The U. of I.'s operating budget for fiscal year 2014 will increase 1.2 percent, which is below the national inflation-rate average and the smallest increase in more than two decades.
The U. of I. Board of Trustees unanimously passed the overall $5.6 billion university budget at its Sept. 12 meeting in Urbana.
The budget for all three campuses - because of overdue state-controlled pension and benefits payments - is up 3.9 percent, and the state's annual appropriation went up by .02 of a percent to nearly $669 million.
That funding level is comparable to 1966 when adjusted for inflation, despite a student population that has more than doubled since then.
Tuition revenue is up more than $52 million, an increase of 5.2 percent, though three years ago trustees tied tuition rates to the rate of inflation.
"The University of Illinois remains strong," said University President Bob
Easter. "We are weathering our financial challenges thanks to sound fiscal management and our ongoing efforts to control costs and improve efficiency."
The board also approved the university's 2015 fiscal year funding request, which asks the state for $747 million, an increase of 4.5 percent, or nearly $79 million. A little more than half of that additional money is earmarked for salary and benefits.
Christophe Pierre, the university vice president for academic affairs, said the university is in "solid" financial condition despite a recent bond downgrade by the investment firm Moody's.
He said Moody's was clear in its explanation that the downgrade reflects the state of Illinois' dire financial condition, not the university's, though other areas of concern include uncertain federal research funding, a virtual freeze on new tuition revenue, the funding vulnerabilities of the hospital and health system, and the inability to predict the impact of any future pension solution.
The current backlog in state funding is $207 million, though that number last year went as high as $507 million, according to Walter Knorr, the university's chief financial officer.
He said the university is still four "notches" above the state's bond rating and that the state currently has a backlog of $6 billion in unpaid vouchers.
"We've had some improvement," he said of the state's funding commitments, "but we have the same challenges."
Pierre said the financial situation can be navigated by the university, but it will have to dig deep to find solutions that attain cost savings and protect the core missions of the university without degrading the overall quality of the institution.
"It puts pressure on programs that produce a low amount of tuition," he said. "We need to invest in the university and be strategic. Each campus is undertaking a significant review."
All three campuses recently submitted strategic plans to Easter, Pierre said, and the plans will be used to review all university units as part of a resources "reallocation program."
He said the program could lead to consolidating or eliminating units and programs that don't line up with "emerging priorities" or the university's core mission.
On the Urbana campus, that effort is being led by six campus-developed themes collected in the Visioning Future Excellence initiative. The themes: energy and the environment; health and wellness; social equality and social understanding; economic development; information and technology; and education.
"Reductions are going to have to be made," Pierre said. "Certainly, we need to be very careful and very deliberate about that."
Trustee Edward L. McMillan, the chair of the Audit, Budget, Finance and Facilities Committee, said his committee has formed an audit group to develop better review mechanisms in an effort to provide a more accurate snapshot of the university's far-flung operations.
"It's a challenge to touch all those," he said.
"The issue of efficiency becomes more and more important as we have less money," said board Chairman Christopher G. Kennedy.
One of the results of the audit group's work has been to create a new orientation process for deans outlining their responsibilities and making them aware of their accountability in local fiscal decisions.
"We're going to be facing more and more financial problems," McMillan said, which makes more important the need for effective planning to pinpoint efficiencies, and makes planning more difficult.
Dashboard indicators
Chancellor Phyllis M. Wise welcomed the trustees and presented the Urbana campus's "dashboard indicators," a thematic report given at each meeting by each campus chancellor that compares the metrics of each campus against a list of peer institutions. Faculty and scholarship was this meeting's theme.
Wise's statistics showed that the Urbana campus lags its peers when it comes to student to faculty ratio, but she said that is changing because of a campus plan to hire 500 faculty members in the next five to seven years.
She said there are 170 faculty searches underway this year.
The campus also is behind its peers in faculty salary rates, she said, but that issue also is being addressed through the university's salary program, which has produced merit raises for three consecutive years after a period of salaries being frozen. Additionally, the campus has made available additional funding to deal with compression, equity and retention in faculty salaries, particularly in fields where there are large discrepancies between departments and their peers.
"We think we're going in the right direction," she said.
The process of "cluster hiring" that targets emerging academic areas or groups of specialized researchers has already begun, she said, which should address several campus faculty staffing issues, help the campus attain goals in the Strategic Plan and help meet diversity commitments.
Following the three campus reports, which all indicated fierce competition from institutions trying to lure faculty members away, Kennedy called for a study to determine the "tipping point" of faculty members lost because of salary and benefit issues.
Wise told trustees the statistic that stands out to her from the 10-day enrollment numbers, after the high academic rankings and the diverse geographic origin of the 2013-14 freshman class, is the fact that 21 percent of the new students are the first in their families to attend college.
"We have an extra responsibility" to assist those students and help them succeed.
She said campus-based financial assistance has gone up to $58 million with this year's budget, up $20 million from last year.
"The number one reason students don't (go to Illinois) is because of money," she said.
To address the $500 million in campus deferred maintenance projects, $70 million had been set aside for current work and $370 million will be set aside for future projects.
She told trustees that the recent U.S. News and World Report university rankings, which show the U. of I. moved up the public university list to #11, weren't important except when it comes to outside perception.
"Obviously rankings mean something," she said, "but we don't study for the test. We've been focused on the next 20-50 years ... but I think we'll be doing this in a lot less than 20-50 years."
Other business:
- The board approved an incentive-based bonus of $90,000 for Easter, based on a performance evaluation prepared by its executive committee in July covering the 2013 fiscal year. The bonus program is annual.
- The board received a report on the university's Minority and Female Business Enterprise program, which had a funding increase of 40 percent to $50 million in fiscal year 2013. The program was created by the state Legislature to promote diversity in state contracts.
n Lawrence Schook, the vice president for research, said the leaders of U. of I. Labs are prepared to submit their final project proposal to the Department of Defense by the Oct. 11 deadline for a new digital manufacturing and design innovation institute.
The project, based in Chicago, would use $70 million in DOD matching funds "creating an ecosystem" for high-tech research and job creation, he said. The Illinois proposal involves universities, business, government and communities from 15 states.
DOD will announce awards in December and Schook said the "shovel-ready strategy" in the Illinois proposal means work would begin quickly. He said he expected there to be pilot projects running in the facility within three to five years.
"We're excited about the national interest," he said. "We've had a number of conversations (with industry leaders)."
