By Emily Cadei, CQ Staff

For one month, Barack Obama did not have the big fundraising edge over John McCain that he has enjoyed through most of the election season. But the Illinois Democrat continued to outraise his GOP foe.

New financial reports, coming on the heels of Obama’s decision to opt out of public funding for the general election, revealed that as McCain’s fundraising continued to climb, Obama’s dropped precipitously in May.

The presumed Democratic nominee outraised McCain by less than $2 million last month. It was McCain’s best fundraising month of the campaign, with $21.8 million in receipts. Obama, in contrast, had his worst month of 2008, raising $23.3 million.

Even better for McCain, who sewed up the Republican nomination in March, he limited his spending to $11.7 million. The Obama campaign, meanwhile, doled out more than twice that — $26.8 million — as it fought off a last-gasp challenge from Hillary Rodham Clinton in the waning days of the Democratic primary season.

Obama’s once immense cash-on-hand advantage also shrank in May, though he still maintains the upper hand. The Democrat ended the month with $43.1 million in the bank, down $3 million from April, while McCain added $10 million to his war chest to close the month with $31.6 million in cash.

McCain profited from his status as the Republican’s presumed nominee, joining forces with the national party and President Bush to hold dozens of large-dollar fundraisers last month.

That is a benefit Obama’s campaign is only now beginning to enjoy, and Democrats hope his work to consolidate support, especially among Clinton’s finance team, will pay off in the coming months.

The presidential candidates reported their latest finances in a week that saw Obama announce he would not take public funding for the general election and instead rely on private funds. In doing so, he will become the first candidate to reject the public grant since the system went into effect in 1976.

Obama had promised to participate in the public financing system and tried to put a positive face on opting out. The system “as it exists today is broken, and we face opponents who have become masters at gaming this broken system,” he said.

But his decision was more likely grounded in a huge fundraising edge over McCain and the recognition it would be tactically foolish to neutralize that advantage by forgoing private fundraising after the party convention, as mandated by the public funding program.

Obama also benefits from a massive fundraising network, with hundreds of thousands of small donors who can give again and again and from whom he can request general election funds. McCain is far more reliant on large donors, many of whom have already given the maximum they are allowed under law. McCain has been returning contributions from maxed-out donors that were tagged for the general election, to ensure he is eligible to take public funding.

The Obama campaign also recognized that while the public funding program, which grants each candidate $84.1 million, would put it and the McCain campaign on even footing, it would do nothing to even out party spending on the campaign. The Republican National Committee enjoys a huge cash advantage over the Democratic National Committee, $53.5 million to $4 million as of May 31.