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  USM Board of Regents

Special Meeting

July 11, 2003

Chairman Kendall convened the public session of the Board at 1:07 p.m. in the Atrium of the Elkins Building of the University System of Maryland Office.  Those Board members in attendance included:  Admiral Larson, Mr. Finan, Dr. Florestano, Mr. Hug, Mr. Johnson, Governor Mandel, Mr. Mitchell, Mr. Nevins, Mr. Pevenstein, Secretary Riley, Mr. Rosapepe, Senator Tydings, Mr. Wood, and Mr. Shockley.  Also present were: Chancellor Kirwan, Dr. Boesch, Dr. Battle, Dr. Bogomolny, Dr. Heeger, Dr. Hunter-Cevera, Dr. Mote, Mr. Vivona, Mr. Dillon, Mr. Anderson, Mr. Bruszewski, Mr. Canavan, Mr. Farley,  Ms. Gladhill, Mr. Harnage, Mr. Hart, Mr. Hill, Dr. Holden, Ms. McMann, Mr. Paddy, Mr. Pusey, Ms. Ryan, Ms. Vukovich, Ms. West, and others.

 

Chairman Kendall:

Tuition and fees is the topic of discussion today and the only topic.  This is a very special meeting - one that lots of time has been devoted to.   I would ask the Chancellor at this time to make a statement.

Chancellor Kirwan:

"The actions the Board will be asked to take today are intended to address, as best we can, budget reductions to USM institutions that can only be described as disproportionate, harmful and short-sighted.

"They are disproportionate because they are much deeper than cuts assigned to other state agencies. This time last year, our state appropriation was $868 million. With the latest spending cut of $40 million, our state appropriation for this year stands at $746 million. That's a $122 million -- or 14 percent reduction -- in state support in one year. Funding for the USM is only 7.5 percent of the General Fund, yet we have taken almost 20 percent of General Fund cuts. Our cut is almost three times greater than the average state agency cut. In addition, the cut is disproportionate in relation to the way other states have treated higher education. Two days ago I read a report in the Chronicle of Higher Education that said the national average for reductions to higher education this year is 5 percent. As I just mentioned, our cut is 14 percent. Clearly, other states have found a way to buffer the economic downturn's impact on higher education. Maryland has chosen a different path. It has chosen to target higher education for reductions.

"I also said that these cuts are harmful and they are, on multiple levels. As a result of the accumulated cuts, we must eliminate close to 800 FTE positions across the System including over 400 layoffs. First and foremost, these actions are devastating on a personal level. The Board needs to know that our institutions have gone to great lengths to provide compassion and support for these valued colleagues who will be losing their positions. In particular, we have launched extensive outplacement and other counseling services.

"At the institutional level, these position eliminations erode the quality of our campuses. Class sizes will grow, courses will be cut and support services will diminish.

"The cuts are also harmful because students are being required to pay tuition at a level they could not possibly have planned for when they began their studies. Some may have to drop out of school. Many will have to take part time jobs or expand the number of hours they already work. This will significantly impact their time to degree and the quality of their learning experience. Here again our institutions have stepped forward to try and help as best they can. They have increased significantly their financial aid budgets to assist our neediest students through these difficult times.

"Finally, Mr. Chairman, I said these cuts are short-sighted. The engine of economic growth and the basis for a high quality of life in the 21st Century is high quality higher education. At present, Maryland is blessed to have a System of higher education that, after decades of effort and investment, is regarded as one of the nation's best. It should be seen as a precious treasure that insures a bright future for our state, not as a balancing account to solve or state's fiscal problems. We anticipate a 25 percent surge in the size of high school graduating classes over the next eight years. These students know that the key to success in the knowledge era is a college degree. The question our state leaders must answer is: How will it be possible for this rapidly expanding volume of young people to achieve their higher educational goals and lifetime dreams? Our state is on a collision course with two contradictory policies. On the one hand, we are -- appropriately-- priming the educational pipeline by making the necessary investments to encourage more and more K-12 students to prepare for college, while at the same time we are destroying the ability of our universities to expand capacity and maintain their present high level of quality. Something will have to give and the clock is ticking.

