While employee furloughs are a possibility to help the university contend with cash-flow problems caused by overdue payments and possible budget cuts from the state, furloughs – if they are used – probably won’t happen until March, members of the Urbana-Champaign Senate learned during a discussion of the university’s finances at the senate’s Dec. 7 meeting.
Employee furloughs of two to five days are among the contingency plans that university officials have discussed to help the university keep operating despite a multimillion-dollar backlog of unpaid state appropriations this fiscal year, according to acting vice chancellor for academic affairs Richard Wheeler and Michael J. Andrechak, associate provost for budgets and resource planning.
"Payroll is not at risk right now," Andrechak said. "...(however), we don't know how to meet March (payroll). ... The state did step up and provide some money to Southern Illinois University, which had already run out of cash. They have said that they will provide some cash as we move forward in the year. But it won't be possible for the state to catch up without something dramatic happening at the state level this year."
State lawmakers are considering a tax increase to address the state's $3 billion to $4 billion budgetary deficit, declining tax revenues and a multibillion-dollar backlog of unpaid bills, including payments to health-care providers that are 180 days or more overdue. University employees were notified in early December through a mass e-mail message that the state had just begun paying bills for dental care provided in July and were advised to confirm payment terms with their practitioners before obtaining services.
Each furlough day would save the campus approximately $1.8 million - and help retain employees who might otherwise be lost through layoffs and terminations.
While furloughs are not popular with employees, they "are a more humane option than firing people," Wheeler said. "What now seems to be pretty clear is we're not going to get all the money that was allocated to us this year. The shortfall will be far larger than we're able to make up by having a furlough for a few days. I think it would be imprudent to push off the furloughs and other cost-saving measures until the fiscal year is over and we've done nothing to make up for the deficit that's been created by short funding."
The university instituted a furlough policy in August to prepare for a budgetary shortfall during the fiscal year. The policy applies to all staff appointments except employees covered by the layoff provisions of the Civil Service System.
Sen. Peter Loeb, emeritus mathematics, expressed concern about the long-term impact of lost wages on employees near retirement. "If pay is reduced for those within the last few years of their service, that also affects their retirement pay forever - and that's not right," Loeb said.
Sens. Gabriel Solis, music, and Siobhan Somerville, English, expressed concern about the financial impact on employees and their families, particularly workers at lower-income levels, and Solis requested that university officials notify employees as far in advance as possible if furloughs must be taken.
According to plans under discussion, if it became necessary to furlough employees for more than three or four days, university officials would consider guidelines that would mitigate the financial impact on lower-income employees, Andrechak said.
Because the administrative and legal ramifications involved in putting furloughs into effect are time consuming and costly, "you want to have furloughs as concentrated as possible so you're not spreading that hourly status throughout the year. ...
"The current planning is that if we had three furlough days, ... the impact on paychecks would occur over three months," Andrechak said.
A five-member steering committee of key campus administrators is engaged in short- and long-term financial planning to develop strategies for weathering the current financial crisis as well as ongoing challenges such as declining state support. A 12-member Faculty Advisory Group will examine and comment on the committee's proposals with assistance from the campus Budget Oversight Committee and college deans.
In other business, the senate passed a resolution that urged the Champaign County Board, the Champaign City Council and the Urbana City Council to ban video gaming machines in local establishments. Under the Video Gaming Act passed in July by Illinois lawmakers, businesses that serve alcohol - including bars, restaurants, and bowling alleys - are allowed to install video gaming machines. According to the senate resolution, studies have shown that college students are particularly susceptible to gambling addiction.
