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The University of Maine is receiving $4.2 million more from the state of Maine for the upcoming fiscal year than they did last year.
Costs for the 2003 fiscal year have risen $10 million, however.
“The net affect is about a $5 million budget problem,” Mark Anderson, the interim chief financial officer for the university said recently.
Most of the problem, according to Anderson, is that healthcare insurance costs have risen an average of 10 percent each year nation-wide for the past three years. During that time, the University of Maine System, which works out contracts with each staff and faculty union in the system, had a favorable health care contract with Anthem Insurance. That contract is running out.
“We’ve had a really good bargain,” Anderson said. “But it is catching up with us all at once.”
The combination of the 44 percent increase in healthcare costs and an increase in compensation for staff, minus the expected $4.2 million increase in funding from the state, equals the $5 million shortfall. That means a four percent tuition increase for students and budget cuts that almost every facet of the university will feel.
“Technically they won’t be cuts, but they will feel like cuts,” Anderson said.
Anderson and Robert Kennedy, UMaine’s executive vice president and provost have been working to distribute the cuts.
“We’ve been careful laying out our budget to show that it is all in reallocation,” Kennedy said Thursday.
Being careful does not mean that the budget reductions will not be felt.
“We want to do this as painlessly as possible, but it won’t be painless,” Anderson said.
He said the challenge would be to make adjustments without stunting the growth in construction, staff, research and development and new programs that UMaine enjoyed during the late 1990s.
Reallocation – budget cuts distributed among different offices, colleges and departments – will come largely from research, Student Affairs, Finance and Administration, Advancement, the President’s Office and Financial Management.
Academic Affairs – the department that deals most directly with students – will be the hardest hit, losing almost $3.2 million from its budget. Kennedy said that while this is the largest cut, it is proportionately smaller than cuts from other programs. There are about 40 offices in the department that will share the cuts.
“We particularly tried to shield our recruitments and admissions area [of Academic Affairs],” Kennedy said.
He said recruitment and admissions is one of his prime concerns, and such measures to keep this office healthy could prevent the university from getting in an even bigger budget hole if applications and admissions go down.
Currently, administrators are making other budget adjustments because of just that, lower admissions than anticipated. Kennedy said that for the past several years, they have been planning on more students, especially out-of-state students who pay nearly three times more in tuition than in-state students, than have materialized. Continued overestimation will cause deeper revenue shortfalls in upcoming years.
“For the past several years we’ve been overestimating tuition,” he said. “The chickens have come home to roost.”
He said fewer students leaving their home states is a national trend based on an unstable economy and a pattern of nesting that began long before Sept. 11.
“With people wanting to be a little safer the students and their parents want to be a little closer to home,” he said.
This national trend is exacerbated in the state of Maine because the state tends to export its best students to out-of-state universities, according to Kennedy.
The only funding cut from the state will be in the area of research and development. While the state had originally planned on appropriating $2 million for UMS, the system will now only receive $1 million, with 80 percent going to UMaine. Kennedy said that means no new faculty or equipment will be added with that money, and there will be fewer grants, fewer construction projects and fewer work-study jobs in the coming year.
“That impacts the quality of graduate and undergraduate education,” he said.
Another area of the budget that will be adjusted is how energy costs will be distributed. For the 2002 fiscal year the university was taken by surprise by the sharp increase in energy costs. In order to cover the increase, the university took most of the money from Academic Affairs and research, Kennedy said.
“That’s the last area you want to be disproportionately affected,” he said. “Last year we did it because it was expedient. We had to do it.”
This year energy payments will be more equitable.
This budget will be going to individual offices, colleges and departments soon, and their individual budgets will have to be submitted by March 15. At that time, the budget-imposed hiring moratorium will be lifted.
Bangor Daily News