Over the next three years, the UI’s leaders plan to streamline administrative costs universitywide by $15 million as a long-term strategy for dealing with a downward trend in state support. In the short-term, however, the university also is exploring other means for contending with its financial constraints caused by the ongoing nationwide recession and the state’s $11.5 million budgetary deficit and its backlog of unpaid bills.
In a Nov. 3 e-mail to the campus community, President B. Joseph White and Interim president-designate Stanley O. Ikenberry outlined the economic challenges facing the UI, including significant cash flow problems as a result of slow payments by the state and the expected retraction of federal stimulus funds in the coming fiscal year, which will begin July 1.
From FY02 to FY09, the university’s general fund appropriation from the state declined from $804 million to $700 million, after accounting for last year’s $19 million rescission and the redirection of $24 million to pay employee health care costs previously paid by the state.
“This is a reduction of 13 percent, excluding inflation, or 30 percent in real terms,” White and Ikenberry wrote. “Whether the governor and General Assembly will make downward adjustments to our current budget is unknown and may not be known for several months. At the beginning of the year the university put funds in reserve centrally in anticipation of difficult budget challenges ahead.”
As campus and university administration leaders develop plans for sequestering $45 million in anticipation of a possible rescission of state funding later in the fiscal year, they will be targeting reductions in personnel costs and overall expenditures. Employee salaries and benefits comprise about 70 percent of the university’s overall costs.
In developing contingency plans, administrators and campus leaders are being asked to “safeguard academic and patient-care quality, serve students and maintain externally funded research programs” while identifying “organizational changes and consolidations that will yield longer term savings.
In the e-mail message, White and Ikenberry reiterated that no furlough days are planned before the end of the calendar year and that they hope to avoid them completely in the event of a budget shortfall. However, in July, the university announced that an interim furlough policy had been developed and was included in all notices of reappointment for academic professionals and faculty members for FY10. Additionally, administration also implemented a policy allowing the university to shorten the contract periods of people paid from grants and contract funds in the event funding were lost during the year.
“We know that living with uncertainty is not easy,” White and Ikenberry wrote. “Yet it is far from clear when state policymakers will craft a plan to address the state’s fiscal crisis and what the implications of the plan will be for state programs and services, including higher education. Securing a stable and high quality future for the University of Illinois is our top priority and a challenge we all share.”
Gov. Pat Quinn recently appointed a 35-member Economic Recovery Commission, a panel of business and community leaders that will provide guidance for dealing with the economic downturn and plan for the long-term health of the state’s economy. The commission convened for its first meeting in Chicago on Nov. 2.
