After years of declining enrollment and substantial budget shortfalls, the University of Maine System is seeing some hopeful signs.

"All of us know the headwinds higher education is confronting," system board of trustees Chair Trish Riley said at Monday's board meeting. "There is some reason for hope against these headwinds."

Enrollment dropped this year, but less than in previous years and less than anticipated. Some campuses have budget shortfalls, but they have plans to close them through attrition and decreased travel budgets. And students are taking more credits than the system predicted, Riley and other system leaders said at the latest board meeting.

"I don't think any of us pretend we've solved all our problems, but the work we're doing is working," Riley said.

In recent years, Maine's public university system and other public universities around the nation have faced financial challenges on two fronts: declining enrollment and state investment that has failed to keep up with inflation.

In Maine, the dollar figure appropriated by the state has steadily gone up over the years, but because it hasn't kept up with inflation, the percentage of the system's budget taken on by the state has shrunk. In 1972, state funds represented 70% of the university's funding, with tuition covering the other 30%. Today, the state and tuition each account for about 43% of UMaine System funding, with the rest filled in by revenue from dining, housing, athletics and conferences.

At the same time, enrollment has gone down. Over the past five years, undergraduate enrollment at the system's seven campuses has dropped by more than 12%. In 2019, the system enrolled 22,266 undergraduate students. This year, 19,520 undergrad students are enrolled.

This trend is largely attributed to growing apathy about the value of a college degree, concerns about student debt, and shrinking populations of young people, a problem that is particularly acute in Maine because its population is the oldest in the nation.

In response to these challenges, the UMaine System has been working to boost enrollment through assertive recruitment, attracting students from around the country and world with online courses, and increasing options for students to take online classes and receive credentials on their own schedules. It seems to be working. Although enrollment is down, the drop in students attending is smaller than in recent years.

Enrollment decreased by 2.4% between the fall of 2022 and 2023. System leadership expected a drop of 4% to 6%, closer to last year's drop of 5.4%.

Students also are taking 4,000 more credit hours than the system expected. That's good for the system's bottom line because students pay per credit hour.

This, the system said, is largely due to flexible online courses that students can take at their own pace and increased "micro-credential" offerings where students can quickly get certificates in very specific skills such as electronics fundamentals, lab safety and security or measurement systems.

After years of challenges, system leaders say they are finally seeing light at the end of the tunnel, but concerns remain about the future of the system and what it might take to maintain balanced budgets.

Earlier this year, the Farmington campus had a $2.4 million budget gap. The school closed it by $1.6 million but still has to find around $800,000 by late January. To do this, the school has left open positions vacant, eliminated travel and cut other costs.

"We have drastically cut a bare-bones budget, a budget I didn't think we could cut at all," UMaine Farmington President Joseph McDonnell said. "I have to say all of this is not sustainable at a university and does have morale issues associated with it."