"I refuse to believe that our present path is one that the citizens of Maryland want us to travel. We must redouble our efforts to inform our elected officials and the general public of the dire consequences that will result if the debilitating cuts we have received are not reversed. I want the members of the Board to know that I intend to lead such an effort, beginning with my presentation to special sessions of the House Appropriations and the Senate Budget and Taxation Committees meetings this coming Tuesday. We will call upon our friends and colleagues within and without of the System to actively seek every possible opportunity to talk to editorial boards, go on television and radio talk shows, speak to civic associations and other groups, visit our elected officials, and write our alumni and friends. This will require and intensive effort. But nothing could be a better or more important use of our time.

"Thank you, Mr. Chairman, for allowing me this opportunity to convey my alarm over the long term damage that is being done to our System institutions and to our state's future through these debilitating cuts in our state support and to express my intention to seek support from all possible quarters to reverse these harmful decisions."

Chairman Kendall:

Today we have a large group of interested persons, three of whom have requested to speak.  They are: Mary Platt, Gary Kane, and Gillian Ketsal.  They will each be permitted 3 minutes to address the board.  No one else from the general audience will be permitted to speak.  There was an open meeting the other week [Finance Committee] and Chairman Nevins invited people to speak at that time and contact him afterwards.   Many have since written.  We'll now hear the report of the committee from the Finance Chairman.

Regent Nevins:

Thank you to those members who attended the last meeting.  I would also like to thank my colleagues for their due diligence and hard work.  There are two items for consideration which passed the committee.   The first is a resolution that was offered by Regent Florestano.

 

            "Be it RESOLVED that the University System of Maryland Board of Regents urges the Administration of the State of Maryland to release the hold on $40 million in general fund reductions for the FY 04 USM appropriation."

Regent Nevins:

I move the amendment.

Admiral Larson:

Second.

 

There was no further discussion.  The motion carried (majority).

Regent Nevins:

The second item is tuition and fees.  I believe that the board is between a rock and a hard place.  On one hand there are tuition increases and on the other you have programmatic cut backs and personnel layoffs.   I think the committee has chosen a very good response.  This will continue our march toward higher quality and eminence.  In advance of introducing the motion, I would like to read the following statement into public record.  This is to be considered a preamble, not part of the resolution.

 

Statement on Tuition Increases

And Personnel Actions

"The Board of Regents is aware of the difficult position that all members of the University System of Maryland family, including students, find themselves in as a result of the successive rounds of budget cuts we have endured.  The action we take today is necessary to prepare for the anticipated additional $40 million general fund cut to our budget.  While we intend to do everything possible to avoid this or any further cuts to our budget, we must fulfill our fiduciary duty to manage the System institutions and respond to the Secretary of Budget and Management's request that we reserve $40 million from our FY04 General Fund appropriation.

 "As part of our efforts to avoid additional budget cuts, the Board recently adopted a Resolution asking State policymakers to restore general funds to the University System of Maryland and recognize public higher education as an urgent State priority.  If our efforts are successful, and these cuts do not occur, the Board is committed to reevaluating the tuition decisions we make today and the personnel actions the institutions have been forced to take in response to our fiscal situation."

Regent Nevins:

I move the tuition rate adjustments as presented. 

Regent Hug:

Second.

Chairman Kendall:

We will now hear from the three persons mentioned earlier.

Mary Platt:

I worked at UMCP for 14 years.  Layoffs took place on May 1.  As of July 29, we have no paychecks, no health insurance, nothing.  Seven other of my colleagues in OIT also lost their jobs.  We hear rumors of hundreds and hundreds of layoffs.  We want to address the board and let them know what is happening to the staff who have been laid off.  We ask the Board to protect all of our state universities.  While I appreciate these few minutes to speak, I don't feel as though it's had any real impact.  We have coworkers and friends with families who will lose their homes.  The people who have the power to do something, do nothing.  Your decisions clearly show your priorities - construction, cars, free housing.  Do you have any idea of the effects of layoffs on families?  Positions being paid $230,000 a year are being created.  I could go on and on, but this is not the place do it.  The place is at the bargaining table.  Know where bargaining is going?  Nowhere.  Do not enact the $40 million cut from the Governor.  Send it to BPW where it belongs.  Instruct the University to stop layoffs.  Respect the collective bargaining law.  Make raising tuition and laying off staff the last resort.

Chairman Kendall:

Thank you.  Gary Kane is next.  I remind you of the time limit.

Craig Newman:

I am here to speak instead. 

(It was determined that a substitute is permitted to address the board.)

