USM Overview Legislative Response
Issue 1 - Tuition and fees fund greater proportion of USM budget since 2002. Since fiscal 2002, the proportion of tuition revenues has grown and the share of general funds has dropped in USMs budget. Furthermore, tuition and fees have offset more than half of the general fund reductions.
For Fiscal Year 2004, the USM experienced a 14% reduction in state support, from $868 million in FY 2003 to $746 million in FY 2004. In addition to this $122 million cut from the state, mandatory costs such as health coverage and accommodating the growth in student enrollment increased that budget gap by an additional $84 million. A decade ago, state support was the largest part of the USM budget. Today state support is less than 25% of our budget and is actually the smallest of our three main funding sources, being surpassed by both tuition revenue and research grants.
Budget Gap: The USM took action to cover nearly two-thirds of the $206 million budget gap through expenditure reduction and cost containment, with the remainder (just over one-third) covered by tuition increases. In addition, student tuition payments were extended and additional funds were set-aside for financial aid to mitigate the hardship.
- Nearly 700 positions were eliminated, representing approximately 5% of the USM's state-funded work force more than any other state agency.
- Salaries were frozen and a hiring freeze was implemented for all but essential personnel.
- Academic offerings were reduced at 5 institutions and low productivity programs were eliminated.
- Less costly part time faculty was hired in lieu of full time faculty.
- Facility openings were postponed, some repairs were deferred, and technology upgrades and enhancements have been delayed.
Issue 2- : New tuition policy shifts emphasis to predictability and flexibility. The previous tuition policy, established in 1993, emphasized modest tuition levels, while the new policy, emphasizes predictability and flexibility. DLS recommends the Chancellor provide further detail on how the new four-year tuition plans be calculated.
Transparency for Flexibility: Institutional Tuition Plans
The core of the proposed policy is the proposed institutional tuition plans. Institutions will prepare annually a four-year plan, based on BOR approved assumptions related to expected State appropriations, funding guidelines target and planned enrollment. This approach responds to the Tuition Task Force belief that only the Regents and the Chancellor, in dialogue with the Governor and the legislative leadership, are in a position to resolve the tension between access and quality.
The institutional tuition plans will include targets for increased "efficiency and effectiveness." This responds to the belief that USM institutions also face a responsibility to become more efficient in their stewardship of state resources.
The plans will provide information which will allow students to anticipate future tuition adjustments. This responds to the single, most common issue raised in the public hearings: predictability of tuition increases.
A draft format of the four-year tuition plan calculation is attached for your information.
Issue 3 -: Some opportunities for efficiencies are evident:
Issue 3/Recommendation 1 - DLS recommends that no new contractual faculty positions are authorized except for University College.
All campuses are struggling to ensure that all necessary classes are being offered so that students can graduate within reasonable periods of time. Such a restriction, especially in this budget climate, would make it very difficult for the campuses to offer all of their courses.
The USM reduced seven hundred state supported positions since FY 2002. Many of the staff positions were in areas such as advising and student support. Thus, in addition to losing these positions, the remaining faculty has absorbed many of these duties.
The Board of Regents, the Chancellor and the institutional leadership are working together to ensure that appropriate steps are taken to increase the effectiveness and efficiency of both academic and administrative operations. In that regard, the USM campuses are each conducting audits to ensure that all faculty workloads are appropriate. We expect that these steps will result in some increase in the overall course load indicator.
In addition, faculty workload which consists of teaching, research and service has been increasing over the past ten years. Thus, research grants and contracts have increased over the past ten years from approximately $200 million to approximately $724 million. Also, the campuses have absorbed approximately 10,000 more undergraduate students thus increasing class size and faculty workload in terms of teaching and advising.
It is critical that the campuses have the flexibility to meet their teaching needs. Restrictions on contractual positions would make it very difficult for the campuses to provide the education that our students and the parents of the state of Maryland have grown to expect from us.
Issue 3/Recommendation 2- DLS recommends that MHEC be authorized to consider additional factors in its evaluation of proposed new certificate and degree programs for USM and other institutions.
