The state budget adopted by the Legislature on Friday calls for cuts to the University of Maine System of $4.95 million and to the Maine Community College System of $150,000 by the end of June, but offers some potential relief to higher education by allocating a portion of any surplus funds for student financial assistance and for research and development.

If the state finishes fiscal year 2004 with unappropriated funds, the budget bill commits the first $564,287 to restoring money to the Student Financial Assistance Program run by the Finance Authority of Maine.

Additional surplus funds would be used to restore a total of $3.2 million to higher education, with $850,000 going to the University of Maine System and $350,000 to the Maine Community College System.

Another $2 million would be allocated to the Maine Economic Improvement Fund, which helps the University of Maine and the University of Southern Maine leverage federal and private research and development dollars.

If less than $3.2 million is available in surplus funds, the state’s higher education institutions would share the amount.

According to the budget, the university system’s 2004 cut is $850,000 less than Gov. John Baldacci’s administration proposed last month. But the recommended cut for 2005 remains at $1.2 million.

Conversely, the community colleges’ cut for 2004 remains the same as the governor’s proposal, but has been reduced to $1.1 million for next year.

Maine Maritime Academy’s reductions for both years remain the same as initially proposed by the governor: a $50,000 cut in 2004 and a $262,2000 cut next year.

Monday afternoon found University of Maine System Chancellor Joseph Westphal appreciative that the cuts were less than originally proposed and hopeful that they would be one-time measures. But he was concerned nonetheless that last year’s cuts and this year’s reductions could cause some real hardships.

“When you look at the cumulative impacts and the fact that the future doesn’t look all that rosy economically, it really worries me,” he said.

“It keeps us from moving forward, from … paying our faculty competitive wages, from being able to provide stipends for graduate students, from upgrading infrastructure,” he said.

The chancellor said he planned to talk to the seven university presidents to determine where the cuts could be made. “We’re beginning to assess what we can do in the next few months. We may have to carry a lot over to next year which compounds the problem we have in 2005 because we’ve got significant increases in operating costs next year,” he said.

Alice Kirkpatrick, spokeswoman for the Maine Community College System, said the seven campuses would absorb the $150,000 by “conserving everywhere we can, from travel to supplies.

“Next year is the bigger challenge,” she said.

And Richard Ericson, vice president for administration and finance at Maine Maritime Academy, said fees and tuition would have to go up next year to make up for the budget reductions.

The bill passed Friday also contains language that prohibits the university system from increasing tuition to make up for the state budget cuts, but allows it to increase tuition to cover increases in health insurance premiums and collective bargaining agreements.

Sen. Mary Cathcart, D-Orono, co-chairman of the Legislature’s Appropriations Committee, said members felt the university system “could come up with the money without raising tuition because it had a fairly steep increase last year.”

No decisions about next year’s tuition rates will be made until the University of Maine System board of trustees meeting in July, according to spokesman John Diamond.

Meanwhile, Rebecca Wyke, commissioner of the Maine Department of Administrative and Financial Services, offered hope that surplus funds could materialize, despite this year’s unprecedented budget woes.

“It’s certainly a possibility” that there will be leftover funds both from additional revenues and from unspent money from agencies and departments, she said.

Higher education officials are crossing their fingers that extra money comes their way. While the passage of a higher education bond last November helped subsidize some of the reductions, the university system still has sustained more than $10 million in reductions during the last two years, Westphal pointed out.

“It really hurts,” he said. “It lowers the bar on our competitiveness and our ability to provide high-quality education to our students.”

And Kirkpatrick said health care and retirement costs are estimated to rise 8 percent to 11 percent next year, providing “an additional challenge of finding $600,000 to $800,000 more money.”