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Chancellor's Speeches

USM Chancellor William E. Kirwan's Report to the University System of Maryland Board of Regents
December 10, 2004

Thank you Mr. Chairman and members of the Board of Regents. Let me begin by expressing appreciation to Freeman and his colleagues for hosting us today. UMBC has truly become a jewel in the University System of Maryland's crown. It has made tremendous strides over the past decade. For example, just recently UMBC was named a "Hot School" by Newsweek and has been ranked in the "Top Tier" of national research universities by the Carnegie Foundation. If only Freeman could be a little more enthusiastic in promoting UMBC, there's no telling what recognition might come its way.

I have a number of items to report on today, but first I would like to take a moment to note some of the wonderful achievements that have taken place within the USM since we last met.

Starting right here at UMBC . . . three new tenants will be moving into the on-campus research and technology park, including BDMetrics, recently named the Best New Incubator Company, and NASA Goddard's Erath Science and Technology Center. This is just one more example of how UMBC is distinguishing itself as a high-tech force in Maryland.

Elsewhere, WBAL TV led off their Thanksgiving editorial with praise for University of Maryland, Baltimore President David Ramsey. Noting that UMB is an economic engine that generates $15 of economic activity for every state dollar invested, the editorial recognized President Ramsey's remarkable ten years of leadership.

Coppin State University is teaming up with the Greater Baltimore Urban League on "The State of Black Baltimore", a collaborative collection of articles assessing the status of the region's African-American community. The State of Black Baltimore will coincide with the opening of Coppin's Raymond V. Haysbert Research Center, a hub for applied research which will be responsive to the needs of the community, business, and government leaders throughout the region.

Last month, Regent Finan and I attended the first Advisory Board meeting of the System's Hagerstown Center. As you might imagine, it was a "who's who" of the Hagerstown and Washington County community. As we approach the official opening of USM at Hagerstown next month and the Gala Grand Opening Celebration on April 22nd, I am very excited about the impact the Center can have on that region of our state.

Turning now to my report . . .

BUDGET & TUITION

As you know, we had expected to ask the Board to make tuition decisions for next year at this meeting. However, the Governor has not yet completed his budget restructuring process and, therefore, we do not know the level of General Fund support he plans for us in the FY06 budget. As a result, we will continue to work cooperatively with the Governor on the preparation of the budget and delay tuition decisions until we have a definite General Fund number. Our best estimate is that the Governor will complete preparation of the budget within the next two weeks and inform us at that time of our FY06 General Fund appropriation. We will then carefully assess our appropriation against our mandated increased costs. Based on that assessment, we will be prepared to hold special meetings of the Finance Committee and the Board in the first half of January and make our tuition recommendations to you.

Obviously, we regret the delay in informing our students about tuition for next year, but it is important for everyone to remember that the Governor's process is intended in large part to free up funds so that he can invest in his highest priorities. The Governor has made it abundantly clear that increased funding for higher education is among his highest priorities. Just last week he said in an interview with College Park's SGA President Aaron Kraus, that higher education would getand I quote"a bump next year."

Yesterday I was at a meeting with Secretary DiPaula and he stated emphatically that higher education was one of the very few state entities that would see an increase in funding. Indeed, he said most state agencies are facing cuts of up to 12%.

The Governor's commitment to increase our funding is much appreciated and it comes at a crucial moment. In fact, I want to stress just how important our budget decisionsGeneral Fund and tuitionare for FY06. The past several years of budget cuts and flat funding are taking a real toll on our campuses. Let me quantify this for you. In FY02 all our institutions had a funding level that placed them above the 75th percentile in comparison to their peers. Today the composite funding level is below the 50th percentile level of our peers. That's a stunning and disturbing drop in funding levels in just a three year period of time. The FY02, faculty salaries were at the Regents' goal of the 85th percentile. This year they are below the 75th percentile.

The precipitous decline in finding is having two dire consequences: First, we can no longer serve all the students who are qualified to attend our institutions and, second, we are seeing signs of decline in the quality of our institutions. One example of this decline is that, for the first time in many years, we are becoming a net exporter of faculty stars. A second example is a disturbing drop in our "quality indicators."

Let me amplify that last comment. We benchmark our institutions against their peers on about 90 different quality indicators. In FY02, our institutions exceeded peers in close to 70% of these indicators. Today, we exceed our peers in only about 60% of these indicators.

These and other examples I could give should be a wake up call for all of us . . . the Board, the System community, our friends in the private sector, and our state leaders. As I said a moment ago, the decisions about the FY06 budget are extremely important. We must reverse the troubling slide in our quality indicators and we must build the capacity of our institutions to serve the influx of high school graduates who will be looking to our campuses to prepare them for their career goals and dreams.

Let me mention two other items that I believe illustrate how responsibly the Board and the System are responding to our funding challenges.

 

EFFECTIVENESS AND EFFICIENCY PROJECT

The first is our Effectiveness and Efficiency Project. At the Board's last meeting you received the Effectiveness and Efficiency Report. You will recall that the Report commits our institutions to a $17 million base reduction in expenditures in FY06 through effectiveness and efficiency measures. It also commits the System to absorbing 25% of the projected enrollment growth over the next three years without additional cost to the state. This is on top of the $120 million in cuts and the $100 million in mandated costs we have already absorbed, and on top of our annual, state-mandated efficiency savings.

Sine the October Board meeting, the campuses and the System office have been hard at work implementing the initiatives in the E&E Report. Policies have been developed and will come to the Board this spring that will codify the academic initiatives. Task forces are at work developing plans to realize the administrative savings. The "online" task forces at both the campus and System level are making progress and we expect their reports to come to the Board early in the new year.

The feedback we have received about the E&E Report from elected officials and business leaders has been highly laudatory. As I said to you at the last Board meeting, the E&E Report represents a remarkable effort by the Board, the System, and its institutions, to protect the Board's goals of quality, accessibility, and affordability. Now it is time for the state to do its part.

FINANCIAL AID TASK FORCE

The final item I want to mention is the report of the Financial Aid Task Force. You will act on this report today. It is a very forward-looking report and positions the System to become a national leader in its financial aid policies and practices. Pat Florestano will provide more of the details later in the meeting, but the major thrust of the report is to put a much higher priority on providing need-based financial aid for our students. The report has received national attention. Other universities and the US Department of Education have requested copies.

We are indebted to Treasurer Kopp for chairing the Task Force and to Regents Pat Florestano and Richard Hug for serving on it. The Task Force also included legislative leaders, campus presidents and financial aid experts, students, and representatives of MHEC. Finally, let me express appreciation to Teri Hollander for her exceptional effort as the senior staff person responsible for facilitating the work of the Task Force.

Mr. Chairman, this concludes my report.