AUGUSTA — Rocky financial markets and severance costs associated with making deep staffing cuts were major factors in the University of Maine System’s $18 million operating loss in its $524 million budget for the fiscal year that ended in June, officials said Monday.

The system trustees approved the final 2015 budget Monday at their meeting on the campus of the University of Maine at Augusta.

Last year, the system cut 157 positions across the seven campuses. Those cuts saved about $12 million in compensation costs, but the system had to pay out about $11 million in new retirement and severance costs. At the same time, tuition revenue was down after a 3.3 percent decrease in enrollment.

“This (drop in expenses) reflects tremendously difficult cost-cutting efforts,” Chief Financial Officer Ryan Low said. “Five of seven campuses have a year-over-year reduction in spending and expense levels are near where they were in 2009-2010.”

Low said the budget was also hit hard by a $4.8 million loss in its investment funds, which had posted a roughly $10 million profit last year.

Concern about investment returns is a theme going forward into the current $518 million 2016 budget, for the year ending next June, Low said.

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That budget, approved by the trustees in May, is balanced with $7.2 million in emergency reserves and makes certain assumptions about revenues. Already, the budget projections for investment performance are below projections.

The 2016 budget assumes the system will realize investment income of $3 million for the year, but so far, the system has a loss of $2.3 million.

The system balanced the 2015 budget by drawing additional funds from a budget stabilization fund, some campus reserves and drawing down the system’s insurance benefit pool.

Also Monday, the trustees gave conceptual approval to a $3 million, three-year plan to create a “center” to pull together all online learning opportunities systemwide for all students, instead of the current campus-by-campus model. After three years, the center is expected to be financially self-sufficient.

“This is a step that has been years in the making and it is frankly long overdue,” Chancellor James Page said.

The trustees have asked campus leaders to get more input from faculties at the seven campuses about the unified online learning plan, after concerns were raised about how they would keep academic control of the material.

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A report with final recommendations for the so-called “Center of Excellence in Digitally Enhanced Teaching and Learning” is due to the board of trustees at its March meeting.

According to the proposal outlined Monday, the center largely uses existing resources. It would be under the oversight of a vice chancellor of academic affairs, a position that is currently vacant.

The trustees also agreed to research how to address systemwide information technology upgrades estimated to cost $44 million. Chief Information Officer Dick Thompson told the trustees the system’s IT infrastructure had not had a major investment since 2003-2004, when bond money was used.

Thompson said the recommended upgrades include $25 million for wireless, $17 million to upgrade 350 of the system’s roughly 550 classrooms to “smart technology,” and funding for 19 new IT positions.

As part of a systemwide effort to cut costs by consolidating back office work, IT has cut 22 positions and saved $3.2 million over three years. The new positions, Thompson said, were different from the positions that were eliminated.

The trustees voted to develop a work plan and funding strategy, but did not authorize any funding.


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