Just one year ago, the new year started with great expectations. In Augusta, the 120th Maine Legislature had convened with a shared sense of optimism and a wide range of ideas about improving Maine and its quality of life. Gov. Angus King was preparing his final biennial budget following steady improvements in the state economy. And in Washington, our new president and Congress were talking about revenue surpluses and what to do with them.

Among the many issues discussed one year ago in Maine and in Washington, public investment in higher education was a popular topic. Policy leaders correctly spoke of the importance of investing in students as a way to sustain economic growth.

However, as we start 2002, the economic condition of the state and the nation is much different. Policy leaders are forecasting deficits again. And they are talking about a limited set of program and funding priorities. Once again, continuing public investment in higher education should be part of the political and economic discussions.

One of the most documented truisms in economics is the connection between the availability of higher quality, affordable higher education and economic growth. Several reasons are cited:

. Universities and colleges are magnets for private-sector, consumer, and federal dollars, spurring major economic activity around them;

. businesses and industries locate and grow where they have access to an educated and available work force;

. research universities in particular are incubators for entrepreneurs and innovation, thus opening opportunities for new jobs, new products, new businesses, and greater economic growth;

. the better educated a work force, the greater its per capita income that creates greater consumer spending and related economic activity, including substantial increases in state tax revenues.

It’s important to look at these basic facts of economic life as the Legislature and governor begin the process of dealing with Maine’s current fiscal condition. As the state learned the hard way in the early 1990s, when it dramatically cut state investment in public higher education, disinvesting in Maine’s universities and colleges during rough economic times actually compounds the problem. During that period, budget cuts and “flat funding” forced universities and colleges to cut necessary programs and services and raise tuition sharply just to continue operating. Basic tenets of public higher education -access, affordability and quality were compromised.

One disturbing yet predictable consequence of that period was a major loss of the state’s brain power, as Maine’s college-bound high school students left the state in increasing numbers. So, too, did some of the state’s most valuable teachers and researchers, in search of a state with a more consistent commitment to education.

Fortunately the improved economy of the past few years gave Maine policy-makers sufficient revenues to start repairing the damage done by those earlier cuts in higher education investment. And we are seeing some of the results: increasing numbers of Maine students are enrolling in our public universities and colleges; we are making long-overdue improvements to learning facilities throughout the state; university-based research is producing results, creating jobs, and drawing record amounts of federal investment; and most important of all, Maine is starting to reverse the brain drain. For the first time in years, the proportion of Maine’s college-bound high school graduates staying in Maine has risen back to the 50 percent mark – still much too low, but an indication that our joint efforts are beginning to pay off.

These trends must continue if Maine is going to grow its economy and to provide Maine people across the state with the services and opportunities needed for rewarding careers and an attractive adequate state investment in higher education.

No doubt the new legislative session will be difficult for lawmakers working to close the gap between budgeted expenses and anticipated revenues. Within the University of Maine System, we have already taken steps to contain costs, all the while attempting to maintain access and affordability as well as quality and essential public services. For example, university campuses have imposed hiring moratoriums, reduced budgets, and have not renewed personnel contracts.

But complicating our efforts is a distressing increase in health care insurance costs, which is comparable in magnitude to the state budget reductions UMS experienced during the early 1990s. My own recent conversations with Gov. King and legislators lead me to believe that our state leaders recognize this imperative. They understand that education funding – at all levels – must be treated as an essential and fragile element of the state’s economic foundation.

Donald L. McDowell is interim chancellor of the University of Maine System.