FROM: Interim President Joseph S. Wood
Newsletter #16: Trustees Report and Cutting and Fixing the 2008-2009 Budget
March 11, 2008
Dear Colleagues:
There were a number of substantive USM issues discussed with the Trustees at a joint meeting of the Finance and Audit Committees on March 7, and during the full board meeting of March 9-10. Before sharing with you issues that speak to where this university is heading, I want to address an issue related to where we've been.
BUDGETING RECOMMENDATIONS
The Trustees commissioned PricewaterhouseCoopers (PwC) to develop a set of recommendations on USM's budgeting and financial reporting systems. PwC raised a number of concerns, among them inadequate budgeting processes that allowed departments to start the fiscal year with deficits not reflected in the overall university budget.
The clear goal of the PwC report, however, was not to assign blame but to improve and strengthen budgeting processes at USM and throughout the University System. A number of the report's recommendations have been, or are being, implemented, among them monthly actual-to-budget reports from all departments, and elimination of year-to-year deficits at the departmental and school/college levels. The System also is sharing the results with all campuses and has asked PwC to conduct similar studies on each campus.
The PwC report is part of a System-wide effort to bring greater transparency and accountability to university budgeting. In the end, this report will help us make better decisions going forward.
FY 2009
Looking ahead to fiscal year 2009 (July 1, 2008 through June 30, 2009), I reported to Trustees that we now are moving decisively and more aggressively to identify a minimum of $6 million in cuts.
That minimum $6 million target is necessary to meet expected cost increases (compensation, energy) and to help us get painful decisions behind us as soon as possible. We then can make significant progress on balancing revenues with expenditures; making reallocations to fix year-to-year deficits in specific budget lines, as recommended in the PwC report; invest in recruitment, marketing and related areas to support growth that will help protect us from future shortfalls; and move on.
For the current fiscal year of 2008, we have achieved the necessary cuts to meet the plan we proposed to the Board of Trustees in January. That plan called for us to cut a minimum of $2 million in fiscal years 2008 through 2010, followed by annual payments through 2014 to replenish the $8.2 million in reserves used to cover the deficits. We reported to the Board that the FY 2008 deficit may be $3.1 million, higher than the $2.6 million estimated last November. Summer session revenues and expenses in May and June will have much to do with determining the final figure. A number of scheduling improvements were implemented to contain costs while offering the courses students want and need. Since summer registrations just began yesterday, it is too early to estimate revenues.
You no doubt have noticed that I have defined the fiscal year 2009 cut of $6 million as a minimum target. That's because it does NOT include the very real possibility of a $7 million decrease in the University System's state appropriation. That would increase the size our cut.
By early April, we will have evaluated budget proposals from deans and vice presidents. I then will outline the details of cuts.
This approach is painful but it is the most expedient way to return us to fiscal sustainability so that we can devote all our attention to USM’s core mission: Engaged learning that transforms lives and communities.
AN UPDATE FOR TRUSTEES
At an earlier session, I told Trustees that we cannot lose sight of the fact that the institution is intrinsically sound, and shared with them the source of USM’s strength.
That strength begins with the remarkable changing profile of the USM student. Despite overall headcount decline -- due to a significant drop in part-time students -- USM has more full-time students than ever in its past. And, of course, USM has more students living in residence halls than it has ever had in its history.
The point is that while USM and other institutions are losing part-time students, more full-time students are coming to USM, a fact that is good for USM, good for the University System, and good for Maine.
I pointed out that much of our work is not funded by the state but by students paying tuition and fees, and by a remarkable increase in private support.
Our curriculum also is evolving to meet the needs of our students. I highlighted the faculty-led General Education reform work over the last half decade, which has produced a model garnering national attention for the way it integrates interdisciplinary courses through our student’s academic career.
I shared with Trustees results of a student-initiated program to voice concerns and offer advice on enhancing community on campus—Change ’08. I was reminded of how effectively USM’s faculty and staff provide engaged learning when, later that day, a student who attended wrote me the following:
"USM is unique in the sense that students are able to have a social connection with faculty and staff which other universities and colleges are not fortunate to have. I have also had the opportunity to be an intern at two different places in the community. I interned at Portland West and I am currently interning at Maine Pretrial Services. I was offered a job at Portland West as an ESL Assistant, which I did over the summer. I have also been offered a case-manager position at Maine Pretrial Services in Portland. USM has the partnerships and ability due to location to offer students some great internship opportunities. I am happy that I chose to go that avenue.
“As for the future, I have applied to Maine Law for the fall and I am hoping to practice Human Rights/Public Interest Law in Maine. Again, I want to say thank you for your time today and I have been very fortunate to extend my education at USM.”
Finally, I want to share with you how deeply our advocates care about and support this university. Bob Blackwood, a USM and Bowdoin alumnus, and chair of our Board of Visitors, submitted to Trustees’ the Board of Visitors’ latest report, "A Southern Maine Imperative II."
The state of Maine, Bob told trustees, must step up its commitment to provide citizens with opportunities to pursue a university education. "Nowhere does the investment of resources provide a greater return than at USM," he said, "where the majority of Maine citizens can realize their aspirations."
The Board of Visitors' report is available online at http://usm.maine.edu/bov/ It offers powerful testimony as to why we must do all we can to meet our short-term budgetary challenges and focus all our energies on USM’s core mission.
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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