice President Waldron, Provost Hecker and I will be visiting each of the colleges in the next several weeks to discuss the basis and framework of our priority needs, strategies and options prior to the Cabinet working with the System Senior Staff to finalize the FY 15 budget. The final budget will be presented to the Board of Trustees in May.
The majority of cost savings for FY 15 will come from not filling vacant faculty and staff positions, and downsizing or eliminating a number of administrative programs while maintaining a commitment to preserving those positions and programs essential to and serving our students. Our plan is to develop a short-term hiring plan using fixed-length and adjunct positions to sustain us through FY 15. However, the long-term goal will be to look toward FY 16–FY 19 to ultimately eliminate the structural gap by a combined strategy of strategic workforce alignment (i.e., strategic faculty hiring to align with program planning and fiscal capacity), improved cost efficiencies, defined program realignments or reductions, aligning enrollment with program capacity, and new revenues from enhanced student recruitment and retention, sales and services, philanthropy, and, hopefully, strategic tuition increases and/or System investments.
Why is the UMaine Administration not working harder on behalf of the UMaine faculty, staff and students in response to University of Maine System and Board of Trustees (BOT) goals and actions that affect the UMaine budget?
Each member of the UMaine Cabinet works closely with the Chancellor, University of Maine System Senior Staff and Board of Trustees, as well as peers at other UMS campuses. The structural gap is a System-wide challenge that requires a collaborative and supportive effort. Significant reduction of the structural gap will be a long-term process through FY 19 and will require a concerted effort throughout the System.
The UMaine Administration has repeatedly and assertively identified the needs of UMaine as the System Flagship in diverse forums. The Chancellor, UMS Senior Staff, and the Board of Trustees have repeatedly affirmed the Flagship role of UMaine and continue to work through a number of budget scenarios and use of current cost-saving strategies to balance the budget demands of the seven campuses. It is anticipated that the BOT and System leadership will partner and support the Blue Sky Plan in addressing UMaine’s FY 15 structural gap, as well as support the strategic role of UMaine through FY16–FY 19 planning.
What is the purpose of discussions like the Blue Sky Signature Academic and Research Programs? If there is no new money involved, is not this just an exercise in futility and a waste of time?
The Signature Programs Blue Sky Initiative was designed to better define UMaine’s programs of excellence. Under Provost Hecker’s leadership, the campus discussion inviting faculty and staff participation has broadened to include categories of signature, emerging and core/foundational programs. This conversation is intended not to simply identify new programs for potential investment, but to assist the campus in defining the most appropriate academic and research program portfolio for the University of Maine going forward. In light of the commitment to eliminating the structural gap, a focused assessment of our program portfolio through the signature program initiative is essential to matching our fiscal capacity to our educational and research offerings, and to ensuring we continue to provide quality education to our students and conduct nationally recognized and impactful research.
A closing thought …
Churchill’s words provide important encouragement to all of us who feel the frustration of another budget reduction challenge. It is not fair. How can we do our jobs? How can we be student-centered and community-engaged when we continue to reduce our capacity?
The fact is, we must never give in to the discouragement and frustration that this long-term challenge inevitably causes. We must continue to use what has become a positive experience of Blue Sky thinking to reverse this financial trend — and maintain the patience and perseverance to work through real change. We must continue to think and plan differently to achieve greater effectiveness and service in our mission as we have done so far ( http://umaine.edu/president/umaine-2013-annual-report/).
We will no doubt experience more challenges and change as a campus through FY 19, but it will be what we make it ensuring that UMaine remains a place of discovery and quality education for students and faculty. I can only encourage us to remain positive and thoughtful and civil to each other as we progress through these challenges. After all, that is the essence of Blue Sky thinking.
With best regards,
Paul W. Ferguson