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December 18, 2008

UMS reveals $15M budget hole, seeks new biz model

By The Mainebiz News Staff

A range of factors -- from the global economic downturn to the state's revenue shortfalls -- have created a $15 million hole in the University of Maine System's current fiscal year budget and prompted university officials to seek a more sustainable business model, Chancellor Richard Pattenaude detailed in a memo to faculty and staff yesterday.

Despite UMS officials cutting $19.1 million from the budget by eliminating positions, reducing operating budgets and freezing salaries for 59 senior administrators, as well as increasing tuition and fees, Pattenaude said the university system is still facing a $15 million budget gap. Pattenaude said the system is suffering for three major reasons: the dramatic increases in the cost of energy and healthcare insurance; a decrease in the number of high school graduates in Maine, and therefore a decrease in university enrollment; and the state's inability to increase financial support for higher education because of its own economic struggles.

Pattenaude said the university system's current struggles make it clear that its operating model is not financially sustainable. He said UMS trustees would meet Jan. 11 to discuss the development of a new business model. "None of us knows fully what actions will be necessary to address the short-term and long-term financial challenges," Pattenaude said. "All we do know is that we must act, and whatever actions we take will be difficult."

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