UM and USM are not underfunded

Public higher education faces major financial pressures. Newspaper articles report declining appropriation levels by states and rapidly rising tuition and fees. Concerns about the adequacy of funding for public higher education abound.

Maine higher education leaders annually call for a greater appropri-ation from the Legislature and announce higher tuition. In this setting, the public receives very little factual information to allow an assessment of the adequacy of funding of Maine public higher education.

A direct approach in assessing funding issues is to examine various financial measures at the campus level relative to typical amounts for groups of similar institutions. This analysis has been conducted by using academic year 2004 (AY04) data, the latest available, as reported by the University of Maine (UM) and University of Southern Maine (USM) and their peers to the Integrated Postsecondary Education Data System (IPEDS).

Together, UM and USM accounted for 78 percent of total operating expenses of University of Maine System schools and received 74 percent of the total amount appropriated for operating expenses to the system by the Maine Legislature.

The sets of similar schools (or peer groups) for the two schools differ. The Carnegie Classification System identifies UM as a doctoral-extensive institution and places USM in the master’s colleges and universities I category. In each case, the two national peer groups are made up of public, four-year institutions that do not have a medical school or do not grant a medical degree.

In the case of UM, there are 47 institutions in the peer group. USM’s peer group contains 246 schools. The comparison between each school and its peer group focuses on total operating expenses per full-time equivalent enrollment (FTE), appropriation revenue per FTE and tuition and fees. Peer group performance is expressed as a median value to avoid the influence of extreme values on average values.

In AY04, UM operating expenses per FTE were $28,372. Excluding UConn and UVT, both with medical schools, this is the highest among New England public doctoral-extensive institutions. The comparable amount for UNH is $27,941. Among the 44 institutions reporting such data, UM’s expenses per FTE rank as the 10th highest nationally, 1.20 times or 20 percent greater than the median value for the peer group.

USM’s expenses per FTE were $20,158, 20th highest among the 243 national peers reporting expense data. This figure was 1.45 times or 45 percent greater than the median value for the peer group. Both schools spent significantly more per FTE than did most schools in the peer groups.

Appropriation of public funds to cover operating expenses and tuition and fees are major revenue sources. UM reports appropriation per FTE in AY04 to be $9,116. With the exception of UConn, this is the highest among public doctoral-extensive institutions in New England, exceeding UMass-Amherst’s $8,761 and UNH’s $4,226. Nationally, UM’s figure is 1.36 times greater than the peer group’s median value and ranks 11th highest among the 44 peer institutions reporting these data.

The same figure for USM is $5,150, slightly less than the $5,281 median value for its peer group. This ranks USM 129th among 240 schools. UM clearly receives more appropriated dollars per FTE than nearly all New England public doctoral-extensive schools and more than most of its national peers. USM’s position is about typical for its peer group.

Tuition and required fees are another important revenue source. The analysis compares in-state tuition and fees for full-time undergraduate students as of Fall 2003. (Net tuition, which adjusts for discounts and financial aid, would be preferred, but is not readily available). UM’s figure is $6,328, the lowest among New England public doctoral-extensive institutions. However, among its national peers, this figure ranks as the 17th highest and 1.15 times or 15 percent higher than the group’s median value.

This apparent paradox – lowest in New England but high nationally – reflects the fact that New England public doctoral schools have historically charged significantly higher tuition than their national counterparts. USM’s tuition and fees in Fall 2003 were $5,510 placing them 48th highest among 242 peers. This figure was 1.29 times greater than the median tuition for the peer group.

Tuition and fees for both institutions are high relative to their respective peer groups. The often-noted point that UM’s lowest-in-New England tuition is a positive feature stands in sharp contrast to the national picture. In fact, the question, when viewed nationally, is why are tuition levels in general so high in New England?

The analysis presented here provides little support for the contention that UM and USM are underfunded. Amounts spent per FTE in AY04 at UM and USM greatly exceed amounts spent by similar institutions.

As to the adequacy of the state appropriation, the amount per FTE at UM is very high in comparison to similar New England institutions and to national peers. USM’s amount basically equals the median value for their peer group.

Tuition and fees at both institutions are high relative to national peer institutions.

By the standard used here (comparing an individual campus to similar schools), arguments that these institutions lack adequate resources to fulfill their missions, receive too little money from the state and charge low tuition appear to be weak. Why do so many other schools operate with lower expenditures per FTE, less public support per FTE and charge lower tuition?

Thomas D. Duchesneau is professor emeritus of economics at the University of Maine.