Chancellor's Speeches

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

Thank you Mr. Chairman and members of the Board of Regents. President Battle, thank you for your remarks this morning and for sharing some of the exciting developments at Coppin.

I am very pleased that we are having this meeting at Coppin State University. This new name for one of the nation's oldest historically black colleges doesn't just sound good . . . it better reflects Coppin's standing as a major urban university. And, as the $160 million recovery capital construction plan for Coppin moves forward, this wonderful institution will have an even greater ability to expand its academic programs and increase its impact on the community.

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.

And I will begin right here at Coppin. Earlier this summer Coppin's Science, Technology Engineering and Mathematics (STEM) Project was awarded $2.5 million by the National Science Foundation (NSF). This five-year grant will be used to strengthen the university's mathematics, computer science and natural science programs. I am equally pleased to note that Bowie State University received that same grant for their efforts to increase the percentage of underrepresented minorities in science and technology majors.

As further evidence of the USM's leadership in the sciences, the University of Maryland, Baltimore County is one of only nine schoolsout of 72 applicationsto receive funding from the National Science Foundation's (NSF) ADVANCE program. The $3.2 million grant gives UMBC the opportunity to develop and implement policies that will promote the recruitment and advancement of women faculty in these disciplines.

The reputation of the USM's institutions continues to grow: Salisbury University was ranked in the top 10 percent of all universities of its kind by U.S. News & World Report, The Princeton Review, AND The 2005 Newsweek-Kaplan College Guide. Towson University rose from sixth to fifth place in this year's Top Public Universities - Master's (North) category in the U.S. News rankings. The University of Maryland, College Park maintained its top 20 ranking among national public universities. And once again every first professional school at the University of Maryland, Baltimore was represented at least once in a top-10 ranking from U.S. News.

And it's not just our institutions that are thriving, but our graduates as well: NASA's latest class of astronaut candidates includes a graduate of Frostburg State University.

I am also pleased today to acknowledge our recently-announced Elkins Professors, the first permanently endowed, university system-wide professorship.

- Carol O. Tacket, a professor in the Center for Vaccine Development and the Department of Medicine at the University of Maryland, Baltimore (UMB), who has been recognized as a leader in the area of clinical vaccine research.

- Harry Basehart, a professor of political science, and Francis Kane, a professor of philosophy, who serve as co-directors of Salisbury University's Institute for Public Affairs and Civic Engagement (PACE).

- And F. Michael Higginbotham, a member of the faculty at the University of Baltimore School of Law, who has developed a national reputation for his work on the impact of race on the law and the law on race relations. He is also a founding member of the Baltimore Scholars Program, which identifies undergraduates at historically black colleges and universities in Maryland interested in post-graduate professional education.

On behalf of the Board of Regents and the entire University System, I extend my congratulations to our Elkins Professors.

As this list of accomplishments indicates, from academic excellence, to faculty achievement . . . from cutting-edge research to community outreach, USM institutions and their faculty and students are a source of pride for the entire state.

Over the summer, there was considerable activity on two items of great significance for the USM. The first was the progress on MHEC's draft updated state plan for higher education. Chairman Cliff Kendall, Bob Bogolmony and I serve on the Task Force responsible for developing this plan. We were ably assisted by staff both in the System office and at our institutions. These talented staff worked wonders in helping us stay on top of the various issues that arose during the plan's development. The main themes we pressed are, first, the critical importance of achieving, maintaining and advancing the excellence of higher education in Maryland . . . and the vital role that state funding plays in realizing that goal. Secondly, we emphasized the importance of the state meeting its responsibility to expand the capacity of higher education so that every qualified person who could benefit from a college degree has a chance to get one at an affordable cost. MHEC will circulate its draft update plan for public comment and we will make certain that each of you gets a copy of the draft. The final report is due in mid November.

The second item that received considerable attention this summer is our Financial Aid Task Force, chaired by Treasurer Nancy Kopp, which I appointed earlier this year. The Task Force membership includes Regents Florestano and Hug, as well as presidents and others from across the System. I consider the work of this task force to be extremely important. All of us are concerned about the impact of rising costs on access to our institutions. The recommendations coming from the task force give us a chance to ensure USM has financial aid policies in place that are informed by the best practices from across the nation, and that will best serve the needs of our students.

