AUGUSTA — In a telling sign of the state’s tough economic times, the head of the University of Maine System said Wednesday that he is just grateful that the governor’s proposed budget doesn’t include cuts to the university system.

“I was delighted that the governor’s budget had us flat-funded,” Chancellor James Page told the Legislature’s Education Committee. “That speaks volumes about the importance of education in Augusta.”

The budget proposed by Gov. Paul LePage for the two years starting July 1 includes $176 million for the University of Maine System.

Page, who has been chancellor for 10 months, told the committee that he has begun initiatives to cut costs and bring a more business-like approach to managing the system, which has seven campuses and more than 31,000 students.

One of the system’s biggest challenges is the economy, Page said. Costs continue to rise, students and families are under financial pressure, and administrators are trying to avoid raising tuition.

“We do not expect, in the near future, that we will be able to come to you for more money,” Page told the lawmakers. “But we need to reinvest what we have.”

The system’s board of trustees voted last spring to freeze tuition for 2012-13 — the first year tuition hadn’t increased since 1987. They voted in September to extend the freeze through the 2014-15 academic year if the state didn’t reduce the system’s funding.

The average tuition for Maine residents in the system is $7,240 a year, ranging from $6,510 at Augusta to $8,370 at Orono.

In the 2003-04 academic year, it ranged from $3,690 to $4,710.

Page briefed the committee on several initiatives to cut costs and extend educational opportunities to more Mainers, including:

• An administrative review across the system has led to consolidation and centralization where necessary. Page said officials expect $20 million in structural, long-term savings, which can be reinvested to generate revenue.

• The system has begun a three- to five-year plan to create “seamless” credit transfers among the campuses. Page said officials also are working with Maine’s community colleges to improve credit transfers between the two-year and four-year colleges.

• The system is testing a change to its internal funding formula. Starting this year, it will take a small portion of its state funding and earmark it for “outcome-based” performances by the campuses.

For example, system administrators will apportion 95 percent of the state funds the way they have historically, but will distribute 5 percent based on a point system that rewards campuses for how many degrees they issue, with additional points for science, math, engineering and technology degrees, and additional points for older students.

Page said officials plan to increase the earmark gradually to 30 percent, then assess its effectiveness.

Staff Writer Noel K. Gallagher can be contacted at 791-6387 or at:

ngallagher@pressherald.com