We [AFSCME] have a wealth of knowledge from working here in the System.  We have put forth some proposals on the table instead of the cuts and tuition increases.  The administration will not even talk about our proposals.  We are the backbone.  Your negotiators tell us they will not talk about our proposals.  We gave them our proposals on May 7.  This is not the way a family should operate.  We would much rather work cooperatively and not make an antagonistic situation.

Chairman Kendall:

Thank you.  Gillian is next.  We have circulated your letter. 

 

(A copy of the letter is on file in the Office of the Chancellor.)

Gillian Ketsal:

I am an undergraduate with several ideas.  Why not rent out unused space during the summer.  Why is the Rossborough Inn still open?  Why not have private investors?  Why not go to IKEA and ask them to donate furniture to the university?  Utilize private companies.  Coke made a huge donation to Duke. [Lists many other corporate donations to universities and colleges.]   We cannot continue to rely on public funds any longer.  Assign this project to a business school group.  They would come up with multiple solutions.  Utilize resources outside of the school.

Chairman Kendall:

Thank you.  Any other discussion?

Regent Wood:

I intend to vote in favor of the motion, but do so with expectations that there will be a full review of need-based aid in the fall and that the E&E workgroup will do an operational review.

Admiral Larson:

This is a difficult decision.  We have some funding increases, but they only brought us back to/near the level at the last recession.  I know that once we've already taken the cuts we've taken, that there is not much discretionary spending left to cut.  I know this from my experience.  We are trying to balance access, affordability, and quality, but seem to be losing on all three.  Regarding access, may have to cap enrollments.  Regarding affordability, we are balancing the books on the backs of students when we raise tuition.  The middle class does not qualify for need-based aid.  Regarding quality, we will start losing programs.   As regents, we try to maintain quality via tuition increases and need the layoffs to meet the budget cuts because that's all that is left.  I will vote for this motion, because I see no other alternative at this time.

Regent Rosapepe:

I am about to answer that with an alternative.   But first, have a question about the financial aid figures provided on the handout.  What is the base?

Vice Chancellor Vivona:

92,000 undergraduate and graduate students.  Keep in mind that aid is usually directed to full-time students.

Regent Rosapepe:

I would like to thank the Chairman of the Finance Committee for very open talks and consideration of setting the rates.  I offer the following resolution as an alternative proposal.

"I move that the Board amend the Finance Committee's FY 2004 tuition recommendation by:

-        replacing its proposed rate schedule with the one above (and detailed in the attachment); and,

-        directing the Chancellor to refrain from establishing a $40 million reserve and from cutting $20 million from campus budgets unless there is legally binding action requiring it."

(Regent Rosapepe's proposal is on file in the Office of the Chancellor.)

Regent Rosapepe:

There are two elements to the committee's proposal on setting tuition rates.  The first is the set of cuts made during the legislative session.  The second is the $40 million reserve fund set aside.  The state has a surplus of $81 million, according to the state budget office.  The $40 million cut to the USM is in a budget of the state that is not in need of cuts.  My proposal is to strip out the rate increases associated with the establishment of the $40 million reserve fund (referring to the June letter from DBM).  Question - should we enact tuition rates that are in line with the actual approved budget?  I seek your support for my amendment.

Regent Pevenstein:

I would differ with Regent Rosapepe's conclusion, that holding funds aside in a reserve fund is illegal.  At the Finance Committee, we heard from the Office of the Attorney General representative.  We have heard the practice explained by Governor Mandel.  We heard Governor Schaefer state publicly that the Governor is within allowable bounds.

Governor Mandel:

Once the budget is passed by the General Assembly, it's law.  It's a General Assembly budget.  It they want to change that figure, then 6 months down the road that money is not there, then what will the system do.  If that money is spent now, the University System will be in worse trouble than it is now.  I have never seen a Governor inherit a deficit of such magnitude.  The budget that came back to the Governor was not a balanced budget.  Once the bills were vetoed, the budget was not actually balanced.  Federal aid was the only thing that kept us constitutionally balanced.  We do not want to be stuck with a resolution that will bury us six months from now.

Admiral Larson:

If we lose this bet, six months from now will would be looking at twice the number of layoffs and doubling the tuition rate increases.  The only prudent thing to do is plan now for the cut.  I would vote against the Rosapepe amendment.

