PORTLAND – If projected summer enrollments pan out and no emergency expenses crop up before June 30, the University of Southern Maine is on track to end its budget year with a $1.5 million surplus.

Despite the enviable position, university officials say future budgets must begin to address more than $200 million in deferred maintenance as well as shortcomings in the emergency reserve fund, faculty hiring and the financial aid program.

USM administrators are developing a flat-funded, $140 million budget for 2011-12 that won’t include layoffs, President Selma Botman said, thanks largely to past staff reductions and an ongoing reorganization.

The university anticipates a surplus because it has $1.5 million in federal stimulus money in reserve. An estimated 4,200 students are expected to sign up for summer courses at USM campuses in Portland, Gorham and Lewiston, bringing an end-of-year infusion of $5.3 million.

“We should sing off the rooftops for the work that people have done to get us to this point,” Botman said. “But we also have grave financial needs that must be addressed.”

At the top of Botman’s to-do list is establishing a fund balance to protect the university’s credit rating and maintain operations during a financial emergency.

KPMG, the university’s auditing firm, has recommended that USM have a fund balance of $2.8 million to $5.6 million — enough to cover the university’s operating expenses for five months.

“Even if we dedicate the entire $1.5 million surplus to the fund balance, we still come up short,” Botman said.

KPMG uses a rating system of 1 to 10 to measure the health of institutions, Botman said. The lowest rating in the “healthy” range is 3. USM’s rating is now 2.1, up from 0.1 when Botman became president in 2008.

At that time, USM administrators were battling back from deficits of $3.9 million in 2005-06 and $3.5 million in 2006-07. Botman has kept the university in the black by cutting its administrative staff, eliminating nonacademic programs and using economic stimulus money to pay down past deficits, among other actions.

“We’ve made great progress, but we’re not there yet,” she said.

USM has nearly $200 million in deferred maintenance projects, Botman said. That’s according to a recent analysis by Sightlines, a Connecticut-based firm that advises colleges and universities on capital improvement needs.

Sightlines found that USM has two types of buildings: new, state-of-the-art facilities and those “beyond the end of their useful life.”

USM has spent about $10 million less per year on its buildings than similar schools, “creating a sizable backlog of needs” related to utility systems, exterior maintenance, code compliance, campus infrastructure and instructional space.

“We put money every year into deferred maintenance, but it’s like climbing up a hill,” Botman said.

Financial aid is another area of concern, Botman said. While USM’s enrollment is holding steady at about 9,500 students, she said, the university must greatly increase financial aid to sustain healthy enrollments year to year. USM now spends $7 million per year on financial aid.

A pending report from Noel-Levitz, a firm that advises schools on student recruitment, is expected to recommend that USM increase its financial aid budget by $1.3 million per year for the next four years, That would bring the university’s annual financial aid allocation to $12.2 million.

“I’m hoping we’ll be able to do that,” Botman said.

To further ensure the future health of the university, Botman said she also wants to resume hiring tenure-track faculty members, something that hasn’t happened for several years.

Adjunct faculty members often provide excellent instruction, she said, but they aren’t required to publish research, advise students or serve on committees — work that enriches the university community and helps to sustain competitive academic programs.

Botman hopes to make a dent in the demands with her 2011-12 budget, which she will present to University of Maine System trustees May 22-23. How she will juggle it all remains to be seen.

“We have to be very, very careful next year,” Botman said. “We’re anticipating a balanced budget. We have no choice.”

Staff Writer Kelley Bouchard can be contacted at 791-6328 or at:

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