ࡱ> @B;<=>?7 bjbjUU &7|7|lzzzzzzz8LhT2\rrrMMM$F f׀zMMMMM׀{zzrr{{{Mjzrzr{M{Z{xzzr +xBi{H02{RR{zzzzMARYLAND SENATE BUDGET AND TAXATION SUBCOMMITTEE ON EDUCATION, BUSINESS AND ADMINISTRATION UNIVERSITY SYSTEM OF MARYLAND TESTIMONY OF USM CHANCELLOR WILLIAM E. KIRWAN THURSDAY, FEBRUARY 12, 2009 Chairman Kasemeyer, Vice-Chairman Madaleno, and members of the Committee, thank you for the opportunity to testify on the Governors FY 2010 budget recommendations for the ĢƵ (USM). I want to begin by thanking Governor OMalley for his strong support for the USM. This has been a hallmark of his administration from day one and is once again reflected in this years budget request. I also want to sincerely thank youthe members of this committeefor your continuing support for higher education and, in particular, the ĢƵ. We at the USM greatly value the very productive relationship we have forged with the Legislature, especially with our key committees and subcommittees. Id like to dwell on this latter point for just a moment. Over the past several yearsworking with leaders in Annapoliswe have forged a true partnership, which is quite frankly the envy of universities around the nation. We have aligned OUR priorities with those of the state. We have kept faith with our most fundamental responsibility of high quality academic instruction and research programs, especially in areas that impact economic growth and meet workforce demands. We have made great progress on the challenges of access, success and affordability. And, through our E&E and climate change initiatives, we have gone to extraordinary lengths to reduce costs and consumption and streamline services, while maintainingand enhancingthe quality of our institutions and the environment . These are all areas you have stressed as important. We have heeded your call to action. After reviewing actions USM has taken in recent months impacting the FY 2009 budget and talking specifically about the Governors proposed FY 2010 budget, I would like to frame the rest of my testimony around these three shared priorities  EMBED PowerPoint.Slide.8  As we all know, we are in the midst of a once-in-a-century economic crisis. Certainly, Maryland has not been immune from the negative impacts of the economic upheaval being felt across the country and around the world. These times call for shared sacrifice and the USM has been prepared to step up, fully understanding that we must absorb our share of the pain. As you can see from this chart, the USM suffered significant FY 2009 budget cuts. We have worked hard to manage these budget reductions, but some level of negative impact is unavoidable. In response to the cuts, we implemented systemwide hiring controls, allowing exceptions primarily to accommodate enrollment growth and sustain critical functions. We reduced funds for facility renewal projects, delaying some much-needed and long-overdue renovation and maintenance projects. We reduced student services and academic program support. We drew upon our fund balance, but not to the extent that our bond rating will be threatened. And we joined with the rest of state government in implementing furloughs. All but the lowest paid employees throughout the USM are participating, with highest paid employees taking as many as six furlough days. I am pleased to note that the USMs furlough approach was worked out in agreement with union leaders. I see these furloughs as a micro example of our macro approach of shared sacrifice. This ethic of shared sacrificeon every levelcontinues as we approach the FY 2010 budget.  EMBED PowerPoint.Slide.8 The FY 2010 state funding level proposed by the Governor essentially flat-funds the USM at a slightly lower level compared to FY 2009. As this chart indicates, under normal circumstances, USM would be seeking a relatively modest increase to cover our current services level. Clearly, these are anything but normal circumstances and we fully recognize our obligation to do our part to make due with less. Obviously, this entails some significant sacrifices. While we will not be able to expand enrollment as rapidly as we have in recent years, we nevertheless remain committed to maintaining enrollment levels in FY 10. In fact, through growth at our two regional centersthe Universities at Shady Grove (USG) and the ĢƵ at Hagerstown (USMH)and at the University of Maryland University College (UMUC) and the University of Baltimore (UB), we will add more than 500 additional students to our headcount of 144,000. In addition, other USM institutions will make every effort to expand enrollment to the extent it is financially possible. Again, we are doing this with NO additional targeted enrollment funding. We will also not be able to implement some key programmatic enhancements at our institutions. As a small sample, let me mention that the University of Maryland, College Park (UMCP) will not be able to fund anticipated enhancements to its highly regarded Nano-Bio program. The University of Maryland, Baltimore County (UMBC) will have to put on hold plans to bring its engineering program to Shady Grove. And while we will do all we can within our means to maximize priority areas such as Science, Technology, Engineering, and Math (STEM), our goal of tripling the output of STEM educators will be negatively impacted. In each case, we remain committed to these enhancements and will do what we can even without targeted funding, butfor right nowsome of these vital improvements will have to wait. And, of course, there will be no pay increases for USM faculty and staff, as is the case with all state employees. Obviously, given the economic circumstances, USM is extremely pleased with its proposed budget. We are both grateful for this level of support, and thankful that the administration and this legislature recognize the vital importance of higher education The fact of the matter is, this protection of and support for higher education is vital. Andas I mentionedit is by focusing on our shared priorities that we will overcome the current challenges and position Maryland for progress and prosperity when the economy rebounds. Shared Priority 1: Spurring Economic Growth and Meeting Workforce Demands The linkage between higher education and economic prosperity has been understood for years, and the recently-completed work of the Commission to Develop a Maryland Model for Funding Higher Educationor the Bohanan Commissiondrove the point home further still.  