U. of I. leaders, aware that the expiration of a temporary state income tax increase next January would lead to reductions in the state's education budget, will spend this spring lobbying legislators for level university funding.
If the temporary increase is phased out, the Illinois Board of Higher Education predicts the state will cut the university's funding share by 12.5 percent, U. of I. President Bob Easter told trustees at their March 6 meeting at the Illini Union in Urbana.
"We have to be prepared for that potential outcome," he said, "and we'll continue to argue strongly for stable funds."
The university's state appropriation now stands at nearly $650 million. Should the tax increase expire and if corresponding cuts are made, the university could lose $80 million in annual tax-supported state funding.
Easter said university officials would testify this month at a House appropriations committee meeting, held just a few days prior to Gov. Pat Quinn's annual budget address, and are hopeful they are able to affect discussions.
"We will point to projects like the Digital Manufacturing and Design Innovation Institute" as examples of the U. of I.'s economic and workforce impact and proof the three campuses are a good return on state investment, Easter said.
DMDI Institute, based at Chicago's UI LABS, is a partnership comprising 60 Illinois companies, civic and government units, and universities and community colleges, as well as 300 supporting organizations from 17 states. With a matching $70 million federal grant recently announced for the project, the digital manufacturing lab is expected to "bring together the best of industry, academia and workforce development in support of a single mission - to transform American manufacturing," according to a news release distributed at the board meeting.
"They'll probably ask more questions than usual," said Walter Knorr, the chief financial officer, of the upcoming legislative budget meeting. "I think we can expect a more aggressive hearing."
Easter said even the timing of the expiration of the tax is problematic considering it comes in the middle of the fiscal year, and that the uncertainty has made long-range planning even more difficult.
He said losing a large percentage of state funding would make it even more difficult to attract and retain top faculty members, which already has been challenging with recent changes in the state-supported pension system and other funding and employee equity issues.
Knorr said the university's bottom line could further be affected with a new law requiring it to report unfunded state pension obligations on its own financial balance sheet. Doing so would "wipe out" any positive aggregate cash balances.
How it will affect the university's borrowing rates, which currently is four levels above the state's rating, is unknown.
"Moody's is wrestling with how they're going to view that," Knorr said.
Several trustees said they were pleased with the interest rate of 4.76 percent the university had received for $80 million in bonds for the next construction phase of Ikenberry Commons and $90 million of the $165 million of the renovation work on State Farm Center. Details for both projects were finalized at the meeting.
U. of I. Foundation President Thomas Farrell reported that an effort to double philanthropic giving within the next decade is going according to plan, but that the program would not bear fruit in the near term.
He said fundraising this year is down by more than 16 percent from the five-year average, but that will change as the long-term plan is implemented. The plan includes a 22 percent increase in the foundation's base budget and the addition of 67 new fundraisers and support employees. A public fundraising program will be announced for 2017 to run in conjunction with the university's 150th anniversary. The foundation's goal is an annual 7.9 percent increase in revenue.
"There's going to be a lag because we're in a transition," he said. "But we're setting some pretty ambitious goals and we're not giving up. We are remaining optimistic."
Other business
- The board approved a student insurance plan that includes gender reassignment surgery coverage for transgender students seeking it.
Renee Romano, the vice chancellor for student affairs, said support was measured through a campus petition signed by 2,500 students, a town hall meeting in which "no concerns were voiced" and an Illinois Student Senate resolution supporting a transgender friendly campus. Adding the surgery to the insurance plan will cost Urbana students an extra $2.22 each semester, though the overall rate is expected to rise by 15 percent next year to cover added requirements of the Affordable Care Act. Students at UIC, which has a self-managed plan, will pay 2 percent more.
"In general, we think it's a good thing to offer," Romano said of the surgery coverage.
Trustee Timothy Koritz, a physician, said he was concerned that the surgery is permanent and that students would be making the decision at a young age.
