It is disheartening to hear that there are still some who do not believe that USM is in a financial crisis and who continue to misrepresent the university’s financial data — misleading Maine residents. USM’s structural deficit is not a fairy tale created by fevered imaginations, despite what professor Susan Feiner would lead some to believe.
After reading Feiner’s misleading Oct. 23 BDN OpEd, it is time to, yet again, set the record straight.
Feiner cites USM President David Flanagan as initially misrepresenting the percentage decline in enrollment, but make no mistake, USM has seen about a 15 percent decline in its enrollment over the past five years and has seen an average attrition rate of about 30 percent in that same time. These numbers don’t lie, and they are part of the reason USM is in its current fiscal crisis.
Feiner and those who are still in denial about the structural deficit at USM often point to the U.S. Department of Education’s Integrated Postsecondary Education Data System, or IPEDS, which shows income and expenses of universities in the aggregate, grouping both restricted funds — such as those designated by donors for our libraries, scholarship funds, etc. — and unrestricted funds together. Restricted funds legally cannot be used to pay for USM’s general operating costs nor for its general payroll.
Unrestricted funds include tuition and fees, the state appropriation and income from the operation of residence halls, dining facilities and sales and services. It is irresponsible for some to continue to overlook that a 15 percent decline in enrollment over the past five years, flat funding by the state and a three-year tuition freeze created USM’s structural deficit. Add on expenses that increase with inflation and rising payroll costs and we get a picture of a university struggling to pay its bills.
Structural deficits cannot be remedied by borrowing from the University of Maine System’s shrinking reserves. In fact, a January 2014 University of Maine System report highlighted that USM is below target benchmarks in four key financial ratios for reserves while the system is below target peer benchmarks in two of four key areas. That should frighten the University of Maine System Board of Trustees, not misrepresented IPEDS data.
Included in the “surplus” that Feiner mentions are funds that the University of Maine System has set aside for employee health claims and endowed funds providing scholarships for thousands of students across the entire university system.
It is unfortunate that this situation of declining enrollment and increasing expenses, predicted by the University of Maine System task force report “ Meeting New Challenges, Setting New Directions,” was not addressed in 2009 when the report was released. USM, and the University of Maine System, is five years late in beginning the work required for its fiscal sustainability.
Higher education has reinvented itself before. Middle-class World War II veterans entered colleges in droves using their GI Bill benefits. In the 1970s, teachers colleges responding to a glut in the market reinvented themselves as comprehensive universities. Now, with fewer students, and more competition from nonprofit and for-profit universities, USM must again reinvent itself.
Responding to calls for flexible schedules, more online classes, and course content that will prepare students for their careers, USM is positioning itself to do just that.
Forget about Trick or Treat. Without change, USM will have little to be thankful for on Thanksgiving.
Denise Taaffe is chair of the USM Board of Visitors. She is also principal of Baker Newman Noyes, an accounting and advisory firm with offices in Portland.