EMBED PowerPoint.Slide.8  Now, $750 million is a significant amount of money, especially in these financial times. And I am under no illusion that the next year or two will bring anything more than a modest down payment. But, this is a plan for the long haul, not next year. Its recommendations advocate new higher education policy directions and a laser-like focus on higher educations place in the global knowledge economy. I refer to the Bohanan report for two reasons: First, as a nation, we must recognize the tremendous importance of higher education in terms of maintaining Americas economic leadership. Second, as a state, Maryland is in a more enviable position that most other states. It has been the investments YOU have made in education these last several years that is the source of our strength . . . especially in the new economy.  EMBED PowerPoint.Slide.8  It is axiomatic that the states economy and job growth are linked directly to USMs capacity to meet enrollment demand and to graduate students prepared for the workforce. It is just as self-evident that it is job growth that will pull us out of this recession. That is why the USM has heeded the call of this legislature to make economic competitiveness, job creation, and workforce development top priorities, especially in the vital new economy areas of STEM. As I noted earlier, funding limitations will necessitate a slow-down with some of our more aggressive STEM initiatives, but we are committed to taking whatever action we can to advance this cause, no matter what the circumstances.  EMBED PowerPoint.Slide.8  In the 2008 State New Economy Index, released last fall by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation, Maryland ranks in the top five states in its progress advancing toward the New Economy. That is, in innovation, creativity and technology. The USM is a prime contributormaybe even THE prime contributorin this success. Now more that ever, higher education and the USM are a vital part of the solution to this economic crisis. Shared Priority 2: Ensuring Access, Success and Affordability One of the most impressive aspects of the support USM has received in recent years is the overwhelmingly positive effect it has had on access and affordability. While our budget situation will certainly affect our ability to increase enrollment in the short term, it is important to consider the recent trend. In the fall of 2005, USM headcount stood at 128,425. This past fall it had risen to 143,457. That is more than 15,000 additional students in just four years. Looking at it another way, we have added a campus the size of UMBC over the past four years. THAT is what we mean by access to opportunity. And, as you all know very well, over those same four years, tuition for in-state, undergraduate students has been flat. The Governors budget enables USM toonce againhold tuition flat for in-state, full-time undergraduates. By doing so, we help maintain affordability for families.  EMBED PowerPoint.Slide.8  With an unprecedented 4th consecutive year with a tuition freeze, Maryland would move from 6th to 18th in terms of national tuition rates by state. The four-year effect of the freeze on tuition is that students will pay about $1000 per year less than they would have paid if tuition had accelerated at a modest pace of 4.5 percent annually. And in this time of economic turmoilwhen jobs are being cut, salaries reduced, home equity and savings slashed, services curtailed, and families squeezedby holding tuition flat we areYOU AREproviding direct and seriously needed relief to the middle class. This is relief that other states simply are not providing. Supporting our budget provides immediate relief to the hard-pressed middle class families of Maryland. Andat the same timeby keeping tuition affordable today, we are building the future workforce we will need tomorrow, meeting vital goals for the state. We are also attacking the affordability issue through financial aid policies and practices. In just one yearFY 2006 to FY 2007USM increased its institutional student financial aid awarded to undergraduates by 15 percent. During that same period, USM increased its institutional, need-based aid for undergraduates by 40 percent. More than 50 percent of the undergraduates enrolled at USM institutions receive some type of financial aid. As I discussed with you last year, we have launched a major system-wide initiative, called Closing the Achievement Gap, to raise the graduation rates for all students and equalize the rates between low-income and minority students and the general student population. Since this issue comes up in my response to the analysts issues, Ill defer my comments on the status of this initiative until later. Shared Priority 3: Streamlining Services and Reducing Consumption, While Maintainingand Enhancingthe Quality of Our Institutions and the Environment USM continues its Effectiveness and Efficiency (E&E) initiative. Since its launch in FY 2005, E&E has yielded more than $100 million in cost savings.  