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Maine Universities Reduce Structural Gap by $37 Million

For Immediate Release
September 21, 2015

Maine Universities Reduce Structural Gap by $37 Million

 One-Year, 41% Reduction in FY 2020 Structural Gap Attributed to Savings Initiatives,
Improved Out-of-State Enrollment and an Increase in State Aid for Public Higher Education

PRESQUE ISLE, MAINE – University of Maine System Chief Financial Officer Ryan Low provided the Board of Trustees with an updated Multi-Year Financial Projection (FY 16-FY20) that show that Maine’s universities have reduced the FY 2020 projected structural gap by $37 million from the $89.6 million figure established in the November 2014 multi-year projection.   The one-year, 41% reduction in the projected 2020 structural gap is largely attributed to savings achieved in the FY 2016 budget, increases in Out-of-State enrollment and an in increase in State Aid for Public Higher Education.

Improving year-to-year financial stability of Maine’s public universities has been a top priority for the Board of Trustees and university leaders because of the campus uncertainty that comes with having to cut budgets on an annual basis.  In 2014 the Board of Trustees established a set of strategic outcomes that includes the goal to “reduce the current structural gap with year-over-year gap reduction that eliminates in entirely through a combination of expense reductions and revenue growth by FY 19” (Financial Sustainability Target 1).

Maine’s universities are facing unprecedented fiscal, demographic and competitive challenges resulting in a need for new, cooperative approach to delivering university programs and services to students and the people of Maine.   The One University Initiative, unveiled by University of Maine System Chancellor James Page earlier in the year, seeks to align administrative functions and improve academic coordination and student access across the state while maintaining the existing seven mission-differentiated campuses.

Future financial performance and enrollment cannot be presented with certainty.   The multi-year report and the update presented today are planning tools that university leaders and stakeholders use to establish a framework for discussions and decision making.

The $37 million reduction in the structural gap point to the progress made to date in the current FY 2016 Budget as Maine Universities achieve campus-levels savings, realize administrative efficiencies and as new revenues, including increases in out-of-state enrollment and increased support proposed by the Governor and approved by the Legislature., are realized.   Ongoing savings and revenue enhancements realized in FY 2016 flow through the out years of the projections.  Highlights from CFO Low’s report include:

  • $21.4 million savings tied to FY 2016 compensation / elimination of 194 positions;
  • $5.5 million in campus-based savings initiatives;
  • $636,000 in additional student revenue;
  • $2.9 million in additional State Appropriations; and
  • Approximately $5 million in statewide administrative savings.

The update presented today by CFO Low also included projections that assume out year increases in appropriations and tuition tied to the Consumer Price Index.  These modest revenue enhancements reduce the $89.6 FY 2020 structural gap projected in November of 2014 by 75% to $22.4 million (version 2 slide).

“We are achieving savings and finding new revenues as we continue to make strong progress toward our goal of uniting Maine’s seven mission-differentiated campuses as One University,” said UMS Board Chair Sam Collins.  “The results of our hard work strengthens our resolve to ensure that Maine’s universities remain pathways to opportunities and advancement for our students and the people of Maine.”

“We are pleased with the budgetary progress we are making but still have a long way to go,” said Chancellor James Page.  “I want to thank our campus leaders and community members for their work and express our collective appreciation to the Governor and the Legislature for increasing state support for our institutions in challenging fiscal times.”