The University of Maine System board of trustees unanimously voted Monday to raise student tuition as part of next year’s $648.6 million budget and extend Chancellor Dannel Malloy’s contract for two more years.

The budget is the first since 2014 for which the system hasn’t had to dip into its reserves to cover expenses, a feat for a system that has for years struggled with flat and declining enrollment, decreasing revenue from room and board and flat state investment relative to inflation.

System Vice Chancellor for Finance and Administration Ryan Low said at Monday’s board meeting that the budget shows progress, but there is still a lot of work to do to put the system on more solid financial footing.

“We need to get to the point where we’re not just balancing our budget but instead we’re investing back into our institutions,” Low said.

The budget was balanced through: eliminating positions; downsizing by selling, leasing and demolishing unused spaces; cutting duplicative courses or those with low enrollment; sharing resources across campuses; expanding revenue-building programs such as early college and adult degree completion; and increasing student costs.

Tuition, mandatory fees and room and board will all go up an average of 3.8% for in-state and out-of-state undergraduate students, starting this fall. The increases range from 1.9% to 7%, depending on the school, with the biggest increase at UMaine Augusta.

For graduate students, costs will increase by 3.7% for in-state students and 3.0% for out-of-state students.

Student tuition and fees make up 39% of the system’s budget. The remainder comes from state funds (38%), dining and residence hall revenue (12%), and other sales and services (11%).

Despite the increases, Maine’s public universities remain the most affordable in New England, the system said in a written statement. 

University of Maine Chancellor Dannel Malloy. Derek Davis/Portland Press Herald

“Proposing a tuition increase is not something we take lightly but is necessary now to meet obligations to our employees and start making the investments to support our students and their success and stabilize our institutions’ infrastructure,” said Chancellor Dannel Malloy in a statement.

Malloy, who has faced criticism in the past for a lack of transparency, was also offered a contract extension until 2027, though the exact terms have not yet been decided. His contract is currently set to expire in 2025 and is worth a total of $941,052.

The board chair and vice chair will negotiate details of the extension over the next month or so.

UMaine faculty and staff have long been worried about attrition and layoffs in a system where most of the budget, 63%, is spent on compensating faculty and staff.

And as system schools work to balance their individual budgets, some of those fears are being realized. The University of Southern Maine recently eliminated five middle-management positions and the system is losing other positions through attrition. The system did not provide the exact number of position reductions on Monday. It said that attrition savings is not based on individual positions but factors including how long it takes to fill certain positions and retirement trends.

Following the elimination of the five USM positions last week, Faculty Senate President Matthew Bampton said the faculty was “gravely concerned” by the eliminations at the Portland-based campus and that losing those colleagues would significantly disrupt essential departments.

For years the UMaine System and other public school systems around the country have struggled financially amid decreasing enrollment, inflation and diminishing state investment.

While public university systems in other states have eliminated regional campuses, the UMaine System has pledged to keep all its schools open, and improve its financial situation by increasing enrollment and efficiency and saving money in other ways.

Since January, it has sold or listed “underutilized” buildings and land in Bangor, Belfast, Harmony, Houlton, Presque Isle and Portland, according to a system statement. In the coming fiscal year, it is expecting to save $10.3 million from attrition and more from energy projects such as replacing lighting with LED fixtures.

The system is also working to increase enrollment through initiatives such as direct admissions – admitting students who haven’t formally applied based on where they went to high school, their grades and their standardized test scores.

Board Chair Trish Riley said that in putting forward the first balanced budget since 2014, the first strategic plan in 19 years and restructuring the system through unified accreditation, it’s clear that, although there is work to be done, the system is moving forward in a positive way.

“It’s been an incredible couple of years,” said Riley.