The task force has determined four areas of emphasis:

- (1) The balance of institutional aid, not just merit-based versus need-based, but also how the aid is divided among undergraduate, transfers and graduate students;

- (2) lowering the debt burden that follow so many of our graduates out of college;

- (3) the need to find additional resources targeted toward financial aid, at the state and federal levels, as well as from private sources;

- (4) examining best-practices to make our financial aid efforts more effective and efficient.

Clearly, this effort is about more than just finding additional sources of financial aid monies, as important as that is. It is also about making sure that aid is better targeted and more effectively delivered.

To complete the Task Force's work, the Treasurer established two sub-committees -- the goals sub-committee, chaired by Pat Florestano, and the administrative procedures sub-committee, chaired by Vince Conti, Senior Vice President and Chief Financial Officer at the University of Maryland University College. Both sub-committees have been working extremely hard. The preliminary report is expected in October, with the final report due to me in November. The report will then be brought to the Board for its consideration and action.

At this point I ask Regents Florestano or Hug if they have any observations about the task force they would like to share.

Let me turn now to our agenda for today . . . .

As you might expect, I begin with our budget status. As you know, the September Board of Regents meeting usually includes the Regents' consideration of the system's proposed budget. We have been working in close coordination with the Department of Budget and Management, and the consensus is that we should postpone our budget decision until the October Board meeting so that the state's fiscal picture can come into sharper focus. With so many uncertainties, everyone agreed it made sense to wait on both our budgetary and tuition decisions.

Our current budget guidance from DBM is to plan for flat state funding again in FY06. However, Governor Ehrlich has said on several occasions that he considers higher education a top priority and he has instructed Secretary "Chip" DiPaula to try and find funds to add to our budget. Obviously we would certainly welcome any additional funding from the state, but for now we are assuming flat funding.

Of course, given the expected increase in mandated costs, such as merit increments, rising health care costs, huge increases in energy costs, and new facilities coming on line, not to mention the costs of serving larger numbers of students, flat funding actually translates into a shortfall of about $100 million.

As you all know, grappling for a third straight year with a roughly nine-figure budget gap is both difficult and stressful. Worse, it greatly compromises our ability to sustain the quality of our institutions and to expand capacity to meet the surging enrollment demand. There were very few "easy cuts" in the first place. At this point, with no new state funds, there is very little we can do that will not cause significant hardship on the System's institutions and the people we serve.

Our budget outlook makes our efforts to improve effectiveness and efficiency all the more vital. Next month, the report from the E & E Task Force, Chaired by Chairman Kendall, will go to the legislature. The report will cite the savings our efforts already generated in FY 04, which preliminary estimates put at over $50 million in cost savings, cost avoidance, new sources of non-tuition revenue, and reallocation of current resources.. The E & E report also will include recommendations to be implemented in FY 05 and beyond. These recommendations are expected to encompass both the administrative savings as identified by the Accenture study and the savings resulting from the academic initiatives developed at the Presidential Retreat last summer. When finalized, these recommendations are expected to result in tens of millions of dollars of additional savings. They also will enable us to expand capacity somewhat because our greater effectiveness on the academic side will lead to a decrease in time to degree for students across the System. .

Just as the fiscal uncertainties make our E & E efforts all the more important, so too the enrollment certainties underscore their importance. As I've mentioned before, enrollment will jump more than 25% over the next decade. And while we estimate that between the on-line leadership of UMUC and our educational centers at Shady Grove and Hagerstown, we can accommodate one-third to one-half of the projected enrollment growth at a considerably lower cost to the state, there is simply no way we can continue to provide high quality education to the full demand of students without a significant investment by the state. In just a moment, we will begin a discussion of the magnitude of the resource problem we face, if we are going to overcome the twin challenges of building the quality of our institutions and accommodating all the students who could benefit from the education our institutions offer.

Before moving to that discussion, let me conclude my report by noting that this coming academic year is going to be an extremely important one with critical budget decisions and tuition proposals, the implementation phase of our E & E efforts, the Financial Aid task force recommendations; and the MHEC plan all emerging in the next few months. And right on the heels of these developments will come an incredibly important legislative session.

I am looking forward to working with all of you, our university presidents, leaders in Annapolis, and our tremendous network of advocates, as we move forward to position the University System of Maryland for a new era of excellence.

Mr. Chairman, this concludes my report. With your permission, I would now like to begin the first of a series of policy discussions by the Board on the resource requirements of the USM over the next several years as we attempt to continue to build the quality of our institutions and accommodate the enrollment projected demands.

The discussion today is intended to lay out the magnitude of the challenges and policy choices we face and to begin a conversation on the policy choices the Board will have to make on these critically important matters.