Senator Tydings:

I address my comments to the Vice Chairman.  We cannot play Russian roulette on whether or not the $40 million will be restored.  I have the greatest respect for my fellow regent, Rosapepe, but we cannot tie the presidents' hands behind their backs.

Regent Shockley:

This is my first meeting and I appreciate the opportunity to speak.  I support the Rosapepe amendment.  I did not realize until the last meeting that this [$40 million] was not truly a cut.  If we take a preemptive cut, then we will show that we can surely live without this funding.  We cannot.   Personal incomes do not rise fast enough to cover these types of increases.  Families cannot plan or prepare.  If we don't pass this now, we will have extra time to lobby the Governor further of higher education as a priority.  I fully support the amendment.

Regent Mitchell:

We need to face reality.  I have to go along with the rest of my colleagues on this board. 

Regent Florestano:

I want to support the Rosapepe resolution, but I just don't think it's the wise thing to do.  We have no choice as a board.  The Governor [of Maryland] is the most powerful governor in the U.S.  The Comptroller is on board with the establishment of this reserve fund.  We have done the "early cuts" - travel, vacant lines.  What's left is people and tuition.

Regent Finan:

I respect Regent Rosapepe's position.  However, there is an uncertain consequence down the road of ignoring this request from the Governor. 

Regent Hug:

I move the Rosapepe amendment for a vote. 

Regent Florestano:

Second.

 

The amendment failed.

Regent Rosapepe:

I move that the language read by Regent Nevins as a preamble be added to the [original] resolution.

Regent Florestano:

Second.

Regent Nevins:

I will accept as a friendly amendment; no vote is necessary.

 

 

Regent Pevenstein:

Regarding Regent Wood's comments on E&E, I look forward to working on that committee and reviewing the expense side of the equation.

 

 

Regent Rosapepe:

I will vote against the resolution.  For the first time in history, student and parent investment will be greater than the state.  We will now have quality as our first, second, and third priorities instead of balancing quality with access and affordability.  A 21% increase is too much for the middle class.

 

 

Regent Finan:

I call for the question.

 

The motion carried (majority).

Chairman Kendall:

I want to apologize for not introducing our new regents.   (Introductions of regents Shockley, Pevenstein, Mitchell, and Governor Mandel.)  I would also offer some closing remarks.

 

Many people have participated in the discussions related to how the University System should absorb the dramatic budget cuts that we face.  Many suggestions and observations have been made which have been helpful to us, the staff, and the System administrators.

As chairman of the board I tried to give everyone an opportunity to present their facts and express their opinions.  I might add that the Chairman of the Finance Committee, David Nevins, did a wonderful job of gathering information, letting everyone participate in the process, and guiding the Finance Committee to their recommendations to the Board. The process seemed to work quite well.

However, there were a few statements that were made during the committee and board meetings that did not accurately reflect the situation and could have been construed as inflammatory.  Fortunately, during the discussions no one over reacted and our deliberations proceeded in an orderly manner.

Now that the decision has been made on what the tuition charges will be I think it is important that we address significant false impressions that may linger because of a few erroneous statements.

First, during the discussions there was a claim made that the Regents did not care about students and the budget crisis was being used as an excuse to raise tuition charges more than necessary.  Nothing could be further from the truth. I have seen every member of the Board agonize over every dollar that tuition is being increased and I can assure you that there is deep concern about how these increases will affect access for current System students and future students who wish to enter institutions in the University System of Maryland.

Second, others stated that there is not enough concern for the faculty and staff and that the furloughs and layoffs contemplated should not take place.  Again, I know that the university presidents, the System Administration and the Regents have agonized over the necessity to eliminate positions and layoff staff in order to avoid unacceptably high tuition increases.

Third, I have seen articles that state additional fees or staff reductions would not be necessary if the System would just operate more efficiently.  Unfortunately, I can tell you from my personal experience running a rather large organization, that there is a limit as to how much savings can be produced through increased efficiency, especially in the time frame within which we have to make these cuts.               

The decision on tuition fees has been made and now it is time to work together and develop ways that will enable each individual institution to continue in its quest to be the best among its peer group.  It is incumbent on us all to put our differences behind us and get on with the business of making this the finest system of higher education in the land.

Chairman Kendall:

Motion to adjourn.

 

Second.

 

The meeting adjourned at 2:20 p.m.

 

 

 

 

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