FEBRUARY 2, 2005

Testimony of USM Board of Regents Chairman Clifford M. Kendall

Mr. Chairman and members of the Committee, I am pleased to join you again to testify on the Governor's proposed budget for the University System of Maryland. On behalf of the Board of Regents, I want to first express my appreciationto the Governor and the members of the General Assemblyfor the strong support shown for the University System. Today I will give a brief overview of the USM, with Chancellor Kirwan following up with more specific details.

As you know, the Governor has proposed a budget of $800.7 million for the USM.  This proposal is  a 5.7% increase in total funding for the System, and-- after accounting for targeted and transfer funds--represents a discretionary fund increase of 4.8%.  At a time of budget stress, we are certainly grateful for this support. Our hope is that this budget marks a return to stability and an opportunity to make some modest investments. Most importantly, it enables us to keep tuition increases modest -less than 6%--and avoid cuts into student services.

As you know, the USM is facing significant challenges. We face the challenge of rising demands on higher education in the "knowledge economy." At the same time, our mandated costs (healthcare, energy, facilities, etc.) continue to escalate. In addition, with the "baby boom echo" and the " Thornton effect", enrollment is expected to increase 30% over the next 10 years. The state must find a way to support its share of the cost of educating these students and find the resources necessary for the USM to meet is three goals of quality, access and affordability. The Governor's budget proposal helps to reaffirm the State's commitment to funding, and begins to reinvest in public higher education.

Recognizing that we face a "new reality" in public higher education, we have taken several steps to do our part in meeting our shared goals of excellence, affordability and accessibility in this environment. A few years ago we began what was truly a system-wide reengineering effort. We have updated our Strategic Plan to address these changing circumstances. We established a Tuition Task Force and a Financial Aid Task Force, which together helped us develop a new approach to stability, predictability, affordability, and enhanced access. And we launched the Effectiveness and Efficiency Program, which has already saved the System over $60 million, with significant savings still to be realized in future years.

Clearly, as a system, we have taken real and meaningful steps to address the challenges we face, while maintaining our firm commitment to the principles of quality, access and affordability. The budget increases proposed by the Governor will enable us to build upon these efforts and continue our progress toward these goals. We urge its passage.