I can support that phenomenon as well: in my department we had many fewer applicants for our Masters and PhD programs from non-USM people.  For now that is fine as we have plenty of students, but it does not bode well for  future years.  I have wondered if this is caused by economic factors or other causes, but hearing that it is happening in other departments suggests what I most feared: that Shelby & Co. have likely proved detrimental to the health and prosperity of our graduate programs. 

When are the powers-that-be going to realize that having an administration that runs off the most accomplished young faculty (many of whom already have national scholarly reputations), purposely causing the worst publicity this university has ever seen, and deemphasizing all university activities other than economic development is bad for business?

Oh yeah, one of my colleagues just accepted another position in another state for twice the money and much better benefits - he won't be the last.