Students and faculty members who are protesting budget cuts at the University of Southern Maine are accusing officials of making up numbers and “manufacturing” the crisis.

The critics say the University of Maine System should use its $183 million in unrestricted reserve funds to plug budget holes and save faculty positions. But USM and system officials say that money is earmarked for specific projects and can’t be used to balance the budget.

“We’ve been putting this out for the past year that this (restructuring) was coming down the pike and things would have to change,” Norman Fournier, a University of Maine System trustee, said Tuesday. “The money is not there. If the money was there, we’d be more than willing to share it.”

USM started laying off professors Friday in an effort to cut $14 million, 10 percent, of its $140 million budget for the fiscal year that starts July 1. In all, President Theodora Kalikow has proposed cutting four academic programs and as many as 50 faculty and staff positions. The moves have prompted several protests.

Officials say that flat state funding, declining enrollment and tuition freezes have left a $36 million funding gap across the seven-campus UMaine System.

But Susan Feiner, an economics professor at USM, has sharply questioned the premise of the cuts at campus forums, at protests and in a guest column in the Maine Sunday Telegram. She says officials could reallocate funds.


“They’re sitting on big reserves and making them bigger, at the expense of the core academic mission,” Feiner said Tuesday.

Of the $183 million in unrestricted reserve funds, $133 million, 73 percent, is controlled at the campus level, said Rebecca Wyke, the system’s vice chancellor. Generally, the money is used for campus capital projects, deferred maintenance, scholarships and other projects, she said.

The UMaine System’s office controls about $50 million, 27 percent, and uses:

$20.5 million in reserve for the self-insured health plan covering all employees in the system.

$15 million for the budget stabilization fund.

$6 million as collateral for internal loans to campuses and a reserve to cover deductibles for risk management.


$3.6 million for information technology projects in development.

$3.9 million for smaller emergencies, contingencies, strategic projects, etc.

Fournier said the $15 million budget stabilization fund and the $3.9 million emergency fund is “the only money we have at this time” to even consider using to offset the impact of the current budget crisis.

“With a total system budget of $700 million, that is very little,” Fournier said.

The system’s operating budget is $523 million; the $700 million includes grants and other funds.



Aside from hard numbers and statistics is the philosophical debate about the future of traditional liberal arts education at universities nationwide, Feiner said. That’s one reason that New York Times columnist Paul Krugman mentioned USM’s cuts on his blog Monday.

“From what I’m hearing, it appears that while declining state funding is a key driver of events, the university administration has exaggerated the financial problem; it seems eager to downsize liberal arts and social sciences for reasons that go beyond money,” Krugman wrote.

“Krugman was willing to comment on it because USM is the perfect storm of that broader philosophical argument manifesting itself in a very specific situation,” Feiner said. “Lots of email I’ve gotten since this has happened is from people telling me they work at XYZ university and they all face budget cuts … and in some cases the faculty had hired auditors, found high reserves, very highly paid administrators and a complete unwillingness to rethink their approach to the core academic mission.”

Chancellor James Page countered Feiner’s position in a guest column in the Portland Press Herald.

“Some would suggest utilizing one-time university reserves set aside for scholarships, deferred maintenance and other critical needs to lessen budget cuts. But these are not resources we can count on as repeatable each year,” he wrote, noting that the system is going through a reorganization.

“Our entire organization – across the state – is restructuring and reducing costs while ensuring that our core mission is enhanced and not compromised,” he wrote.



Critics have also accused USM and the university system of being top-heavy with administrators, reflecting a national debate over colleges hiring more administrators than teachers and reducing costs by hiring part-time instructors instead of tenure-track faculty members.

Since 2007, a total of 520 positions have been cut in the university system, including more than 25 percent of administrative positions and 10 percent of faculty positions. Page said that of the 291 employees now in the system office, only 12 are administrators and the rest are the support staff for the campuses.

At USM, Kalikow said cuts in recent years have hit the administration more than the faculty.

Since 2007, USM has reduced its workforce by 245 employees, 20 percent.

Kalikow said that since 2006, administrative positions have been reduced by 51 percent, the salaried staff by 26 percent, hourly employees by 33 percent and the faculty by 15 percent.


Feiner said she believes that the cuts are aimed at eventually eliminating all liberal arts majors at USM.

“They do not want the liberal arts majors on this campus,” she said. “I think that there is a sympathy toward private colleges, like Husson and Kaplan, and so shrinking USM would increase business for those guys. I think that is part of this.”

Faculty Senate President and physics department Chairman Jerry LaSala said he hasn’t been able to get USM officials to provide a cost breakdown by department and administrative unit.

“I’ve asked for very specific reports and was told they couldn’t do it,” he said Tuesday. “How can anyone make financial decisions without that?”

LaSala said he has been told that he will get the information in the near future.

“Is it a manufactured crisis? That’s the big question. I quite frankly don’t know,” he said. “I’m an astronomer, not an accountant.”



At USM, the unrestricted net assets are now $7.1 million, said Chief Financial Officer Richard Campbell. Of that:

$1 million is for replacement of the 45-year-old central heating plant on the Portland campus.

$2.8 million is for auxiliary services, primarily in the event the residence halls, which are supposed to be self-supporting, face a loss.

$3.3 million is for emergencies.

As an example of previous use of the funds, Campbell said USM replaced the central heating plant on the Gorham campus last summer for $3.1 million, and had an emergency $500,000 repair several years ago after a wind storm damaged the roof of a building.


“Why do we have reserves? Because we have weather,” Campbell said. “Things like that come up.”

Even the current cuts may add to expenses in the short term, he said, since USM is offering retirement incentives.

USM is projected to have a $1.5 million operating loss in the year that ends June 30, according to a systemwide financial analysis of unrestricted funds on Feb. 28 .

“This is what we know about what our situation is, and it paints a very different picture than the position Professor Feiner takes,” Campbell said Tuesday. “The best I can say is that I don’t agree with (her) analysis.”

Feiner said the university system’s AAA bond rating from Moody’s Investors Service is proof of its financial health. She said she doesn’t think that adjusting financial strategies by changing the use of the unrestricted funds would cause a decline in the bond rating.

Noel K. Gallagher can be contacted at 791-6387 or at:

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