EMBED PowerPoint.Slide.8  Through good financial management practices, USM maintains its excellent bond ratings And, we have accomplished this without compromising quality in the least. In the past, I have often noted the impressive array of honors received by USM institutions. I belief that between U.S. News & World Report and Diverse Issues in Higher Educationtwo of the nations most prestigious and respected sources of higher education rankingyou will literally find every USM degree-granting institution singled out for praise. But today, I want to stress some different rankings. Three USM institutionsSalisbury University, Towson University, and the University of Maryland, Baltimore County have been recognized by The Princeton Review as among the "Top 50 Best Values in Public Universities" for 2009. And Kiplingers rates the University of Maryland, College Park as Americas 9th best higher education value. You can have complete confidence that the USM is committed to being cost-conscious, cost-effective stewards of whatever funding you approve. And we will continue to be a system of outstanding institutions offering educational excellence with affordability. Finally, I want to note USMs commitment to addressing challenges of climate change and the environment and the leadership we are bringing to this cause for the state and the nation.  EMBED PowerPoint.Slide.8  With every USM president committed to the American College & University Presidents Climate Commitment, our campuses have begun the process of completing an inventory of the institutions greenhouse gas emissions to determine their carbon footprint in order to develop and implement a climate neutral plan within two years. In addition, the commitment calls upon our campuses to integrate sustainability into the curriculum and make it part of the educational experience. As I have noted in the past: The USM is uniquely suited to help our state, our region, our nation, and our world come to terms with the impact of global climate change and related environmental concerns. When you consider our educational impact, research programs, community outreach, and commitment to "best practices," I can think of no entity in our state better positioned to lead on the vital and complex issues of climate change. Before I turn to the issues raised by the legislative analyst, I want to re-emphasize how proud the USM is of the partnership we have formed with the elected leadership in Annapolis. Together we have worked cooperatively to identify challenges, establish priorities, and set a course to strengthen higher education in Maryland. We look forward to continuing this partnership. LEGISLATIVE ANALYSTS ISSUES & RECOMMENDATIONS To ensure that we respond directly and expeditiously to the actions recommended by the analyst, as well as the request for comments, we have divided the following testimony into two sections. The first addresses the specific recommendations by DLS in the order they are listed in the analysis, beginning on page 37. The second section contains the Chancellors response on the issues DLS raises in the analysis and requests comment. Section 1. The Chancellors Response to Recommended Actions DLS Recommendation 1. DLS recommends that the USM current unrestricted funds be reduced by $5,649,966. This reduction shall not reduce the number of students projected to be enrolled. USM Response: The $5.6 million reduction due to the under attainment of the HEIF is already reflected in the USM base budget in the FY 2010 Governors Allowance, as was displayed on Exhibit 11, page 21 in the analysis. DBM made this base reduction during the development of the Governors Allowance in December. If this recommendation is accepted, the USM will have its base reduced twice -- $5.6 million by DBM and additional $5.6 million by the legislature. This would result in an $11.2 million base general fund reduction to cover a $5.6 million shortfall. Surely, this is no ones intent. It is important to note that any reductions to the proposed FY 2010 general fund base will likely require reductions to financial aid, student services, and other student related priorities. Please keep in mind that to be successful with initiatives such as Closing the Achievement Gap, low income and minority students will require greater amounts of financial aid and enhanced student services not less. DLS Recommendation 2. DLS request that the USM continue to provide annual instructional workload reports for tenured and tenure-track faculty. Report due December 1, 2009 USM Response: The USM concurs and will continue to submit the report as requested. Section 2: The Chancellors Comments on Issues Raised by DLS in the Analysis 1. Teacher Education In order to identify enrollment and graduation trends of students in the teacher education programs at USM, USM should separately report data on the number of undergraduate and graduate students enrolled in and completing teacher training programs and employed in Maryland public schools. The Chancellor should comment on efforts the USM institutions are undertaking to increase undergraduate enrollment as well as retaining students in teacher education programs (page 9 of the analysis). USM Response: We agree with this recommendation and will comply to the degree that data are available; however, as has been noted in the past, without a longitudinal data base that allows for tracking graduates into the workforce, it is virtually impossible to ensure an accurate count of the teacher-graduates who are employed in Maryland Public Schools. Teachers frequently change schools (called swirling) and local school districts do not always have accurate information about where their teachers received teacher training. The need to produce and retain more highly-qualified teachers continues to be an issue of concern in the State of Maryland, as well as the nation as a whole.To help address this issue, institutions within the USM have undertaken a variety of strategies aimed at increasing teacher production and the USMO has supported the institutions in developing strategies through our internal grants programs. These strategies have included developing a mix of programs and opportunities aimed at allowing students and professionals to enter the teacher training pipeline in several ways, including as dual undergraduate majors, as post baccalaureate students, or as mid career changers. The result is that while reported enrollments in traditional undergraduate teacher education programs have fluctuated over the past five years, as programs are reorganized and new programs and pathways developed, the total number of teacher candidates produced by USM during that period (i.e., the number of new graduates coming out of USMs undergraduate and graduate level teacher education programs ready to enter the teaching workforce) has actually increased by 8%. With that said however, the USM is committed to increasing the number of teachersboth undergraduate and graduatethat our institutions produce. To help boost enrollment in these programs overall, Towson University (TU), the states largest producer of teacher education graduates, has initiated just this past year new undergraduate programs in Early Childhood and Elementary Education at the USM regional center at Shady Grove. TU also has begun an integrated Elementary Education and Special Education program at the HEAT Center in Harford. These new outreach programs should expand enrollments in these critical workforce need areas as well as provide access to training within the specific regions. TU also has submitted a new major an integrated Early Childhood and Elementary Education and Special Education for state approval, hopefully to be initiated in FY 09. Finally, TU is preparing in FY 09 for the admission of additional cohorts in Elementary and Early Childhood Education on its main campus, in its programs at Shady Grove, and at the HEAT Center/Harford Community College. At the same time, the University of Maryland, College Park (UMCP) is also working to increase the pool of students that enter the field of teacher education. UMCP has been in the process of restructuring its teacher education program offerings to attract more students into the profession. To that end, it has expanded the curricular options available to students, including those in other disciplines, by offering teacher education minors for students in other majors; five-year integrated B.S./M.Ed. programs that lead to certification; post-baccalaureate programs that require a shorter completion time, and a masters certification program that can be completed in one year. By shifting its focus towards minors and post-baccalaureate and masters models, the number of students UMCP enrolls in teacher enrollment at the undergraduate level has declined, but that decline is expected to be made up for in larger post-baccalaureate and masters enrollments. In coming years, UMCP plans to intensify its teacher education recruitment programs at both the undergraduate and graduate levels and to develop a teacher education enrollment management plan that will target an increase in teacher production with specific emphasis on Maryland's teacher shortage areas. This year (2008) Bowie State University (BSU) and the ĢƵ Office, in partnership with the University of Maryland College Park, Prince Georges Community College and Prince Georges County Public Schools received a $12.3 million dollar grant to increase the minority student pipeline into STEM disciplines. A significant portion of that grant is devoted to professional development for STEM teachers (a retention strategy), and early recruitment of teachers into the PGCPS from STEM majors at BSU and UMCP. Juniors and seniors will be receiving stipends to spend supervised hours in the Prince Georges County high schools and will be encouraged to explore teaching as a career. This five-year grant is a ground-breaking collaboration which will be closely studied. With the continuing support of a $6 million dollar five-year federal grant from the U.S. Department of Education (2003-2008), the USM has worked in partnership with Baltimore City Public Schools, Towson University, Coppin State University, Baltimore City Community College and the Maryland State Department of Education (MSDE) to develop new programs in middle schools and high schools to encourage students to consider teaching as a career. The middle school program has established 17 Future Educators of America Clubs in middle schools in Baltimore City, with approximately 200 students participating. Over the last four summers, the Teacher Academy program at Towson University has trained 132 teachers from Baltimore City and around the state to teach a sequence of three high school courses and a course in field experience that are part of MSDEs Division of Career Technology and Adult Learning (DCTL) Career Pathways program. There are approximately 1,000 students enrolled in Teacher Academies this year, the third year of the program. Towson University will be offering credit from this Teacher Academy Program as early college under their general education requirements, substituting for their on-campus course, School and American Society. In support of the existing AAT programs, USM, in collaboration with MHEC, MACC