The University of Maine System is projecting that it could face multimillion-dollar budget deficits in the years to come, raising the likelihood that there will be some combination of faculty and program cuts, increased tuition for students, and requests by the system for more state funding.

The system started off this financial year, which began in July, with a deficit of nearly $19 million, and used reserves and stabilization funds to close the budget gap.

Ryan Low

Officials project that in the best-case scenario the system will have to close budget deficits of between $8.5 million to $14 million each year over the next four years. In the worst-case scenario, it will have to close budget deficits ranging from $17 million to $38 million each year over the next four years. The system’s budget for this financial year is $616.7 million.

The struggle to maintain a balanced budget is projected to be most severe at the system’s Presque Isle and Fort Kent campuses, two of the system’s smallest in terms of enrollment. Although the actual deficits are projected to be greater for the University of Maine’s flagship campus in Orono, the projected deficits at Presque Isle and Fort Kent would make up a much larger share – 10-15 percent – of the campuses’ total budgets.

“They’re certainly challenging numbers, I’m not going to sugarcoat that in any way,” Ryan Low, vice chancellor for finance and administration, said of the deficit projections for Presque Isle and Fort Kent during the UMaine System Board of Trustees meeting Monday. Low added that the goal is for the system and individual schools to keep budget deficits between zero to 2 percent of operating budgets.

The University of Southern Maine and UMaine Augusta are the only schools in the system that came into this financial year without budget deficits. They are anticipated to maintain either small deficits or small surpluses in the years to come.

However, none of the numbers that Low laid out in a presentation to the trustees are set in stone. Anticipating future budgets is “a little bit of a crystal ball exercise,” he said.

Low was not available for an interview on Wednesday.

University of Southern Maine junior Isabelle Collins walks past the student center on the Gorham campus in March 2020. Ben McCanna/Staff Photographer

Future enrollment, state funding, the outcome of the gubernatorial election, tuition, the direction of the economy, and the cost of running the state’s seven universities and law school all will determine how deep of a financial hole the system finds itself in four years from now.

Following a national trend, enrollment has been decreasing at UMaine schools over the past decade and there is no sign that will change any time soon. Decreased enrollment has in the past, and likely will in the future, have a significant financial impact, especially at the system’s smaller campuses, Low said. Fewer students mean fewer people to split the cost of running a school. Additionally, in the wake of COVID-19, fewer students are living on campus, Low said, with some campuses having seen an almost 40 percent reduction in residency hall occupancy rates. That means less money for the schools through room and board.

The low-end estimate of $8.5 million to $14 million each year for the next four years assumes that the system will get the state funding it asks for, but that may not be the case. For three of the past four years, the state has granted the system a 3 percent increase in appropriations. The system is hoping to receive a 6 percent increase next year and 3 percent for each of the following years.

The impact of inflation and whether a recession occurs will affect the success of the system’s appropriation requests, as will the outcome of the gubernatorial election this fall pitting incumbent Democratic Gov. Janet Mills against former Republican Gov. Paul LePage.

Board Chair Trish Riley said the budget projections for the system are worrisome, but that she thinks the investments the system has and is planning to make in its campuses will help recruit and retain students and that unified accreditation will help the system stay afloat despite it being a challenging time for higher education.