1. 1 Presentation to the Senate Budget and Taxation Committee University System of Maryland January 15, 2004

2. 2 Regents Effectiveness and Efficiency Initiative A University-wide commitment to review the most fundamental aspects of the academic enterprise and to improve total organizational performance Willingness to examine ideas, comments, and criticisms from all corners

3. 3 Emerging E&E Transformation Themes Reduce the cost structure Create strategic reallocation model for enrollment management & growth Alternative financing approaches for core activities Maintain quality

4. 4 Specific Tasks in Support of E&E Themes In Process Faculty workload audit & policy review Presidents workgroup to plan for expansion of on-line education Presidents workgroup on collaboration & consolidation Hagerstown Center in January 2005 RFP for acquisition of outside consulting services Expand scope of current efficiency system Completed Campus utilization study Review of property & equipment assets Executive compensation & administrative staffing levels

5. 5 Administrative Salaries Salaries of senior executives –70 th percentile of national comparison groups for comparable titles Salaries of managers & supervisors –63 rd percentile of Eastern region for comparable titles

6. 6 Administrative Staff Size of administrative staff –System institutions have a significantly better efficiency rating vs peer institutions nationally –Overall, USM institutions serve 30% more students per staff member (97.1 students to 1 staff) than their peers (67.7 students per 1 staff) –9 of 11 institutions have fewer staff per 100 students vs peer institutions nationally –System’s Central Office ranks 28 th out of 47 Systems in operating budget per headcount student (FY 2001); 17 th out of 19 in number of staff per headcount student (FY 1997)

7. 7 The Budget in Brief The budget crunch in public higher education is a national phenomenon causing major challenges for quality, access and affordability.

8. 8 FY 2004 Cost Containment Actions Expenditure reductions $120M (58%) Total problem $206M & 787 positions eliminated Tuition increases $75M (37%) Other revenue $11M (5%)

9. 9 USM Position Summary FY 2002 – FY2004 State 14,532 13,983 13,824 (5%) Non-state 4,958 5,309 5,263 6% Total 19,490 19,292 19,087 (2%) FY 2003FY 2002FY 2004% change FY 2004 position level reduced by 787 from original budget request.

10. 10 FY 2005 Current Services Budget State appropriation level-funded at $746.2M Estimated mandatory costs included in budget - $71.3M Selected programmatic needs - $7.7M Costs not included: –Health insurance inflation (per DBM instructions) –Enrollment growth Balancing the CSB –Effectiveness & Efficiencies initiatives & additional budget reductions - $25M –Tuition increases - $55M

11. 11 USM – State Supported Budget Where the Dollars Come From FY 2000FY 2005 Tuition & Fees (33%) USM State Appropriation (55%) Tuition & Fees (46%) USM State Appropriation (43%) Other Unrestr. & Restricted (12%) Other Unrestr. & Restricted (11%)

12. 12 State Dollars per USM Student 12 $ per FTE student

13. 13 Funding Guideline Achievement

14. 14 Tuition Maryland’s in-state resident tuition is high ― we are 6th in the nation ― and affordability is a serious concern. Stabilizing tuition is an imperative, but increasing state funding is as well.

15. 15 Top 10 states for Highest Tuition Resident Undergraduate 1.Vermont $ 8,389 2.New Hampshire 7,744 3.Pennsylvania 7,448 4.New Jersey 7,206 5.Ohio 6,878 6.Maryland 6,246 7.Massachusetts 6,204 8.Delaware 6,191 9.Michigan 6,004 10.Connecticut$ 5,869

16. 16 State Funding &Tuition Relationship Historical Pattern % Change

17. 17 State Wealth vs. State Spending on Higher Education Per capita personal and disposable personal income - MD 4 th State general funds for higher education: per $1,000 personal income – MD 38 th per capita – MD 27 th per student – MD 23 rd

18. 18 Tuition - New Regents Policy Increased predictability for students and families Increased institutional flexibility to propose tuition rates based on: –Mission –Market opportunities and constraints –Pricing strategies An integrated four year plan with: –Enrollment projections –Resource needs –Funding Guideline achievement

19. 19 Enrollment - Joint Committee Report “… the USM & Maryland's community colleges should respond as to the State's ability to meet enrollment growth and workforce demands, while ensuring high quality, access and affordable tuition …”

20. 20 USM Headcount Enrollment FY 1999106,773 FY 2002119,300 FY 2004125,939 FY 2005 –Current Services Budget127,497 –Separate List130,269 FY 2008141,060 FY 2011153,307  32%  44%  20-22%

21. 21 Thousands 199719992001200320052007 55 60 65 70 Actual Projected Source of Enrollment Demand Maryland High School Graduates 1998 -2007

22. 22 Enrollment Strategies What the Community Colleges & the USM will do together: Maximize current operating capacity Community College / USM collaborations (UMUC) Regional Centers Complete associates degree before transfer What the State can do: Need-based aid Predictable & affordable tuition Predictable State funding

23. 23 The USM and the Maryland Economy Higher Education is the raw material of the new economy

24. Salary and Degree Level & Unemployment Rates Average Annual Earnings (000s of $) 020406080100120 Source: U.S. Census Bureau, Current Population Survey, Annual Demographic Survey, March Supplement, Table PINC-03, March 2003 (for calendar 2001, individuals ages 25 and over). Less than H.S. H.S. graduate Some college, no degree Associate degree Bachelor's degree Master's degree Doctorate Professional 24 < 2% < 2.5% 4% 4+% 5+% 8+%

25. Research Dollars Per Capita by State Source: Milken Institute US $ Per Capita 25

26. 26 University’s Role in Job Creation and Enterprise Development Maryland is ranked 1st nationally in % of population with college+ education Our State is ranked 2nd nationally in knowledge jobs This State scores highest nationally in Workforce Development Maryland is ranked 5th among the states in its capacity as a Knowledge Economy Source: New Economy Index

27. 27 Recent Economic Investments Despite tough times … –Governor and General Assembly continue to support a strong capital facilities program –Governor funded, and General Assembly approved, Sunny Day grants for major research parks at UMCP and UMB –Governor provided $500,000 from TEDCO for technology transfer projects