PORTLAND — David Flanagan, the retired CEO of Central Maine Power Co. and a former University of Maine System trustee, will be the interim president at the University of Southern Maine, system administrators announced Wednesday.

The position is vacant after UMS Chancellor James Page announced two weeks ago that the former president, Theodora Kalikow, would step down to take a job at the system office where she will lead a “community engagement initiative.”

As president, Flanagan said he will have to move quickly to accomplish the tasks outlined for him by Page.

“The fiscal situation will not permit a leisurely, long-term, languid look at our issues,” he said. “We know what the issues are and we need to deal with them properly.”

He said the problem at USM is that expenses are growing faster than revenue, due in part to “low recruiting and enrollment and unacceptably low retention rates of people who do come there.”

USM will have to cut $12.5 million from its budget next year, Page said. That is the first task on Flanagan’s list. Another is “to restore process and dialogue,” Page said, in order to resolve internal tension that exists at USM.

Flanagan said he would try to ameliorate the tension by being careful to gather facts before making decisions and by being transparent about his decision-making process.

“People feel alienated and disaffected if they feel intimidated and out of the loop,” he said. “I want to give people a chance to be heard.”

Flanagan acknowledged that it would be difficult to carry out the cuts, which likely will result in workforce reductions, and ease the tension on campus at the same time.

“There’ll be grief to be had,” he said. “I’ve had a long career dealing with difficult situations.”

During a Wednesday morning news conference at the USM campus in Portland, system and school leaders touted Flanagan’s turnaround of a struggling CMP as providing good preparation for what he’ll face at USM.

Samuel Collins, chairman of the system’s board of trustees, said Flanagan inherited an electricity company with a nation-worst 44 percent customer satisfaction rate in 1994, and left it at 92 percent when he departed in 2000. That stretch included the catastrophic Ice Storm of 1998, which knocked out power to as many as 700,000 of the state’s 1.2 million residents.

“Something is seriously wrong here. USM is losing out in enrollment, in revenue, in public support. I have seen this phenomenon before — a competent, well-meaning organization built up over decades in a cocoon of monopoly conditions suddenly has to confront competition and changing conditions,” Flanagan said.

“I was CEO of the largest public service company in Maine during some trying times — trying politically, commercially and financially. Reform, restructuring and repurposing is a hard, wrenching, sometimes personally painful job. But it is possible for even a large unwieldy organization like USM to come out of it stronger and better and more service-oriented than ever,” he continued.

“I can think of nobody better suited for this time and place,” said Tony Payne, vice chairman of the USM board of visitors, during the morning news conference.

The university system has seen a spate of top administrators leave their posts this year, including University of Maine President Paul Ferguson, who left to head Ball State University in Muncie, Indiana.

Flanagan will be paid $203,000 annually, the same as his predecessor, and will only hold this position until the search for a permanent USM president is completed, which Page said would take about a year.

Flanagan said he is taking on the challenge as an act of public service.

“This not a stepping stone to Ball State,” he said. “This is where I am, this is what I care about. I’ve got no future ambitions.”

Kalikow, who served as president of the University of Maine at Farmington for 18 years, took the position at USM in 2012 and had a tumultuous two years on the job.

This year, USM cut $7 million — about 5 percent of its budget — after a five-year financial analysis showed that the university system would be $69 million in debt in five years if nothing changed.

About $22.7 million was cut from the system’s seven campuses this year and more than $11 million was pulled from a rainy day fund to help campuses pay their bills. More cuts are expected in years to come.

An initial round of budget cuts and layoffs were met with faculty and student protests this spring. Kalikow rescinded 12 faculty layoffs in April and included faculty in budget decisions.

This will not be the first time Flanagan has been called upon to help fix an ailing state system. Earlier this year, he presented legislators with a plan to fix the state’s county jail system.

In 2010, he contributed to a report to reform state government by reducing inefficiencies and increasing accountability. In 2005, he compiled 70 recommendations on how to improve the Washington County economy for then-Gov. John Baldacci.

And in 2009, Flanagan was chairman of a task force assembled to address an estimated $42.8 million shortfall that the university system was staring down at that time.

The plan created by his task force recommended that the system reduce duplication of services and courses offered among the seven universities and revamp the funding formula used to distribute state appropriations to the campuses. The system is now attempting to carry out those initiatives.

Next fall, the university system will undertake a search for a permanent president to head USM. A committee, which will include trustees, faculty members, students, administrators, a member of the board of visitors, an appointee from the chancellor and an alum, will conduct the search.

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