"This (procedure) causes complete and irreversible sterility," he said, suggesting psychiatric care and hormonal care already offered in the student plan would be a "better choice for an 18-year-old."
Trustee Edward L. McMillan, who supported the measure, said he did so reluctantly because the treatments for gender dysphoria are covered under Affordable Care Act mandates but the surgery is not. He said he was "troubled" that other students were being "forced" to pay for the procedure.
"That's just the nature of insurance," said Trustee Pam Strobel. "It's not appropriate in our roles of trustees to exert our moral judgments."
"It is indeed a medical condition that needs to be addressed medically," said Trustee James D. Montgomery.
The measure passed with Koritz and Urbana campus student trustee Michael Cunningham voting against it.
- Trustees approved a health care reorganization plan that will align clinical and academic enterprises at UIC under a single umbrella to enhance patient care, teaching and research. Clinical and academic units currently operate independently.
The board endorsed the framework of the reorganization in November, and gave final approval March 6 after Easter provided implementation plans addressing details such as lines of authority, job descriptions and other organizational issues.
Avijit Ghosh, a professor of business administration and senior adviser to Easter, said under the new organizational chart, the vice president's position would be eliminated and a vice chancellor for health affairs at UIC would take its place, overseeing the new unified organization and reporting to the UIC chancellor. Chancellors at each of the university's three campuses report to the president, who will continue a leadership role in health affairs through regular meetings with the new vice chancellor, UIC's chancellor and provost, and the university's chief financial officer.
"The system has single, unified leadership but is not overly centralized," Ghosh said. "There is still local reporting."
Integrating teaching and research into clinical care will create opportunities for collaborations among academic units in real-world clinical settings, officials say, fostering innovation to improve patient care.
A unified enterprise with common goals and a single administrator also will make the university's health care operations more nimble and efficient amid rapid changes in U.S. health care, officials say.
The reorganization will be fully implemented when the new vice chancellor is hired, expected by early 2015. Clinical and academic units will maintain their current lines of authority in the meantime, and ongoing efforts to transform the university's health care enterprise will continue.
Capital projects approved
Trustees at their March 6 meeting approved several measures tied to construction and building renovation projects on the Urbana campus:
- Contracts totaling nearly $90 million for the second phase of renovation work at State Farm Center. The $165 million project will add luxury suites, expand the hall's useable floor space by using retractable seating and add air conditioning. Work is expected to be completed in November 2016, with a stoppage for the 2014-15 basketball season.
- Design plans for a new Integrated Bioprocessing Research Laboratory, which will "bridge the gap from basic discovery in crop sciences to commercialization of next-generation biofuels, chemicals and food sources." The board also approved a $1.7 million increase in the project budget, to $24.9 million. The State Capital Development Board will pay nearly $23 million toward the new building, with an expected completion date of spring 2016.
- Renovation plans for Everitt Laboratory, which will become the new home of the department of bioengineering. The proposed $50 million project would renovate more than 125,000 square feet for instruction and research, and would be funded in part through a grant from the Grainger Foundation. Work is scheduled to begin in May 2016 and be completed by May 2018.
- A $1.9 million increase in the project budget for renovations and an addition to the Chemistry Annex Building, providing state-of-the-art laboratory instructional space for undergraduate chemistry students. The $24.8 million project is underway; work is expected to be completed by summer 2016.
- A $3.4 million increase in the project budget for renovation of the Natural History Building, covering costs such as furniture, fixtures, equipment and data networking systems. The $73.4 million project will modernize the historic building. Structural problems forced the university to close almost half of the building in 2010 and move offices, labs and classrooms. The project completion goal is August 2016.
- Renovation plans for the Surveying Building, which will provide state-of-the-art study and research facilities to accommodate growth of the College of Business. The $8 million project will be funded in part through a $4 million gift from the Irwin Family Foundation. The board also approved renaming the building the Irwin Center for Doctoral Study in Business. Construction is scheduled to begin in July 2015 and to be finished by June 2016.