The university's budget won't be granted relief anytime soon and will continue to suffer in the shadow of the state government's financial crisis, said Christophe Pierre, the vice president for academic affairs.
Pierre spoke at the Urbana Academic Senate's annual faculty meeting on behalf of university President Bob Easter, who was traveling.
"We've had to adapt to what has become a permanent situation," he said of state support, noting the $42 million in state funding cuts in fiscal year 2013, a static appropriation in FY14 and the possibility of tens of millions in lost revenue in FY15 if a state income tax that was proposed as temporary is discontinued.
The state currently owes the university more than $300 million, a figure that recently was up to $500 million, and its debt load and outstanding pension obligations have led to a mirrored downgrade of the university's credit rating. The state's capital projects budget has gone unfunded for 10 years.
Despite those ongoing challenges, Pierre said the university is moving forward on a positive path.
"We still have found funds to rehabilitate several buildings," he said.
He said the university is well on its way to address the new funding realities, with all of the campuses reviewing and restructuring their operations and working on strategies to increase nonstate revenue.
"It is a time of much good and a time of serious concerns," he said. "The challenge is to make the very best use of our resources and seize the opportunities that open up to us."
The administration has not been immune to introspection, with a seven-team committee recently submitting a list of 47 recommendations that are designed to streamline and improve universitywide administrative operations and "strengthen crucial relationships."
Salary and health and pension benefits continue to be of special concern to university officials, he said, because they go to the heart of the quality of new hires and the long-term confidence and stability of the university workforce.
He said Easter, along with the other presidents in the state universities system, had endorsed the so-called six-point pension plan published by the U. of I.'s Institute of Government and Public Affairs.
That plan calls for the eventual absorption by the university of some of the pension costs paid by the state.
Pension reform through the Legislature "is still up in the air," he said, which has led to discussion among university leaders of how much of the pension responsibility the university can handle and how such a change would affect its financial bottom line.
He said every 1 percent of state pension costs shifted to the university would equal an additional $19 million annual expenditure for the three campuses.
Administrators also have considered making changes to the Tier II benefits system, a system that went into effect in January 2011 for new hires.
"The Tier II system needs to be improved," he said. "The university may have to look into establishing its own (supplemental) retirement system for Tier II."
Pierre's comments followed a comment during the question-and-answer session by Stephen Kaufman, a professor emeritus of cell and developmental biology, who said the university had not done enough to protect retiree benefits.
Kaufman said the six-point plan was unfair because it called for more sacrifice from retirees - despite the fact that all of Illinois' residents benefited from money that was earmarked for pensions but spent for other projects.
"There is no reason for (retirees) to feel secure," he said. "These are very basic covenants of employment."
John Kindt, the chair of the senate's benefits committee, echoed some of those concerns.
"These are concerns shared by a vast majority of the university community," he said. "We'd like to see (university leaders take) a more aggressive view on this."
"We're working as much as we can with the state," Pierre said. "(The six-point) plan is not a perfect plan, but there is not a perfect solution."
Chancellor Phyllis M. Wise provided an update on the progress of the campus Strategic Plan, which includes an ambitious hiring plan, increases in financial aid and a call to double fundraising efforts over the next decade.
"We realize that bringing the best faculty here is only the first step," she said, noting that campus leaders are working to find ways to increase salary and benefit programs despite funding restrictions.
She said specific attention on the issue of salary and benefits needs to be paid to the College of Liberal Arts and Sciences and the College of Fine and Applied Arts to bolster retention efforts.
"We have to do it through private funding," she said. "We're working very hard to build relationships and we need to broaden our pool of donors. We need to be talking about what they're passionate about."
She said the key to navigating the future is in making plans together as a university through established shared government principles, then carrying out those plans in unison.
"We were established as a beacon of hope for the state," she said. "We will continue to invest and I think we can do even better and have greater impact. Unless we have input from faculty and staff and students, the decision will not fit."
Roy Campbell, a professor of computer science and the chair of the Senate Executive Committee, reported that recommendations would soon be made following the recent completion of a faculty survey on the strength of campus shared governance and a subsequent ad hoc task force on governance and faculty issues and concerns that completed its work over the summer.
"It reinforces the notion of shared governance and how people can participate," he said, noting that several opportunities currently exist to affect campus change. He said under that governing system, everyone should have equal access to voice opinions.
He said the senate's structures would be further studied and improved upon through the upcoming seventh senate review process. The result will be several recommendations for improving campus representation and sharing information.
Campbell predicted that some of the recommendations would lead to technological improvements, such as a stronger senate Web presence or automated senate voting.
"We'll do all of these under the statutes and ensure everyone is consulted," he said.