and MICUA, will be conducting research on the AAT pipeline efficiencies. With support from the Lumina Foundations Making Opportunity Affordable grant, the USM will contract with the Jacob France Center at the University of Baltimore to complete a study of the AAT pipeline to evaluate the effectiveness and efficiency of the AAT programs, including how many students who earn an AAT transfer and complete teacher preparation programs and teach in Maryland schools. Teacher retention is a challenging issue across the nation. Research on teacher retention is complicated by the multiple factors influencing retention: preparation programs, mentors, cohort programs, school climate and safety, principal leadership, salary limitations, and personal life choices (marriage, pregnancy, etc). One strategy that appears to have a significant impact on teacher retention is a pre-service experience in a Professional Development School. According to continuing longitudinal research conducted by Towson University and supported by USM, teachers prepared in Professional Development Schools (PDS) are twice as likely to be retained in the public schools in Maryland compared to teachers who were not afforded Professional Development School experience. Towsons research confirms that stable funding for PDSs will have a significant and positive effect on the retention of Maryland trained teachers in Maryland public schools 2. Request for Chancellor to comment on USMs efforts to increase the capacity of and enrollment in nursing programs (page 12 of the analysis). USM Response Addressing critical workforce shortages in the health care field, including nursing, continues to be a top priority of the USM and many of its institutions. To address the states need for nurses, the USM has employed a multifaceted strategy that includes: 1) focusing on the development of nurse educators, particularly through the graduate programs at UMB, in order to boost the number of faculty qualified to teach in expanded nursing programs at other institutions in the state (UMBs enrollment in its graduate level nursing programs has increased by 59% over the past five years, going from 567 in FY 04 to 904 in FY 08); 2) expanding the reach of USM nurse education and training programs to include the populations and hospitals served by USMs regional centers at Shady Grove and Hagerstown; 3) increasing the capacity and attractiveness of USM nursing programs through new or improved programs and facilities located on the home campuses of Coppin State University, Bowie State University and other USM institutions; and 4) working to develop and implement new programs that expand the number and quality of nurse education opportunities to previously untapped areas of the state, such as the collaborative nursing program Frostburg State University has developed with Allegany College. As a result of such initiatives, and led by the increase in UMBs graduate nursing programs, overall enrollment in nursing at USM institutions has actually increased by about 7% over the past five years, despite the slight decline (5%) in undergraduate nursing enrollment during the same period described in exhibit 3. For FY 10 and beyond, the USM and its institutions will continue to focus on building overall enrollment in USM nursing programs. Particular strategies include the following-- The University of Maryland, Baltimore (UMB) expects to expand its nursing education program at the USM Shady Grove center, doubling enrollment at the center over the next five years. At the same time, UMB will refocus its undergraduate program at the Baltimore campus so that it will serve as a model for educational innovation and fast tracking Bachelor of Science in Nursing (BSN) recipients into graduate programs. UMB expects to continue to expand enrollments under its graduate programs as well. The Clinical Nurse Leader (CNL) and the Doctor of Nursing Practice (DNP) are two programs recently added by UMB that are designed to contribute to enrollment growth. The former is an accelerated masters for students already holding a baccalaureate and who are new to the field of nursing. The CNL program currently enrolls 144 students and is expected to top out at over 150 in the next year. The Doctor of Nursing Practice program offers nurses the option of a terminal professional degree that qualifies them to teach as faculty in an associates, baccalaureate, or masters level nursing program, thereby supplying a critical nursing workforce need. Currently there are 62 nursing students enrolled in the DNP program, and enrollment levels are expected to rise to around 66 in the program within the next two years. Towson University plans to collaborate with the Community College of Baltimore County to begin an Associate to Masters (ATM) degree in Nursing in spring 2009. Students will complete an accelerated program to earn an AS, BS, and MS degree in Nursing. Coppin State University, which opened its Health and Human Services Building in August 2008, expects to use the capacity added by this new facility to grow its undergraduate nursing enrollment further and reduce the number of qualified undergraduate students who were not able to be admitted into the program. By FY 10, CSU estimates that it will be able to add an additional 60 nursing students to its programs. Finally, as briefly noted above, Frostburg State University (FSU) has been working with MHEC, the Maryland Board of Nursing, and a sister institution in the region to develop a Bachelor of Science in Nursing (BSN). Completion of this new program, which is offered in collaboration with Allegany College, will allow registered nurses (RNs) or students who are enrolled in an