June 22, 2018
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Why USM’s budget crunch is more complicated than you might think

Courtesy of USM
Courtesy of USM
This University of Southern Maine aerial photograph depicts the school's Gorham campus. USM also has campuses in Portland and Lewiston.
By Matthew Stone, BDN Staff

The University of Southern Maine sent layoff notices to 12 members of its faculty earlier this year as part of the 9,000-student university’s plan to trim $14 million from its budget for the 2014-15 academic year. But President Theodora Kalikow later reversed course after an outcry from students and professors.

Another part of the cost-cutting plan involved phasing out four academic programs, but USM ultimately preserved one of them: recreation and leisure studies.

The University of Maine System later shored up half of USM’s budget gap with a contribution from its rainy day fund. But the reality that USM isn’t yet out of the financial woods struck again Friday, June 13.

That’s when Kalikow finalized USM’s budget reductions for the coming year — which involved a number of faculty retirements, one staff layoff and the elimination of three programs. She also warned of more cuts to be made in the coming year.

Shrinking budget, shrinking potential?

Over the past decade, the University of Maine System has experienced consistent enrollment declines. But the decline has been more pronounced at USM.

Between 2003 and 2013, USM’s enrollment slipped 18.9 percent — to 8,923 in the fall of 2013 from 11,007 in 2003 — compared with a 12 percent slide across the seven-university system.

As USM pursues another round of cuts, administrators say the ultimate goal is to position USM for a financially sustainable, high-quality future. Through budget cuts, though, is the university hurting its potential to attract more students and grow?

The demand is there for classes in social work and other departments, USM economic professor Susan Feiner argued this week in a BDN OpEd. But the university’s cuts have affected USM departments’ ability to hire enough instructors to meet demand. With limited capacity, she said, students go elsewhere for post-secondary training, and USM misses out on an opportunity for a net revenue gain.

Meaghan LaSala, a USM senior who has been active in student protests against the university’s budget cuts, said reductions to the university’s budgets for hiring part-time, adjunct instructors limits the range of classes students can take and when they can take them — potentially keeping students away.

“On the ground, it does not feel or look like we’re positioning ourselves for the long term,” she said.

But USM spends $4.7 million a year on part-time instructors, 10 percent of the instructional budget, said USM spokesman Bob Caswell. The university also offers 60 percent of its courses between 10 a.m. and 2 p.m.

There’s a risk that cuts to the part-time budget can suppress enrollment, Caswell said.

“But if it’s done strategically, you can do so with the minimum harm to the smallest number of students,” he added.

USM is starting to rework class schedules so they’re spread more evenly throughout the day and so students can plan out courses for a full academic year, rather than semester by semester, Caswell said.

Rising expenses, declining revenues

A confluence of factors in recent decades have made for tricky budget-balancing at the University of Maine System.

One is a state government appropriation that has come to represent a progressively smaller portion of the university system budget. State appropriations represented 44 percent of the seven universities’ total budget in 1991, while tuition and student fees accounted for 18.4 percent. In 2013, the state share had dropped to 29 percent, while student charges accounted for 36 percent.

Since 2005, staffing has fallen nearly 10 percent; the system had 5,590 employees as of October 2013. The system lost 8.4 percent of its faculty members in that eight-year period and 39.5 percent of its administrators, while the ranks of salaried staff inched up about 2 percent.

The system also has pursued a variety of strategic initiatives in an effort to rein in expenses, realize efficiencies throughout the university system and help each of the seven campuses develop a niche.

Still, according to a financial analysis the university system released last fall, Maine’s universities are on track to post an $87 million deficit in the 2018-19 academic year if nothing about their operations changes. USM’s share of that deficit would be $28.6 million; the University of Maine’s would be $36.4 million.

In stark terms, the structural gap would disappear if state funding rose 9.1 percent annually through 2018-19, if the system raised tuition 8.8 percent each year, or if enrollment grew 4.7 percent annually. On the expense side, the university system could eliminate 14 percent of its workforce — the equivalent of 686 full-time employees — in order to close the gap.

None of those scenarios on its own is a likely one, which brings up a core dilemma Maine’s universities have to address.

The core question

“You have to have a strong sense of what you’re there for. What is the real purpose of our institution?” said Peter Hoff, who served as president of the University of Maine from 1997 to 2004 and previously served as an administrator for university systems in Georgia and California. “Otherwise, all you’re having is silly conversations about what you’re doing.”

For much of the second half of the 20th century, public universities could sustain a wide range of academic departments, extensive research endeavors and a medical school.

But, “ever since the 1970s, universities have been fighting for students. It’s been a buyer’s market,” he said. “There are more seats in universities across the country available than there are students for them. The fact is, we overbuilt in the 1960s.”

Part of the recruiting pitch has been to tell high school students they’ll have more prosperous careers if they enroll. And that’s contributed to a perception that higher education is a private — rather than a public — good, Hoff said. That’s made it easier for policymakers to cut off state funding for public universities.

“Because we’ve gone out and sold college as something that will make money for you, we’ve painted ourselves into a corner,” Hoff said. “I think the model of university most faculty and students would like to have, I don’t think it’s sustainable.”

But it’s still desirable.

“A lot of what the student movement has been about is we need and have a right to a comprehensive university in the most prosperous and diverse area of the state,” said LaSala, the USM senior. “If we thought creatively about how money is being spent systemwide and, also, if there was more transparency and shared governance at USM, we could sustain the university as it is now.”

Metropolitan university

As USM attempts to balance its budget and prepares to search for a new president, it has started to hone a strategic focus aimed at transforming USM into a “metropolitan university.”

“I’m among those who believe USM needs a new model; we’re on a financially unsustainable path, and we need a growth strategy around which faculty and students can coalesce,” said Richard Barringer, an emeritus professor in USM’s Muskie School of Public Service who is leading USM’s Metropolitan University Steering Group.

In Portland, competition in the higher education market has intensified in recent years as private institutions such as Husson University, the University of New England, Southern New Hampshire University and Kaplan University have expanded aggressively. Maine’s community colleges also have grown rapidly.

Given the competition and a difficult financial situation, USM needs “a clear, collegial identity,” Barringer said. As a metropolitan university, USM would elevate the importance of community engagement in every academic department and emphasize it when hiring faculty and administrators. (USM’s metropolitan university steering committee will contribute to the criteria for USM’s next president.)

It also is an identity dozens of other universities across the country have pursued, from Rutgers University in New Jersey to Westfield State University in western Massachusetts.

“It really has to be a growth strategy, and, in fact, all of the places that we looked at — Portland State University [in Oregon], Rutgers — have all used this as a foundation for a growth strategy when they were in economic distress.”

Matthew Stone is BDN opinion page editor.


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