The Jewish Theological Seminary is in debt after struggling to cover rising annual operating expenses over the past few years.

School officials said the school borrowed an amount of less than $40 million from unspecified “internal sources” to meet operating expenses, after income from investments and gifts to the school fell below projections.

The school maintained it is fine fiscal health and said a plan is in motion to reduce the debt.

“JTS is exceedingly strong financially. Our assets far exceed liabilities by many times,” the chancellor of the school, Rabbi Ismar Schorsch, wrote in an e-mail sent to students, faculty, and staff earlier this month.

He continued, “Our Board has implemented a plan to reduce our current borrowings, which represent less than half of our endowment, to assure that we move forward from a position of strength.”

The seminary’s endowment is $80 million, Mr. Schorsch noted.

He also wrote that the seminary is selling a parcel of land at West 100th Street and will direct the proceeds to the school’s endowment. He characterized the sale as part of the school’s decision to prioritize faculty and programs over construction projects.

The letter came on December 17, one day after an article in the Jewish Week by Debra Nussbaum Cohen that said that “the school faces serious financial problems.” An anonymous faculty member quoted in the article said he’d been told at a faculty meeting that the debt was $50 million.

The director of communications at the seminary, Elise Dowell, called the article “inaccurate and misleading” and echoed Mr. Schorsch’s statement that JTS’s financial position remains strong.

An independent endowment adviser, Dennis Hammond, called the situation “serious, but not a death knell, if the school can pay back the money.”

Another expert cautioned that the school would have to do everything right to recover. “They’d be able to work their way out of the situation, I believe in three to five years, if they’ve put together a business plan that includes some combination of selling the property, a group of people giving more money, either cutting their operating costs or keeping their costs at the same level, and maybe changing their investment policies” a fund-raising consultant, Michael Washburn, said. Mr. Washburn, whose business is Washburn Partners, said he has no direct knowledge of the seminary’s financial statements.

Based on his familiarity with some of the seminary’s board members, however, Mr. Washburn was optimistic about the seminary’s outlook.

“I would be relatively confident because I think there are some people on that board who are very smart and good businesspeople,” he said.

“They have the depth of financial capability to work their way through this as a board and through their contacts,” he said.

Board members include the financiers Ronald Lauder and Gerald Rosenfeld and the real-estate executive Steven Roth.

The current retrenchment comes after several years of expansion and increased fund-raising. In the late 1990s, the school had achieved several years of balanced budgets and fund-raising was the rise, according to a grant proposal submitted to the Kresge Foundation in 1999.

In undertaking the renovation of two dormitories and the rebuilding of its library tower, the seminary embarked on its first capital campaign, with a goal of raising $250 million over five years. Ms. Dowell said the school raised $265 million in the campaign, which ended this year.

Capital campaigns have been known to put pressure on an institution to dip into cash reserves to make its numbers, experts said, and institutions sometimes become looser with budgeting when they know so much money is coming in for the campaign.

The seminary’s costs have increased in recent years, according to numbers reported by the seminary and published in the Chronicle of Philanthropy. The annual expenses of the school rose to $37.2 million in 2003 from $27.5 million in 1999. Fund-raising expenses increased to $6,422,952 in 2003 from $3,839,212 in 1999 – an increase Mr. Washburn called quite modest.