The U. of I. is at "risk of deterioration" unless the state finds a budget solution soon.
President Tim Killeen told trustees at their Nov. 12 meeting that he has been delivering that message to any state official who will listen, including recently at a legislative hearing in Springfield on higher education funding.
"We see the university as a revenue center for the state, not a cost center," he said, noting that the U. of I.'s nearly $14 billion annual economic impact is around 2 percent of the gross state product.
U. of I. and other state higher education leaders have been advocating for months for the state to resolve its funding impasse and restore annual appropriations. The three-campuses of the University of Illinois alone receive around $660 million in annual state funding.
Killeen said each month that passes without a budget resolution, the U. of I. is forced to tap into around $75 million from reserves to cover payroll and other expenses.
Several actions taken by the university have been aimed at protecting academic programs by reducing administrative costs, including a University Administration hiring freeze, reductions in information technology activities and added deferred maintenance.
He said those actions, and many others planned, have allowed the university to manage the fiscal uncertainty in the short term.
"Many actions are underway to (help the university) become as effective and as efficient as we can be," he said. "All of our actions are student-focused. The mettle of the U. of I. is being demonstrated on a daily basis."
He said he would be floating the idea of increasing enrollment in the future to increase revenue, but he would like to keep tuition rates stable, especially for in-state students.
At the board meeting, Killeen asked trustees to sign an oversized resolution calling for legislators to end the impasse.
Walter Knorr, the U. of I.'s chief financial officer, said the talk in Springfield is that the budget won't be resolved until at least January, when legislators return from holiday break.
If a state budget resolution is passed in late January or early February, he said it could still be weeks or months before university officials could include the new figures in a budget document.
Knorr said as of Dec. 31, with no new budget in place, the state would be holding some $500 million in unprocessed university bills. There also is the question of how quickly the current year's appropriation arrives even when a budget is passed at the state, based on the fact the state is in arrears by several billion dollars.
He said there are similar pressures on the state-operated Monetary Award Program, which has announced financial aid recipients but can't replenish funding until a state budget is passed and appropriations again start flowing.
Knorr said there are other programs at the U. of I. that depend on state funding to trigger matching federal funding. Without the state money, the federal money can't be obtained. He said the problem is especially troubling at the UIC hospital, where federal Medicaid money is funded on a matching basis with the state.
Timothy Koritz, chair of the board's University Healthcare System Committee, said if the payments are not received soon, it could have a destabilizing effect on the system.
Right now, the hospital has to essentially absorb $14 million in unpaid Medicaid bills each month, he said.
"We have not yet had to deny services or furlough employees," he said, noting the topic will loom larger in the new year if the issue is not resolved at the state level.
Knorr said the lack of a budget and the fact that borrowing costs continue to increase because of diminished bond ratings make it difficult to move forward on capital project planning. He said currently there is "no talk at all" of a state-supported capital program.
Danilo Erricolo, a UIC engineering professor and a member of the University Senates Conference, told the board of trustees that faculty members are becoming very concerned about the impact of the budget crisis on students and employees.
"Not having a budget in place limits (the university's) activities," he said. "We are very deeply concerned about the immediate and long-term consequences."
He said the USC has voiced three major concerns deriving from budget issues.
One is the threat of reduced or eliminated MAP funding, which Erricolo said could erase recent gains in the number of minority students enrolled at the U. of I.
As it stands now, the university has agreed to cover MAP money promised to students but not received this fall, but it may not be able to cover that cost in the spring unless the state is able to replenish the MAP account.
"Our greatest fear," he said, "is that thousands of students will drop out of the higher education pipeline permanently."
Erricolo agreed with other comments at the meeting that the health care system also is at risk like never before, with some $45 million in matching federal money at risk because of the state's teetering Hospital Services Fund.
"It's nearly empty now," he said. "Consequently, we can't receive the federal match."
He said no patients have been denied service, but there is uncertainty over how much longer the situation can be sustained.
"We are racking up a huge liability," he said of the health system's financial condition.
Erricolo said federal matching funding also is at risk for countless university research programs and centers. Even without matching-grant components, many of the federal dollars that come to the university are first filtered through a state agency.
He said the Illinois Center for Transportation is one example of the close relationship the university has with the state. The center, which studies traffic safety and efficiency issues, is funded over five years with $30 million. More than 100 researchers and students conduct more than 50 research projects for the center.
He said losing the center would impact research, employees and state residents who benefit from its findings. He said economic impact of the program is more than twentyfold of that invested.
All of these issues are underscored by the need to remain competitive with other universities, he said, which is becoming more difficult.
"These impacts extend into the future," he said.