The issues of state funding, tuition rates, employee compensation and institutional quality all found a common link during discussions at the UI Board of Trustees meeting March 23 at UIS.
The board unanimously approved a 6.9 percent increase in guaranteed, four-year tuition for incoming freshmen. The rate is locked in over four years.
Walter Knorr, vice president and chief financial officer, said the tuition rate equates to an annualized adjustment of 2.7 percent for new students and is based on the Higher Education Price Index, which tracks inflationary costs for colleges and universities.
"Then we extrapolated it for the four-year guarantee," he said. "It really is reflective of the cost of an institution of higher education."
Under the new in-state tuition schedule, freshmen at Urbana will pay $718 more per year for a total cost of $11,104; UIC freshmen will pay $630 more annually for a total of $9,764; and UIS freshmen will see a jump of $562 to $8,670.
Trustees also finalized fee structures proposed in January, approving an overall half-percent increase in Urbana student fees, a 1.8 percent increase at UIS and a 1 percent decrease in fees at UIC.
University President Michael J. Hogan said the inflationary increases equated to a flat rate and that UI tuition costs continue to be competitive nationally with other universities.
"If you look at the whole picture, our students are doing well on the financial side," he said. "Other institutions make ours look good, under the circumstances."
According to Knorr, last year more than 44,000 students applied for 10,000 open spots at the university's three campuses.
Despite continued state funding shortfalls, the university had sought to cap tuition rates at inflationary levels to avoid passing those fiscal problems to students, Hogan said.
The tuition increase is expected to generate about $22 million in additional funds, a portion of which Hogan said the university will use to offer another $6 million in supplemental financial aid.
"That's our way of dealing with the access issue, in part," he said.
About half of last year's undergraduate students received some form of need- or merit-based assistance, and in the past 10 years the UI has increased its need-based "supplemental" budget to $51 million even as student assistance from the state has dropped.
"We're doing what the state won't do," Hogan said.
Board chairman Christopher G. Kennedy asked administrators to study the impact of tuition increases on varied demographic groups.
Knorr said the state of Illinois continues to be behind nearly $447 million in promised payments, which is about two-thirds of the total UI has billed. In addition, Gov. Pat Quinn has promised to continue "level" state funding for the university for this year, Knorr said - but with uncertain revenue and without federal stimulus money, that may not be tenable.
"We may yet face another budget cut next year," Hogan added.
Knorr said pending legislation also could take aim at reducing benefits in the state's woefully underfunded pension system, and there are expectations that health and other costs will continue to rise. Illinois is about seven months late in paying obligations, though student-aid costs have been "absorbed" by the university and added to the state's unpaid pile of bills.
"It's a very distressing picture," Knorr said.
Meanwhile, the issue of employee compensation has gained traction since 2008, when the last general salary program was offered to employees.
"It doesn't make a compelling case to come to work here," Kennedy said of budgetary pressures being faced at the UI.
He said "enthusiasm has waned" among employees because of last year's furloughs, the well-publicized pension system problems and continued salary stagnation.
Hogan said furloughs won't be enacted this year and that cost-cutting efforts expected to eventually generate $60 million in annual savings could help support a general compensation program with employee pay raises.
Hogan said the furlough idea "is not worth the savings. It's very, very demoralizing."
"We really need ... to basically put together a meaningful compensation package," Knorr added.
Knorr said the largest savings will be realized through "cutting our way to freeing up those dollars," and that many efficiency-inducing programs are ongoing - including the Stewarding Excellence initiative begun last year.
Hogan said there are hopes that a restructured foundation office will lead to fundraising improvement. He said UI officials continue to tout the investment return the University of Illinois brings back to the state in an effort to shore up public legislative funding support.
Trustees voiced concern over the effect of the new financial landscape on the overall quality of the university - and specifically how those pressures affect the hiring of quality educators, leaders and employees.
"If we don't tend to that, you run the risk of diminishing the value of a U. of I. diploma," trustee Timothy Koritz said.
He said he also was worried that rising tuition costs would eventually produce a negative return.
"We may be pricing certain students out of attending the university," he said, an outcome that runs counter to the mission of making education available to as many students as possible.
Trustee Edward McMillan said the university may at some point need to consider the possibility of "pruning" its academic footprint in an effort to make the institution stronger - and that it would have to be done without diminishing quality.
"I think that also has to be in the discussion," Koritz added.
"Our challenge is, how do we do that?" McMillan asked.
Hogan conceded the multitude of issues would not be easy to navigate.
"Managing all of that ... is going to take some serious attention and an awful lot of work," Hogan said.