associates degree program in nursing in the area to obtain their four-year degree while remaining in the western Maryland area. Because of its location, Frostburg has a special responsibility as a major force for economic and work force development in its region. The University has developed the RN to BSN program to create a more highly educated nursing work force and to enrich the state pipeline for nurse educators. Students are already enrolled in prerequisite courses, and will begin to take their first nursing courses in Fall 2009. The current enrollment estimate for the program is set at 40 students. Future expansion of the program could extend to a masters degree program focused on preparing nursing faculty for the region and the state. Preparation of new nursing faculty will enable the state to meet the future demand for registered nurses. The program is a prime example of FSUs, as well as the Systems, ability to address both a critical workforce need for the state and to foster economic development within a particular region. 3. The Chancellor should comment on USMs efforts to assist those institutions with nursing programs to successfully compete and receive grants to fund nursing programs within USM, such as FSUs efforts to develop a collaborative nursing program with Allegany College (page 12 of the analysis). Working in part through the ĢƵ Medical System Board and with MHEC, the Chancellor has been a strong advocate for the creation of the Nurse Support Program II (NSPII). While the NSPII grants are largely institution specific, as with all grant opportunities, the USM Office provides support with proposal writing, the required supporting data for proposals, and in convening participating institutions. The USM Office also works closely with institutions applying for grants to insure that the necessary facilities and infra-structure support is available to sustain programs that are funded through grants. 4. Request for Chancellors comment on efforts to close the gap in retention and graduation rates and especially, the gap between all students and African American students graduation rates. (page 13 of the analysis) & Chancellor should comment on efforts to improve the retention and graduation rates of low-income, minority, and first-time students and all students and how institutions will fund closing the achievement gap initiative and programs. (page 36 of the analysis) USM Response: The Closing the Achievement Gap is a major USM wide initiative. It addresses the threat posed by the state's widening college retention and degree completion gap for lower income and underrepresented (primarily African American and Hispanic) students and the need to ensure that all Marylanders have the opportunity for educational attainment that leads to success. By 2010-2011 Maryland will be a majority minority state demographically. This is already the case in Baltimore City and Prince Georges County. As the African-American and Hispanic population increases, so will enrollment at USM institutions, with implications for graduation rates across the USM. Addressing the achievement gap now will help to ensure the success of lower-income and underrepresented students so that they can move on to obtain higher paying, challenging careers upon graduation. It will also ensure that Maryland continues to have a high quality workforce to sustain its knowledge-based economy. Achievement Gap Action Framework In November 2007, the USM hosted a statewide conference of political, community, business, and education leaders to set a course for Maryland to close this gap in achievement. As a result of the conference, Chancellor Kirwan asked the USMs 11 degree-granting institutions to develop achievement gap analyses that included needs assessments, along with specific goals and timelines to reduce the gap. Each USM institution has submitted a gap analysis for review, and the analyses have been approved. To the extent that current funds allow, the institutions are moving ahead with activities that address the achievement gap by implementing a variety of activities falling under the following five broad categories: Establishing early warning systems using interventions and longitudinal assessments Implementing course redesign and improved assessments for base level courses in mathematics and English based on identified remedial needs and assessments of incoming students Providing educational support systems for at-risk students admitted to USM institutions through bridge programs between high school and college; student preparedness assessments; creation of small group courses; and providing financial aid, housing support, and stipends for pre-admission programs Creating vibrant learning communities that provide group housing to support pre-admits, establish mentoring opportunities with other students, and offer hands-on support to students throughout their education Increasing financial support through needs-based scholarships; financial aid to bridge the gap between community colleges and USM institutions; and ongoing career development assistance through mentoring, internships, and networking 5. Chancellor should comment on the overall impact of the cost containment measures, specifically what, if any, affect the reductions had on instruction, student services and institutional aid. (page 15 of the analysis) USM Response: As a result of the cost containment reductions, the UMS institutions implemented the following actions: Personnel actions such as hiring controls for full & part time positions; reduce adjunct faculty and other actions: IMPACT - insufficient number of courses required to serve students which may jeopardize progress towards