PORTLAND (AP) – The University of Southern Maine is blaming falling enrollments for a financial shortfall that is resulting in a hiring freeze and the possibility of layoffs and merged departments to help reduce costs.

The school overspent its budget last year by $4.5 million dollars and is projected to end this year $3.6 million in the red, university officials said.

Interim President Joseph Wood attributes the shortfall to an enrollment decline and the loss of tuition and fees paid by those students. The falling enrollment is caused by a declining population of college-age students and continuing growth at Maine’s two-year community colleges.

Since 2002, USM’s enrollment has dropped more than 10 percent, from a peak of nearly 11,400 students to 10,200 students this fall.

It is clear the trend will continue, Wood said, and that the university must cut employees and merge programs to bring spending in line.

But that may not be enough, said Wood, who has been delivering the bleak financial news to the university community in recent weeks. The school also has to “divest from some things we do,” he said.

“We have to stop spending like an 11,000-student university and start spending like a 10,000-student one,” Wood said.

More details about cuts and reorganization will be released in the weeks ahead, he said.

The university is borrowing money from the University of Maine System, which oversees the state’s seven university campuses, to cover the overspending. The final deficit number for last year is still being determined by auditors.

The university’s budget is $110 million this year, with 55 percent paid for with tuition and fees and 40 percent covered by state tax money.

Some of the state’s other six universities have also struggled with budget problems in the past, said Meg Weston, chairman of the University of Maine System board of trustees. Last year, the University of Maine at Machias ended up $500,000 off target when revenues failed to reach projections.

Copy the Story Link