UMGC officials defend marketing spending and use of fund balance as auditors flag HIDA transparency issues

University of Maryland Global Campus officials told the Education and Economic Development Subcommittee in Annapolis that the institution is investing fund balance and marketing dollars to grow enrollments and revenue even as state support tightens and an audit flagged governance problems at the university's affiliated HIDA entities.

Kelly Norton, a budget analyst who presented the Department of Legislative Services (DLS) review, told legislators that UMGC’s total undergraduate enrollment for fall 2024 reached 52,187 and that unrestricted E&G expenditures have exceeded revenues in five of the last seven fiscal years. Norton said the E&G deficit for fiscal 2025 is expected to be $17,500,000 and noted that, “as a nontraditional university, UMGC lacks” auxiliary revenue sources such as residential halls and food services that other campuses use to cover shortfalls.

The enrollment and revenue context is central to the university’s marketing strategy, Norton said. She reported that UMGC has spent approximately $326,000,000 of a Board of Public Works authorization for up to $500,000,000 in advertising from fiscal 2019 onward, and that UMGC contends the campaign has produced average annual enrollment gains of roughly 22,000 students. Norton asked UMGC leadership to explain how the university measures the student gains from the campaign and to submit a comprehensive report on the national marketing campaign, a recommendation DLS included in its operating budget actions.

UMGC President Fowler defended the strategy and the short‑term use of fund balance. Fowler said the university is a “tuition driven institution” and that more than 80% of its operating funds come from tuition tied to global operations. “To be clear, these are not meant to be long term operational practices. They are investments we are using to transform testing on the ground,” Fowler said, describing the fund‑balance investments as targeted steps to grow margins in out‑of‑state, corporate, and graduate markets while continuing Maryland‑focused programs such as the Maryland Completion Scholarship and the Golden ID program.

Officials also addressed institutional aid and student outcomes. Norton reported institutional aid rose from $13,000,000 in fiscal 2019 to $19,600,000 in fiscal 2024, with merit scholarships totaling $12,300,000 in fiscal 2024. Norton noted UMGC attributes a large share of institutional aid to merit funding tied to the Maryland Completion Scholarship, which subsidizes transfers from Maryland community colleges.

The meeting also covered concerns raised in an Office of Legislative Audits fiscal compliance review related to UMGC’s HIDA (higher education innovation and development affiliate) entities. Norton summarized OLA findings alleging lack of competitive procurements, insufficient monitoring of an IT project, concentrated interest revenue tied to UMGC (UMGC accounted for 92% of interest revenues from fiscal 2017 to 2022), and limited access to financial documents connected to the HIDA entities. She noted the USM Board of Regents created a HIDA task force and that the task force submitted recommendations on February 14, 2025, addressing transparency, fiscal oversight, removal of procurement exemptions, and clarifying what counts as a high‑impact economic development activity.

Fowler told the committee UMGC supports the Board of Regents’ recommendations and has been working with a third‑party vendor to define what services UMGC Ventures and Accelerate should provide. “We will provide the results of that analysis in the upcoming months, and we remain committed to ensuring that all our operations comply with state policies and regulations,” Fowler said. He added the Board of Regents would vote on revised HIDA policies in an upcoming meeting.

Committee members pressed university officials on metrics and return on the marketing investment, including a line of questioning from Delegate Talia Wallach and Delegate Beacham about how marketing dollars translate to net new Maryland students versus national enrollments. Fowler and UMGC staff cited lifetime student value calculations and competitive spending levels at peer institutions when describing the return on advertising.

DLS also noted other items for the record, including an exhibit showing $62,000,000 in sale proceeds from UMGC’s Largo properties designated for the operating fund balance.

The legislature asked UMGC to: (1) explain the sustainability of using fund balance for E&G shortfalls, (2) describe plans to address an expected decline in state funds for fiscal 2026, (3) detail the rationale for increasing contractual full‑time equivalents, and (4) submit the requested comprehensive report on the national marketing campaign. The DLS recommendation to “adopt narrative request and report on the national marketing campaign” was noted in the DLS analysis; no vote on that recommendation is recorded in the hearing transcript.