Grim outlook for university's fiscal future
Walter Knorr: “We’re living in a normality of total uncertainty."
Photo: L. Brian Stauffer
The sun briefly poked through the clouds Thursday, but inside the Student Services Building there was gloom as faculty and staff heard a presentation on the fiscal health of the University of Illinois.
The forum, sponsored by the UIC Senate, was the third in a series this month, including a talk by Christopher Kennedy, chairman of the Board of Trustees, on the future of the research university, and a panel discussion on public pension policy and funding.
The message: in the midst of a decade-long decrease in the state’s appropriation, university officials never know when — or if — the diminishing state funds will arrive.
“We’re living in a normality of total uncertainty,” said Walter Knorr, university vice president and chief financial officer.
The university’s appropriation has dropped almost 29 percent over the last decade when adjusted for inflation, Knorr said.
As of last week, the state has paid about 45 percent of the university’s allocation for the fiscal year ending June 30, similar to last year. With the almost $28 million the state still owes for financial aid for the semester, the unpaid balance to the university is about $400 million.
The 2012 appropriation, which may be decided this week, could be cut severely, he said, adding that the chairs of the House and Senate appropriations committees have told university officials to prepare for several bad-to-worse scenarios.
“The only reason we haven’t had a rescission in the last two years is because of the federal assistance program, which required that the state not reduce its appropriation from three years ago,” Knorr said.
“That protection is up for 2012.”
The university has made up for cuts in state support in part by raising tuition for new undergraduates by 6.9 percent. The rate is locked in for four years under the state’s guaranteed tuition law, making the annualized increase 2.7 percent.
State support makes up about 40 percent of the university’s educational budget, while tuition is now 46 percent, Knorr said.
“We now have more money coming in from tuition than from the state,” he said. “Thirty years ago we had almost $13 in state aid for every tuition dollar. Now, we have 80 cents.”
If there was any good news, it was that President Michael Hogan is “very committed” to a salary program for faculty and academic staff this year after two years of no raises, said Jerry Bauman, interim provost and vice chancellor for academic affairs.
The bad news, he said, is that colleges and other units, as they do for many other financial necessities, must pay for it out of their own funds.
“Whatever tuition we collect, about 80 percent of it goes back to the colleges,” Bauman said, as does about half of the indirect cost recovery, or ICR, collected from grants.
“This was decided several years ago for the purpose of putting the resources where the decisions are made — at the college or unit level.”
Bauman said UIC has relatively healthy cash balances.
“And that’s a good thing, because we could not make payroll unless we did,” he said.
“The reason we have these cash balances is because the deans and department heads — the people who control budgets — have been very fiscally prudent at UIC.
“It has to do with our financial model — we give them the money and hold them responsible.”