degree; reduce services to students in all areas, such as counseling which may also delay time to degree. Hiring adjunct faculty instead of full time tenured faculty: IMPACT - less academic quality, longer time to degree and impede ability to meet MD critical workforce needs. Eliminate positions: IMPACT - less efficiently run departments along with reduced academic and other support service to students; larger class sizes if the eliminated positions are faculty positions. Reduce academic & student support services and library acquisitions: IMPACT - less services provided and reduced hours of operations; access to required instructional materials will be curtailed. Reduce facilities renewal: IMPACT -renewal will be on a 'firefighting basis'; i.e., something must break before replacement, which will impact on teaching and research missions. Reduce financial aid: IMPACT - increases economic hardships for students and may reduce access to higher education. Reduce information technology: IMPACT - reductions will greatly impact the ability of the schools to implement technological advancements. Reduction operating expense: IMPACT - may impact student's education as it relates to libraries, student services and academic computer support. Reduce faculty development funds: IMPACT - negative impact upon faculty recruitment, retention and productivity. 6. Chancellor should comment on how institutions with a negative or zero balance, or with insufficient funds in the State-supported portion of the fund balance, will be able to meet their allocation of the $20M transfer to general funds. (page 17 of the analysis) USM Response: The institutions of the System that have negative or zero fund balances will be compelled to temporarily borrow funds from the institutions self-support activities, or alternatively from other institutions. As funding is restored, and the states and Systems finances recover in the future, these borrowed amounts will be repaid or the resulting deficit eliminated. The reductions in fund balance currently contemplated will not impair the Systems bond rating, though additional mandated use of fund balance will compel increasingly difficult and dramatic choices. 7. Chancellor should comment on the budgetary priorities and how institutions are able to transfer a combined $18.3M to the fund balance given recent and possible future budgetary reductions. (page 24 of the analysis) USM Response: The institutions have built into their operating budget the transfer to fund balance, and across the System, institutions have met their fund balance goal with a high rate of success. The majority of this transfer to fund balance relates to non-state activities generated by student auxiliary fees, such as dormitory and board fees. The Board of Regents maintains that institutions are to operate non-state-supported activities on a self-support basis. Most of the activities and functions that fall into the non-state-supported activities category are required to operate in a manner similar to private enterprises where they provide for expected facilities and equipment needs through fees and revenues collected from users. In order to satisfy capital needs as well as provide operational investments, institutions are required to build non-state support fund balances. The System over the past two years has expanded its capital program through increases in debt issued each year. These actions were taken in response to continued and projected significant enrollment growth and the resulting need for new facilities. This strategic change inevitably results in higher levels of debt outstanding, and highlights the need to increase fund balances to maintain the current level of financial strength. Providing adequate facilities is essential to the Systems ability to accommodate the expected influx of additional students. 8. Chancellor should comment on how institutions will be able to maintain facility renewal efforts to keep the backlog of deferred maintenance to a manageable level and institutions ability to achieve the policy goal given recent budget reductions. (page 35 of the analysis) USM Response Put simply, budget reductions make it impossible to maintain the gains the USM has made in recent years in renewing and rebuilding our facilities. TheUSM Facilities Renewal Program was re-established as a priority by the Board of Regents in 2005. Since then, it has been recognized by the Bohanan Commission as a model that should be emulated by higher education Statewide. Its success, however, depends on two critical budgetary pieces that must operate together. First, large-scale renovation and building replacement in the capital budget provides the means to reduce the existing backlog of deferred maintenance. To date, your strong support of our capital program has allowed us to make great strides in this area. This year's CIP will continue that progress. The second piece of this important effort is the need for consistent, annual operating spending of 2% of the replacement value of our facilities. This maintains the progress we make on the capital side and prevents further deterioration of our buildings and utility systems. Unfortunately, reductions in the operating budget reduce the capacity of this vital other half of the program. We will use funds from the Academic Revenue Bond-funded "FR" line item in the capital budget to assist institutions toward their 2% goal; but without strong operating budget support,our progress will surely stall and lose ground.  PAGE 1   3 4 6 4567`3 8 !!1!2!3!4!##$$$$&@&))))))I*K*Q*S*//00l1n122!2"2#2$2?3½ j,M U>* j U jz-M U5>* jO[U j:M U jP:M U jU<$[\zef ! 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