The University of Maine System is taking heat for its recent decision to cut faculty and staff in the face of budget cuts, rather than use some of its reserve funds to offset the loss.

UMS officials are saying their $177 million of “unrestricted net assets” is needed for emergencies, capital projects and unexpected expenses. Teachers, students and some other financial experts don’t agree that all of it should be kept for those uses, and are angry that the universities’ programs and staff will be taking a hit despite all that money on hand.

It’s a debate that brings up many issues, including priorities, fiscal responsibility and planning.

No one likes to see teachers, programs and course offerings cut, and that’s given the university system’s decisions an emotional edge. At the University of Southern Maine alone, 22 positions are set to be eliminated or discontinued and 25 courses will be canceled altogether, due to the flat-funding proposed for the UMS in the state’s biennial budget.

It’s important to note that the $177 million isn’t just sitting in the bank with no designs on it. In a recently published story by the Maine Center for Public Interest Reporting, UMS Chancellor James Page said most of the money is allocated to a variety of uses, such as $18 million in a “benefits carryover pool” to cover all of those insured through the university system.

The question is whether or not it’s properly allocated.

Yes, the university system needs to keep an emergency reserve and save money to fund capital improvements. Those are important aspects of financial planning, and with a governor who is keen on vetoing capital improvement bonds even if voters do give the go-ahead, it’s wise of the system to plan ahead.

Maine’s universities need quality facilities to attract students or enrollment will decline significantly ”“ and with it, the tuition funds that keep the system going. But quality programs and professors are also key, and it’s a balancing act with which system officials will always have to contend.

A university system’s fiscal health is judged by financial experts to be healthy if it can cover about five months of operating expenses with its reserve funds. The UMS has 4 1/2 months of operating expenses on hand, putting it in a strong position. As well, the system’s reserves have been growing steadily, doubling from 2001 to $88 million in hand as of 2009, and growing to the current $177 million.

It would seem to the casual onlooker that the university system has enough money in hand to help shore up recent budget cuts and comfortably remain on solid fiscal ground for capital improvements and emergencies.

What most don’t see is the system’s $400 million backlog of building updates that need to be done, as reported in a review conducted last year. Those improvements should be prioritized and completed according to a long-term plan rather than allocating all resources to capital projects while ignoring staffing costs. Certainly, the system can go without some of the needed capital improvements for now, just as it can do without some professors and courses.

Overall, we feel the university’s fiscal overseers are being prudent in their spending, but perhaps a bit too cautious. Cuts can and should be made; private businesses have had to streamline their processes and cut back on staff for years now to compete in the current economy, and the public sector needs to fall in line as well.

Making a habit of pulling reserve money to cover every flat-funded budget year is not a long-term solution, but the system’s current fiscal comfort level is high enough ”“ and growing so strongly ”“ that it would make sense to allocate more of the university’s income toward its staffing costs going forward.

According to news reports, the system has $10 million set aside that is specifically earmarked for “budget stabilization,” and though the system’s officials would like to see that figure at $20 million, we think it makes sense to use some of it this year ”“ for its intended purpose, no less. They don’t need to put in all $5 million and halve that account for this budget season, but throwing, say, $2.5 million at the problem would allow administrators to minimize the impact on the student body and maintain quality of programs while still finding efficiencies and remaining fiscally prudent.


Today’s editorial was written by Managing Editor Kristen Schulze Muszynski on behalf of the Journal Tribune Editorial Board. Questions? Comments? Contact Kristen by calling 282-1535, Ext. 322, or via email at [email protected].