FROM: Interim President Joseph S. Wood
Newsletter #10: USM Plan for Sustainability Presented to Trustees
November 30, 2007
Dear Colleagues:
On Thursday, November 29, I met in Augusta with the Finance Committee of the University of Maine System Board of Trustees to review our plan for returning USM to fiscal sustainability.
I want to review that presentation with you.
Spending reductions are the only way to align the USM budget with our resources. Specifically, we must reduce the base operating budget by about 5 percent in total over the next few years to balance, the budget, restore reserves and invest in our strengths.
This action requires the following steps:
* Reduce the current budget by $2 million, which will leave an estimated year-end deficit come June 30 of $2.6 million.
* Reduce the FY 2009 budget (July 1, 2008 through June 30, 2009) by another $2 million, which will leave an estimated year-end deficit of $600,000.
* Reduce the FY 2010 budget (July 1, 2009 through June 30, 2010) by another $2 million, which will allow us to begin repayments to replenish reserves at the System and campus levels. Those repayments will continue through fiscal year 2014.
During this process, we also must commit a percentage of our savings to investments in critical areas of need, especially recruitment, retention and marketing. Those three areas are integrally linked and critically important if we are to maintain and continue to build our full-time, undergraduate enrollment.
I can’t emphasize enough how important it is to reach the target of a $2 million reduction in our operating budget by June 30 of 2008. The only way to make that target is to focus on immediate cost savings through the freeze on hiring, equipment purchases and discretionary travel.
We will freeze and eliminate a total of 30 positions this year, for an estimated savings of $1.74 million. Bear in mind that not all of those savings will be available this year, because most of those positions will not be vacant for the full 12 months of the current fiscal year. We are, however, carrying forward $985,000 in savings from the 30 positions we eliminated between September of 2006 and June of 2007.
In addition to savings from the hiring freeze, we will, this year, eliminate $140,000 in equipment purchases, $60,000 in travel, and $60,000 in supplies and services. We will need to make similar reductions in future years.
Even as we focus on these short-term cuts, we have to tackle the longer-term work of identifying programmatic reorganizations, mergers, reductions and eliminations. This will be painful. As I told the Trustees, we will be forced to eliminate good things so that we can support those programs and services that are central to our mission.
I’ve said it before but it bears repeating: This work, as difficult as it is, will give us the flexibility we need to focus all resources on our core mission: highly engaged learning that transforms lives and communities.
To view a Power Point of my presentation to the Trustees see http://www.usm.maine.edu/mcr/update/0708/budget.ppt. You can read the financial projections spreadsheet at http://www.usm.maine.edu/mcr/update/0708/unres.xls.
MOVING FORWARD ON UNIVERSITY COMMONS
At the same meeting, the Trustees’ Executive Committee unanimously approved resolutions, which will ensure timely completion of University Commons.
I cannot emphasize strongly enough the point that this project, which will transform our Portland campus, strengthening the connection with the city and its region, has no impact on our current budget situation. Funding for the Commons, including land acquisition and construction, has been made possible by private donations and the recently approved higher education bond. General operating expenses from tuition revenues and the state appropriation are not funding construction. Operating expenses for these facilities are factored into our budget plans for future years. (A recap of University Commons is available at http://www.usm.maine.edu/capitalcampaign/about.html)
You probably have heard about a cost increase associated with The Wishcamper Center, the new home for the USM Muskie School and USM’s Osher Lifelong Learning Institute. That increase will be covered by existing construction-related funds. In early 2006, Trustees approved funding of $21 million for construction. Costs will exceed the $21 million budget by $525,000 (2.5 percent) because of required cleanup of contaminated soils, the extent of which went undetected during tests of the site. The Trustees’ Executive Committee granted permission on Thursday to cover this increase by using $525,000 from a surplus associated with the newly opened residence hall in Gorham, which came in under budget.
Trustees also unanimously passed resolutions clearing the way for the start of the first floor renovation of the Glickman Family Library and the expansion of the Osher Map Library. Key to the University Commons project is the reorientation of the Glickman Family Library entrance so that it faces campus, and expansion of the internationally renowned Osher Map Library. This expansion will provide USM students, K-12 students and the public with space in which to view, study and learn from the more than 100,000 ancient maps, globes and atlases in the collections.
Work will be completed on The Wishcamper Center in the summer of 2008. The Library phase will be completed the following year.
Completion of University Commons will symbolically announce that this university has an important role to play in the lives of our students and communities, and will help ensure that we have the physical capacity to better serve those students and the public.
Sincerely,
Joe
For more information, please click on http://www.usm.maine.edu/mcr/update This site includes the breakfast speech; the latest digest of ideas e-mailed to movingforward@usm.maine.edu; our work plan; and notes from the recent series of town meetings.
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