It is a record year for baby shellfish growing up at the Martha’s Vineyard Shellfish Group, but the 21-year-old institution is facing severe financial troubles, its worst in years.

There is another contradiction. The hatchery, highly regarded in the national aquaculture industry, the recipient of federal grants and accolades from the science community, is dealing with an image problem before Island town selectmen and financial committees. Town officials like the work but they don’t want to help it financially.

Richard Karney, director of the hatchery, said his organization is facing an annual budget it can’t pay for. There have been fund raisers during the summer and there may be help from the legislature. But the money received isn’t enough. “We had our best quahaug year,” he said. “We produced almost 10 million quahaugs for towns, which is double what they were getting over the last couple of years.”

This week, the hatchery is raising two million baby scallops, each of which is not much bigger than a grain of sand, about a 1/16th of an inch in size. After spending a year in Island coastal ponds, these same scallops will be harvestable.

“They were spawned six weeks old. We would have had a lot more scallops but we had a pump failure,” Mr. Karney said. “Fortunately we still can have as many as we produced a year ago.” Last year, the hatchery raised more than 8.9 million scallops for the Island’s coastal ponds. More will be spawned in the weeks ahead.

Bay scallops, quahaugs and oysters are the prize crops of the Island’s shellfish industry. Together, these three shellfish represent a multi-million dollar industry on the Vineyard, supporting Island fishermen in the off-season. The hatchery, started 21 years ago, was located on the edge of the Lagoon Pond as a way to help promote the production of these shellfish. The strategy was simple: The community needs to put back into ponds; shellfishing requires stewardship. The fishermen just can’t keep taking from the pond, something has to be put back. Still, compared to mother nature, the hatchery can’t come close to producing what occurs naturally in the Island ponds. But on any given year, producing and seeding Island coastal ponds with these shellfish does help, especially if a pond is having a bad year.

Demetrius Cox, 28, of the University of Georgia, in Athens, chose to spend the summer on the Vineyard working at the hatchery, after reviewing a number of aquaculture facilities across the country. In the short time he has been here, he said, he has been astounded at how valuable an asset the facility is, not only to the Vineyard but also to the growing science of aquaculture. “We are trying to recover our shellfishery in Georgia. Down South we don’t even have this resource. We have to scramble just to find funding to do research to see if it is possible to recover the shellfish population. This is a powerful facility. I don’t think there is another place in the country doing as well as this hatchery.”

Mr. Cox said: “Florida has had some success with oysters and quahaugs. We are trying to duplicate the work done here. I am here to learn from the best. Yet it strikes me that this resource is taken for granted.”

Shellfishing is a fickle resource. Last winter, Cape Pogue Pond produced its worst year of bay scallops in anyone’s memory. “About the only shellfish coming out of Cape Pogue now is what has been put there by this hatchery,” Mr. Karney said.

Ten years ago, Edgartown commercial scallopers would not have believed last winter’s scallop fishery could be so bad. Cape Pogue Pond alone produced more bay scallops than any other spot in Massachusetts, except for Nantucket. Menemsha and Quitsa Ponds are once more productive after 10 years of poor landings.

At the other extreme, Tisbury had its best scalloping season last winter in a decade.

While the work of the hatchery at best makes a small contribution to landings, it does assure fisheries biologists that there will be a set of scallops in each pond. Mr. Karney and others believe regularly seeding the Island ponds on both good and bad years helps stabilize nature’s production.

The annual budget for the hatchery this year is $134,000. Each of the participating Island towns contributes $13,500. This summer, the shellfish group held three fund-raising events — a clambake, a seafood festival and a celebrity cocktail party. From the three events the shellfish group raised $12,000. But as a setback, the shellfish group learned this summer the town of Gay Head has withdrawn financially from participating in the hatchery program because of its own fiscal problems.

In the last three years the shellfish group has been the recipient of close to half a million dollars in federal grants for projects. That money runs out this year, and now the hatchery must adjust to a leaner and less ambitious list of programs. Mr. Karney said there is a possibility there may be $25,000 coming this year from the state legislature.

“It is a financial crisis,” he said. “We only have half of our budget secure. We are talking about possibly laying everybody off but me, or me in the course of this winter.”

One alternative being explored is to close down the recently acquired Chappaquiddick shellfish nursery, a converted summer home that now contains saltwater tanks and pumps. The new facility on Martha’s Vineyard Land Bank property, near Chappaquiddick Point, has given the hatchery considerable usable space. At the new facility, Mr. Karney has been able to raised 10 million quahaugs. The millions of quahaugs were started at the Lagoon Pond facility and then moved to Chappaquiddick, where there is more space and the sea water is of higher quality. The new facility has benefited the staff in solving a water quality problem at the Lagoon Pond.

Every summer except this year, Mr. Karney said, his quahaugs suffered from a phytoplankton that seems to grow annually in Lagoon Pond. The bloom is toxic to quahaugs. “We’ve found that moving the quahaug seed to Chappaquiddick before the bloom occurs saves these animals. Last year we lost half a million quahaugs to the bloom. This year we avoided the problem by moving all the quahaugs in the Lagoon Pond hatchery early to Chappaquiddick,” he said. “The Chappaquiddick facility has allowed us to double our production.”

This month, the hatchery is taking the first of many steps to counter the projected deficit, by widening the support it gets from the Cape and Islands. The town of Falmouth may join the shellfish group next year. This month, Mr. Karney is selling 20,000 baby bay scallop seed to the town of Barnstable for $400. “There is a shortage along the coast for bay scallop seed,” Mr. Karney said. The $400 sale may not be much, but it is the first time the Island-funded facility has sold its product off-Island.

Mr. Karney said this is a good year to sell bay scallop seed. “We’ve had a good natural set for bay scallops around the Island,” he said. “There is a heavy set in Lagoon Pond, Katama Bay and Quitsa Pond, so the excess seed is not going to be that critical.” In Edgartown, Cape Pogue is still not doing well and an initiative is under way to ensure that the pond is seeded better than in the past. “This summer the Edgartown shellfish department and the shellfish group are experimenting with the use of bay scallop spawning sanctuaries, which may have played a factor in helping Lagoon Pond and Quitsa Pond have good years,” he said.

Raising shellfish is far from being an exact science. “There is a learning curve here. You are never off of it. Mother nature is always throwing something at you,” Mr. Karney said.

Mr. Cox added: “After being here all summer, I don’t think the townships or the selectmen realize the importance of this facility.”