Three of the seven campuses in the University of Maine System operated with budget deficits last year and now are taking steps to avoid any future red ink.

The University of Southern Maine, UM-Machias and UM-Fort Kent all experienced varying issues that led to their budget woes based on financial figures obtained recently from the UMS office and interviews with campus officials.

The numbers for the most recent fiscal year still are being audited, but it appears that two of the campuses – USM and UM-Machias – are continuing to struggle to balance their budgets.

Campuses in Orono, Farmington, Presque Isle and Augusta had budget surpluses in fiscal year 2006. All campus budgets were calculated based on unrestricted revenue, which does not include revenue from research grants and contracts, endowment funds, etc.

The University of Southern Maine’s nearly $4 million deficit for the 2006 fiscal year has garnered the most attention in recent months, but interim USM President Joseph Wood said progress is being made toward closing the gap.

“The landscape is changing and we’ve got to figure out how to adjust and treat it as an opportunity,” Wood said Friday.

When the Community College System was formed in 2003, colleges systemwide anticipated an initial loss in students but expected that enrollment would pick up again when students transferred to work on four-year degrees.

“We thought that would happen, but that a percentage would come back to USM after finishing their two-year degree at a community college, or even before they finished their two-year degree,” system spokesman John Diamond said. “That’s not been happening at the rate projected [and] as a result, USM is going through a reorganization process.”

In a speech earlier this year, Wood outlined his plan to focus on a narrower range of academic options, realign services, increase marketing and retention efforts, and overall spend less money as an institution.

A freeze on hiring, travel, and equipment purchases continues today and is expected to extend to 2009.

USM borrowed funds from the system to make up the difference, but that money must be paid back.

“It’s a wake-up call,” Wood said. “The [enrollment] numbers that we’ve had historically we still have, but they haven’t grown.”

Wood stressed the importance of keeping the USM community apprised of changes and progress and developed a Web site where he regularly posts updates about the reorganization process.

“What we know is we have to work harder,” Wood said.

USM is not alone in its shortfall.

UM-Machias has been in a deficit situation since the 2002 fiscal year, but is working to come out of it. Its 2006 fiscal year deficit of $265,000 was much smaller than in the past.

“The difficulty we’re having is not in our education [budget] in general, which is our main operating budget,” said Tom Potter, vice president of finance and administration at UMM. “That actually has been in a surplus the last couple of years.”

The problem lies with auxiliary enterprises, such as residence hall and dining commons fees.

“We’ve got a low number of resident students,” Potter said.

An addition and renovation to residence halls at UMM a few years ago added 50 beds to the campus, bringing the capacity to 350 resident students.

“At the time we did it, we were over capacity,” Potter said.

A plan under former UMS Chancellor Joseph Westphal to consolidate the system’s smaller campuses also hurt UMM’s enrollment, and although numbers have been average or above the last three years, the campus continues to feel the effects, Potter said.

Last fall, UMM had only about 205 students living on campus, but that number increased this year to 245.

“Things are looking very positive,” Potter said. “We had a lot more new resident students this year [and] we’re doing some new marketing initiatives that we think will pay off.”

Like USM, Machias also is borrowing funds from the system but intends to pay back the money as soon as possible.

In northern Maine, the University of Maine at Fort Kent had a $583,000 deficit for fiscal year 2006.

While the dollar figure isn’t nearly as large as that at USM, Fort Kent has a much smaller budget and the deficit represents a larger percentage of its revenue than at southern Maine.

“In 2006 we had a bad year, and then in the year that just ended, while the numbers haven’t been audited yet, we expect we’re going to be positive approximately $20,000,” UMFK President Richard Cost said Friday.

In 2006, there were a couple of stumbling points. Each of the seven campuses changed to a new accounting system and it took Fort Kent a little longer to get used to the system, Cost said.

“As a result, our reports were dramatically delayed and in a different format,” he said.

It wasn’t until a week before final figures were reported to the UMS office that Cost knew of the shortfall.

Funding was, and continues to be, a factor in campus budget health.

“As our enrollment has grown dramatically during the same period, the per student funding through the state appropriations process and then through the UMS allocation among the seven institutions has not kept pace,” Cost said. “If we were receiving an appropriation that equated to our percentage of student enrollment and staff size, we would have received $2.2 million more than we did.”

Instead of a $500,000 deficit, the campus would have seen a $1.5 million surplus that could have been used to hire additional staff, address deferred maintenance and equipment issues, or put into savings for future needs.

To close the gap, UMFK hasn’t had to borrow any funds from the system.

“We certainly worked very hard immediately to get our arms around the new reporting system,” Cost said.

They also held off on hiring additional staff and were able to use surplus funds from previous years to cover the lack of funds.

“We think we’ve been successful in at least coming out in a balanced position this year, and as we enter the current year we intend to continue to operate with a positive budget,” Cost said.

Elsewhere, the Orono flagship campus had a revenue surplus of more than $4 million, while Augusta and Farmington came in with $1 million-plus more than anticipated, and Presque Isle fell just shy of the $1 million over anticipated revenue mark.

The campuses aren’t alone in trying to monitor their finances better. System officials are looking to step in and help.

In an effort to better scrutinize budgets systemwide and be more proactive in ensuring that each campus meets its responsibilities, the UMS board of trustees is talking about bringing in consultants to look at the overall situation, Diamond said.