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UNIVERSITY SYSTEM CHANCELLOR SEEKING COST-REDUCTIONS

Westphal Also Tells Legislators That R&D Investment “Has Paid Off”

AUGUSTA – University of Maine System Chancellor Joseph W. Westphal told legislators on Tuesday that he, the System trustees, and the campus presidents are seeking additional cost-efficiencies and cost-reductions to deal with recent cuts in State support and increases in the System’s health care and business insurance premiums.

Westphal’s comments were offered as part of the annual “State of the University Address,” delivered at a joint session of the Maine Senate and House of Representatives in Augusta at the State House.

According to Westphal, the combination of State funding reductions and increased insurance and operating costs “have created the biggest financial challenge in the System’s history – a $23 million gap between our current level of funding and what it would cost us to continue providing our current level of programs and services.

“We know that the State cannot cover that gap – at least not in the immediate future,” Westphal added.

Westphal shared a list of cost-containment measures that the System universities have undertaken so far, including hiring freezes, budget reductions, and centralizing more services where cost savings could be realized.

Westphal added that he is reviewing the missions and functions of each campus and administrative aspect of the University System’s operation to find additional cost-savings.

Noting that several universities and university systems across the nation have already increased tuition for the current fiscal year to deal with budget shortfalls, Westphal said that he and the University System’s trustees are emphasizing cost-reductions as the foremost objective.

“We have resisted doing what so many other [university] systems did – raising tuition before attempting to gain savings in other ways,” Westphal explained.

“We started the process to identify savings several months ago,” he added. “We have more to do.”

However, Westphal stressed that the University System intends to continue pursuing certain initiatives that are important to Maine’s educational and economic improvement.

“Despite our efforts to reduce the cost of our operation, we remain committed to expanding the University System’s role as a resource and partner in addressing Maine’s most urgent needs,” he explained.

He cited several examples:

  • “Public Education Partnership,” which would work with current and prospective teachers and school administrators on matters of teacher training, certification, and professional development.
  • A small-business outreach and workforce training initiative currently being developed.
  • Expansion of university-based research and development activity.

Westphal spoke of new jobs, new products, and new businesses that have grown out of research taking place at the University System’s two graduate institutions – the University of Maine, located in Orono, and the University of Southern Maine, located in Portland, Gorham and Lewiston.

He said that the money the State has invested in university-based research over the past five years – $35 million – has attracted four times that amount in external funding.

“That [State] investment paid off,” Westphal stated. “Our faculty and staff have used that money to bring in more than $140 million in research grants, mostly from the federal government.

“That’s a four-dollar return for every one dollar the State made available in matching funds—a 400 percent rate of return!” he explained.

Westphal cited the recent announcement of a new commercial manufacturing facility that opened in Bangor – Engineered Materials of Maine – as an example of the spin-off benefits of university-based R&D.

“That business is taking wood-composite technology developed at the University of Maine and is commercializing it for use in the construction industry,” Westphal explained. “The company expects to employ 75 people by the end of next year [and] will have an annual payroll of nearly $5 million.”

Westphal added that the goal of the University System’s research initiative is “to put the resources and expertise of our universities to new and greater uses for the betterment of Maine.”

Since 1987, the Legislature has invited the University System chancellor to address a joint session. A similar invitation has been extended to the president of the Technical College System since 1995.

Established by the Legislature in 1968, the University of Maine System consists of seven universities, 10 University College academic outreach centers, and more than 100 distance learning sites located throughout the state.

The University System currently enrolls more than 34,000 degree-seeking students in associate’s, bachelor’s, master’s, and doctoral degrees. Its current enrollment is the largest in the System’s history.

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NOTE TO EDITORS AND REPORTERS: Please remember that a difference exists between the University of Maine and the University of Maine System. The University of Maine is a single institution, located in Orono, and is the flagship institution of the seven-member University of Maine System. The University of Maine System is the administrative and coordinating organization that oversees all seven universities and other related entities.