After drawing on reserves this year, the University of Maine system expects to face at least four more years of multimillion-dollar budget shortfalls, paving the way for future cuts that could hit harder. small campuses.
The system entered a new year of operation in July, having to make up an $18.8 million budget shortfall to stay balanced. But the outlook has deteriorated in recent weeks as registrations continue to fall across the system. Officials now say they will likely have to resolve deficits totaling $40 million by 2027.
This adds to Chancellor Dannel Malloy’s challenges following a failed search for the next WBU president that prompted votes of no confidence from faculty on three campuses, with 2022 election uncertainty complicating financial matters. Malloy won a one-year extension to his contract on Monday under stricter terms that reflect a strained relationship with the administrators.
Board chair Trish Riley said the budget issues facing the system are “very serious,” but pointed to the efforts Malloy is making to improve campuses.
“But I think some of the investments we’re making and again, the kinds of things the Chancellor has done to fix the infrastructure, to make our campuses more attractive for recruitment and retention, to build on unified accreditation are the kinds of tools that can give us the ability to deal with the headwinds that we face,” she said.
The university’s latest financial forecast asks each of the system’s universities to budget for the next four years, said Ryan Low, vice chancellor for finance and administration.
Factors that could potentially tip the estimates one way or the other are the upcoming gubernatorial election where incumbent Democrat Janet Mills faces former Republican Gov. Paul LePage. Low also cited indications that the United States could be heading into a recession.
Each campus uses historical enrollment, tuition, and credit data as revenue estimates, along with compensation, benefit rates, unpaid expenses, and capital expenditures as expense estimates to create an overview of the future, Low said.
In the overall system budget, the financial forecast projects a deficit of $10.2 million in 2024, $8.4 million in 2025, $8.6 million in 2026 and $14 million in 2027. The figures reflect the discrepancies between income and expenditure, the system will have to determine how to close.
Each of the institutions in the system will be affected differently if these numbers hold true, Low said. When measuring the size of a deficit on each campus, the system looks at what percentage of the overall budget the deficit is.
The University of Maine at Orono is projected to experience a deficit of $5.9 million in 2024, a deficit of $3.25 million in 2025, a deficit of $4.47 million in 2026, and a deficit of $8.8 million in 2027.
Each of those years, the deficits the system’s flagship university will have to overcome are about 2% of the overall campus budget, which is ideal, Low said.
“A $2 million gap at Orono is very different from Fort Kent,” he said. “We look at them in the overall context of each budget.”
At the University of Maine at Fort Kent, forecasts indicate that in 2024 the campus will have a deficit of $1.5 million, in 2025 it will have a deficit of $1.9 million, in 2026 it will will have a deficit of $2.2 million and in 2027 the campus will have a budget deficit of $2.5 million that it will have to make up.
When comparing these deficits to overall school revenues, these future budget gaps amount to between 9 and 15 percent, depending on the presentation. Similarly, the University of Maine at Près Isle will also experience multi-million dollar deficits that will fluctuate over time between 9-10% of overall campus revenue.
The University of Maine Law School, University of Southern Maine, University of Maine Farmington and University of Maine Augusta all remain relatively stable, with some poised for small profits and others hovering around the key 2% deficit marker. depending on the presentation.
The detailed predictions presented by Low depend on the legislature increasing its appropriation of the university system by 6% the following year, and then by 3% each subsequent year. But there is no guarantee that this will be the case.
If that credit were to decrease by 3% next year, then by 1 1/2% the following year, and then remain stable, the system would have to close a deficit of $37.7 million by 2027.