AUGUSTA – Like the state itself, the seven-campus University of Maine System faces a severe shortfall between current funding and what it would cost to maintain present services, Chancellor Joseph Westphal told the Legislature on Tuesday.

A combination of reduced state funding and increased insurance and operating costs has created “the biggest financial challenge in the system’s history,” a $23 million gap between funding and costs, Westphal said.

“We know that the state cannot cover that gap – at least not in the immediate future,” he said in his State of the University address at the State House.

Also addressing lawmakers Tuesday was John Fitzsimmons, president of the Maine Technical College System, who asked for support for a plan to broaden the mission of the seven-campus system he leads and to create a Maine Community College System.

Westphal said the seven university campus presidents are cutting costs in response to reductions in state support as the Legislature faces a $1 billion state budget shortfall for the two years starting July 1.

The campuses already have imposed hiring freezes and budget reductions and centralized more services in order to save money, he added.

“We have resisted doing what many other [university] systems did – raising tuition before attempting to gain savings in other ways,” said Westphal. “We started the process to identify savings several months ago. We have more to do.”

Despite efforts to reduce costs, the university system is committed to expanding its role as “a resource and partner in addressing Maine’s most urgent needs,” the chancellor said.

Examples include certification and professional development programs for educators, small-business outreach and research and development, he said.

State funding for university-based research – $35 million during the last five years – has attracted four times that amount in external funding, mostly from the federal government, Westphal told the lawmakers.

The university system enrolls more than 34,000 students in degree programs, while the technical college system enrolls 7,500 degree students and plans to expand its enrollment to 11,000.

Fitzsimmons asked lawmakers to support Gov. John Baldacci’s proposal to spend $1 million to complete the technical colleges’ transition to a community college system.

Community colleges are “the missing link in engaging more Maine citizens in higher education,” said Fitzsimmons. Nationally, 42 percent of undergraduates enroll in community colleges, compared to only 15 percent at Maine’s technical colleges, he said.