University of Maine System Chancellor Dannel Malloy (left) and chair of the board of trustees Trish Riley (right) attend the first board meeting of the new fiscal year in Belfast, July 11, 2022. Credit: Sawyer Loftus

After dipping into reserves this year, the University of Maine System expects to face at least four more years of multimillion-dollar budget deficits, setting the stage for future cuts likely to hit small campuses hardest.

The system opened a new year of operations in July by needing to close an $18.8 million budget shortfall to remain balanced. But the outlook has worsened just in the past few weeks with enrollment continuing to decline across the system. Officials now say they will likely have to solve shortfalls of $40 million in total between now and 2027.

It adds to the challenges for Chancellor Dannel Malloy following a bungled search for the next president of UMA that spurred no-confidence votes from professors at three campuses, with 2022 election uncertainty complicating financial matters. Malloy won a one-year extension of his contract on Monday under tighter terms that reflect a fraught relationship with trustees.

Board of trustees chair Trish Riley said the budgetary issues the system is facing are “very serious” but pointed to efforts that Malloy is leading to improve campuses.

“But I think some of the investments we’re making and again, the kinds of things that the chancellor has led around fixing the infrastructure, making our campuses more attractive for recruitment and retention, building on unified accreditation are the kinds of tools that can give us the capacity to address the headwinds that we face,” she said.

The university’s latest financial forecast asks each of the system’s universities to make a budget for the next four years, said Ryan Low, vice chancellor for finance and administration.

Factors that could potentially swing estimates one way or another are the upcoming gubernatorial election where incumbent Democrat Janet Mills faces former Republican Gov. Paul LePage. Low also cited indications that the U.S. could be heading toward a recession.

Each campus uses enrollment data, tuition costs and historical appropriations as revenue estimates, along with compensation, benefit rates, non-compensation expenses and capital expenditures as expense estimates to create a look into the future, Low said.

Across the system-wide budget, the financial forecast is predicting a $10.2 million deficit in 2024, $8.4 million in 2025, $8.6 million in 2026 and $14 million in 2027. The numbers reflect gaps between revenue and expenditures the system will have to figure out how to close.

Each of the system’s institutions will be hit differently if those figures remain true, Low said. When it comes to measuring how significant a deficit is at each campus, the system looks at what percentage of the overall budget the deficit equals.

According to the predictions, the University of Maine in Orono is set to see a $5.9 million deficit in 2024, a $3.25 million deficit in 2025, a $4.47 million deficit in 2026 and an $8.8 million deficit in 2027.

Each of those years, the deficits the system’s flagship university will have to overcome represent around 2 percent of the overall campus budget, which is ideal, Low said.

“A $2 million gap in Orono is a lot different than at Fort Kent,” he said. “We look at these within the overall context of each budget.”

At the University of Maine at Fort Kent, the forecast indicates that in 2024 the campus will have a $1.5 million deficit, in 2025 it will have a $1.9 million deficit, in 2026 it will have a $2.2 million deficit and in 2027 the campus will have a $2.5 million budget gap it will have to fill.

When comparing those deficits to the school’s overall revenue these future gaps in the budgets equal between 9 and 15 percent, according to the presentation. Similarly, the University of Maine at Presque Isle will also see multimillion-dollar deficits that will over time fluctuate between 9 and 10 percent over the campus’ overall revenue.

The University of Maine School of Law, the University of Southern Maine, the University of Maine Farmington and the University of Maine at Augusta all remain relatively stable with some set to make small amounts of profit and others hovering around the key 2 percent deficit marker, according to the presentation.

The detailed predictions laid out by Low hinge on the Legislature increasing its appropriation to the university system by 6 percent in the next year and then by 3 percent in each of the following years. But there is no guarantee that will be the case.

If that appropriation was to decrease by 3 percent next year, then by 1 1/2 percent the following year, and then remain flat, the system would have to fill a $37.7 million deficit by 2027.

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Sawyer Loftus

Sawyer Loftus is an investigative reporter at the Bangor Daily News. A graduate of the University of Vermont, Sawyer grew up in Vermont where he worked for Vermont Public Radio, The Burlington Free Press...