Effectiveness and Efficiency Project

1. Effectiveness and Efficiency Project Report to the University System of Maryland Board of Regents

2. OVERVIEW • Context of E & E Initiative • Impact of on-going efforts • Why an E & E “Project” • E&E Workgroup & Participants • What are the E & E “Academic Action Items” • What are the E & E “Administrative Action Items” • What is the anticipated impact • What are our “next steps” • Summary

3. Context • Declining State Aid • FY 2000: $8,488 per student • FY 2005: $7,497 per student • USM Budget cut almost 14% from FY02 level • More than 5,500 additional FTE students since FY02 • Each year we face $100 million in increased costs

4. Impact of on-going efforts • USM Efficiency Report for FY 04: - Cost Avoidance $17.6 million - Cost Savings $10.1 million - Non-Tuition Revenue $22.9 million - Strategic Reallocation$14.9 million Total for FY 04 $65.5 million • Portion of budget shortfall covered by savings: 62% • Portion of budget shortfall covered by tuition hikes: 38% • Nevertheless, on average, system-wide, tuition has increased 30%

5. Why an E & E “Project” • Enrollment is projected to increase 30% over the next decade - “Baby boom echo” & “Thornton effect” • Costs continue to escalate - healthcare, energy, enrollment growth, etc. • Rising demands on higher education in the “knowledge economy” • Need to reconcile these facts while meeting three key goals: - Quality - Capacity - Affordability

6. E&E Workgroup & Participants • E & E Workgroup: Cliff Kendall, Chairman Pat Florestano Catherine Gira Richard Hug Marvin Mandel Robert Mitchell David Nevins Robert Pevenstein Jim Rosapepe • Collaborative effort: - Chancellor and vice chancellors - Institutional presidents, provosts, and vice presidents - Senior campus officials - Accenture’s consulting team

7. E & E “Academic Action Items” Action items developed to build capacity • Faculty Workload - 10% increase in teaching loads across the USM • Time to Degree - Degree programs limited to 120 credits • On-line and out-of-classroom learning - 12 credits completed outside traditional classroom experience • Enrollment management - Maximize utilization of “comprehensive” institutions

8. E & E “Administrative Action Items” Action items developed to reduce costs and fund quality • Support and Administration: - Centralization of “shared services” such as Finance and Human Resource Management • Procurement - Leverage the USM’s buying power for “strategic sourcing” to drive down prices • Enrollment Management Services - Streamline student services functions to eliminate unnecessary duplication • Review Organizational Structure of Special Purpose Institutions

9. What is the anticipated impact • Building Capacity: - Academic initiatives will enable the USM to serve an additional 2,100 students over the next three years -- 20% - 25% of enrollment growth -- no additional cost to the State • Reducing cost and funding quality: - Administrative initiatives will enable USM to free up money to investment in quality and mitigate tuition increases • Fiscal impact: - Academic Action Items: $9.5 million - Administrative Action Items: $17.1 million - Estimated E&E Value FY 06 $26.6 million

10. Next Steps • Report contains 16 specific Action Items - Implementation will begin immediately - We expect items to be completed or substantially implemented over the next two years - Ensure accountability through an internal “scorecard” and an external “report card”

11. Summary • Systemic reengineering of the academic and administrative processes - Accommodates 20 – 25 percent of projected enrollment growth over the next three years - Mitigates tuition increases - Provides for investments in quality • USM has taken steps to expand capacity, promote affordability and enhance quality • To fully meet the Regent’s goals, the state must reestablish higher education as a funding priority