USM does not believe there is a need to add factors to MHEC's review of proposed new programs by the USM or other institutions. Recently, the USM and MHEC were required to develop an agreed upon format for the development and review of new academic programs. This was done and has proved successful. A proposal for a new degree program must identify resources and expenditures. Additionally, the institutions must demonstrate the centrality of the proposed program to the mission of the institution and its relevance to serve regional or national needs. The characteristics of the program and its course of study are fully described. The Chancellor and Board of Regents thoroughly review all proposals for new academic programs."
The Chancellor should comment on how the USM is helping to address the teachers shortage.
USM institutions accounted for 68% of newly eligible teacher candidates educated in Maryland during the 2001-02 academic year. USM institutions aggressively address the teacher shortage by:
Increasing Accessibility: USM is making it easier to get a teaching degree.
- For students living far from a USM campus, USM has extended its reach through regional centers at Shady Grove, Frostburg State University/Hagerstown Center, Southern Maryland Higher Education Center, and the Eastern Shore Higher Education Center.
- Online MAT (Master's of Arts) programs offer additional flexibility. USM also offers ongoing professional education and re-certification for teachers at or near public school sites.
- For nontraditional students, community college students, and career changers, USM has, in conjunction with the state's community colleges, developed new certification and degree options. A new Associate of Arts in Teaching Degree, as well as 2+2 (Associates and Bachelor's) and 2+2+2 (Associate of Arts, Bachelor's of Arts, Master's of Arts) programs help community college students to obtain a bachelors without having to repeat credits. Resident Teacher Certificate Programs help career changers to enter the teaching field, and Post Baccalaureate Certification helps those with degrees outside the field to meet requirements.
Sharing Resources: USM has won nearly $18 million in federal grants that help school systems and others train and retain new teachers.
- USM is currently managing over $10 million in federal grant funds to improve teacher quality, teacher retention, and student achievement in Baltimore City and Prince George's County. The work accomplished under one grant has improved retention rates from 18 percent to 78 percent in the schools served by USM partners.
- USM is leading another $7.5-million grant that will help Montgomery County schools improve and retain high-school math and science teachers, and bring new teachers into the profession.
The Chancellor should comment on USM plans to build its fund balance, including the reliance on state-supported revenues to increase the balance.
The System is facing a significant challenge over the next decade in providing facilities to accommodate the significant growth in enrollment, as well as maintaining current facilities at minimally acceptable standards. To meet the funding need for the capital budget required for these
facilities, while not compromising the financial health of its institutions, the System must issue prudent amounts of debt each year. A high bond rating ensures that interest costs on borrowing remain relatively low, and represents an external and objective market assessment of the state of the
System's fiscal condition. Like the State of Maryland, the System places a high degree of importance in maintaining its bond rating.
Tight fiscal times place pressure on the rating agencies primary benchmark of maintaining available resources at a minimum of 50% of outstanding debt. The System has as a goal increasing the fund balance by an amount equal to 1% of the State Supported appropriation.
There is no System-wide mandate as to what fund sources or activities are to generate the increases in fund balances, as institutions are in a position to assess and weigh institutional priorities and determine the most appropriate strategy for satisfying the System-wide fund balance increase requirement. To the contrary, we would expect that non-state fund sources would be the preference of institutions, all other considerations being equal, because it is the State Supported category of expenditures that directly addresses the instructional program and drives the overall quality of the institution.
Our plan is to be re-evaluated annually, and changes in the plan may be required in response to events outside of the System's control (investment returns for example). The System has already reduced the planned level of debt issuance significantly from about $90 million per year to $65 million per year, in response to the reduction in fund balance during FY 2002. It is believed that further reductions in the debt issuance plans will impair the System's ability to accommodate planned enrollment growth, or maintain its facilities at minimal levels. As a result, the emphasis of the plan is to also increase its available resources, through planned or budgeted increased in unrestricted fund balances.
Recommended Language (reduction) - The appropriation herein for the University System of Maryland institutions shall be reduced by $227,250 in general funds to reflect use of the State Higher Education Labor Relations Board (HELRB) reimbursable fund balance toward higher education institutions' assessment for the board. The allocation of the reduction shall be determined by the University System Board of Regents.
The USM was required to pay $400,000 annually for the costs of HELRB out of their own funds, no general funds were ever provided for these costs. It is our understanding that the HELRB is currently a projected surplus. Rather than a base reduction in general funds the USM feels that unused funds should be returned to the institutions.