November 16, 2018
The Point Latest News | Poll Questions | Ranked-Choice Voting | Election 2018 | Snow

Crisis-worthy deficit or operating surplus? Getting the numbers right at USM

George Danby | BDN
George Danby | BDN

Trick or treat at the University of Southern Maine — retire or be fired. Nice. And perfectly in tune with the horror story about USM’s crashing enrollments and collapsing revenues the administration loves to tell. Like most fairy tales, this one’s the fabric of fevered imaginations.

The Maine Sunday Telegram wrote in a recent editorial, “The size of the reduction in personnel was surprising, and the rollout was hurt by some incorrect numbers produced by the administration. Interim President David Flanagan repeatedly said USM’s enrollment had declined by 30 percent over the last five years. The real number is closer to 15 percent.”

In similar fashion, the budget numbers hailed as crisis-worthy are as erroneous as the administration’s enrollment claims.

The system’s annual audited financial statements do not show actual revenues and expenses on a campus-by-campus basis. Instead, all we see in the audit are the aggregate results for the system as a whole. Fortunately for Maine residents, the system’s reporting to the federal government — using data available to the public in the Integrated Postsecondary Education Data System, or IPEDS — allows us to correct Bangor’s story of poverty, imminent budgetary disaster and looming insolvency.

Consider the oh-so-scary graph USM President David Flanagan has been flashing all over town. For fiscal year 2010, Flanagan’s chart shows $138.8 million in revenue and $137.7 million in expenses. Guess what?

The numbers USM reported to the federal government are significantly different. In FY 2010, revenues reported to the Department of Education were $191.2 million, while reported costs were $181.7 million. This accounting shows USM generated a $9.6 million surplus.

Flanagan’s budget crisis chart and USM’s federal reports for fiscal years 2011 and 2012 don’t match up either.

Where Flanagan’s chart shows $143.4 million in revenue and $138.7 million in costs for fiscal year 2011, USM actually reported $194.8 million in revenues and $183.9 million in costs. That year, USM’s surplus exceeded $10 million. Then, in fiscal year 2012, when Flanagan’s numbers were $144.9 million in revenue and $141.3 in costs, the actual numbers reported to the federal government were $184.6 million for revenue and $181.7 million in costs. That’s a $3 million surplus. For fiscal year 2013, revenues exceeded expenses by $2.8 million.

In just those four years, USM was plenty healthy, generating a cumulative surplus of $26.8 million. USM generated that surplus even though enrollment fell and tuition was frozen. Is your head ready to explode yet?

The reports to the federal government — recorded in IPEDS — simply do not square with the numbers University of Maine System administrators toss around.

Grab a seat before you fall down.

In fiscal year 2010, the UMS surplus was $27.3 million; in FY 2011, it was $39 million; and in FY 2012, the surplus was $8.3 million. Grand total: $75 million. That’s a fiscal crisis every public official would love to have.

In each of those years, system officials screamed “fiscal crisis. Gotta cut campus budgets.” In reality, they — but not the campuses where the actual teaching takes place — had resources out the yin-yang.

The “fiscal crisis” version of the UMS accounting simply fails to include all of the system’s reserves. It is only by that arbitrary and less-than-transparent move the system — and by extension the component campuses — is able to turn what is really a surplus into a deficit.

Year after year, UMS trots out budgets that fail to reveal their true reserve position. There is only one reason to do that: They want their budgets to scare the public into believing their draconian policies of cutting public higher education are credible.

But the full budgetary picture contradicts their group-think inspired hallucination. It is only because the system’s financial officers don’t include all revenue — and, hence, all reserves — in their budgets that they can assert system expenses exceed system revenues. Include all revenue in the budgetary picture and poof! Think graveyard on a full-moon night: deficits vanish, surpluses materialize. Woo, woo, woo.

Hey, System. Your fright mask’s slipping.

Trick or treat.

Susan Feiner is a professor of economics and women and gender studies at the University of Southern Maine.


Have feedback? Want to know more? Send us ideas for follow-up stories.

You may also like