Strategic Communications and Marketing News Bureau

University’s positive cash balance has strings attached

The U. of I. does have $1.8 billion in available unrestricted cash, but it also has a long list of unescapable expenses that make that cushion short-lived.

Those are the findings of a university budget analysis, prepared on behalf of the Urbana Academic Senate and presented to senators at their April 14 meeting.

“There are a lot of claims against it,” said Michael Sandretto, a lecturer in accountancy and the chair of the senate budget committee.

Sandretto, tapped by Senate Executive Committee chair Roy Campbell to prepare the report, said the cash surplus has come on the back of a $1.5 billion to $1.8 billion deferred maintenance backlog, which began increasing in 2009 as a way for the university to increase its cash on hand and satisfy bond rating agencies.

He compared the situation to a family that has paid its bills with a credit card while reporting that it now has a higher cash balance in its checking account.

In addition to the deferred maintenance work, the university will be responsible for paying UIC faculty members back pay upon the conclusion of stalled contract negotiations, the Urbana campus has plans to improve its technological infrastructure and increase its faculty size, and the board of trustees is studying ways to supplement the reduced pension benefits.

Once immediate obligations are covered, Sandretto said the university would have about $700 million available for “one-time costs” – half the amount needed for the deferred maintenance projects alone.

He said those obligations are further magnified considering ongoing threats to state funding and the fact tuition as a source of additional revenue is diminished because of it being legislatively limited to cost-of-living adjustments.

He said enlarging campus faculty size would require a larger endowment designed to cover the additional long-term cost.

Sen. Richard Laugesen, a mathematics professor and the vice president of the Campus Faculty Association’s executive committee, asked Sandretto why his report used universitywide budget numbers and not more specific, campus centric figures.

Sandretto said finding those numbers would be extremely difficult and highly subjective because the three campuses are so interlinked and, legally, they are one entity.

“There are all sorts of interconnections,” he said. “It’s really not set up to do that; the state did not organize the three campuses that way. There is nothing wrong with how we are organized – some states separate their multiunit universities, others set them up like the U. of I.”

Sandretto also estimated the university’s three campuses total about 1 billion transactions annually – making detailed breakdowns very difficult without devoting much greater time and resources.

Ilesanmi Adesida, the provost and vice chancellor for academic affairs, said the Urbana campus is already moving forward on its $700 million deferred maintenance backlog.

He said the Energy Service Company projects being used on campus are designed to not only bring buildings to operational compliance, but also upgrade energy systems that produce long-term savings.

“We’re trying to reinvest the savings,” he said. “We’re going do that for all of the buildings on campus.”

The upfront costs of such work is daunting, said Chancellor Phyllis M. Wise, with cost projections to renovate Altgeld Hall alone coming in at about $80 million.

“Even though it costs money to do this, in the end you save money,” she said.

Adesida said there are plans to make building maintenance a more “concrete” part of future annual budgets and that an associate provost for capital planning had been hired to manage the effort.

In other business, senators approved a resolution supporting the easing of federal student loan regulations.

“The federal government is really acting as a predator,” said supporter George Ordal, a professor emeritus of medical biochemistry.

As the law stands now, said Anthony Fiorentino, a student senator representing the College of Law, student loans are not protected under bankruptcy and penalty and collection practices are onerous.

“It’s the only debt that can’t be forgiven,” he said, noting that salary garnishments can reach 50 percent for students behind on loan payments. “(The student loan industry) has unprecedented collection power.”

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