State shortfall may spell furloughs at UI
URBANA – The University of Illinois has so far seen only $400,000 of $317 million it is owed by the state, leading to a virtual hiring freeze and the possibility of furloughs.
And the state may cut even deeper.
The UI has billed the state for $317 million of its current fiscal year 2010 appropriation as of this week, but has received only $400,000 for all three campuses.
That's enough to run the UI for a few days, "if that," said Thomas Hardy, the UI's executive director of University Relations.
The shortfall led outgoing President B. Joseph White and Interim President-designate Stanley O. Ikenberry to write a mass e-mail Tuesday that said "the result is significant cash-flow problems that we continue to manage."
Managing them means vacant posts will be filled only on a limited basis.
"It will be necessary for departments, colleges and administrative units to manage any hiring on a critical needs, by exception basis for the remainder of the 2010 fiscal year that ends next June 30," the e-mail said.
Hardy said that "by exception basis" means that hiring that might once have been routine will have to be approved for each individual by a relatively high-ranking administrator, such as the dean of a college.
White said in a telephone interview Tuesday that he was loathe to cut jobs or work days.
"We've made people our top priority over five financially difficult years. We hope not to have furloughs; I hope we won't have to take those actions, but we will have to if there are rescissions beyond what we planned," he said.
Last week, Ikenberry said a plan is being drafted to cut $15 million from administrative expenses over the next three years.
Furloughs, for which the UI put a potential procedure in place in July, become an increasing possibility.
In July, White told the UI community of 25,000 FTE workers, "We reiterate that we are not, at this time, declaring furlough days for fiscal 2010."
By September, the picture was darker, with White saying that unless the state steps up, the only option will be budget cuts or tuition and fee increases. The result will likely be "higher tuition than most people will be comfortable with" or cuts that no one wants, White said.
Tuesday's e-mail said employees were safe from furloughs through Dec. 31.
"We do not plan furlough days before the end of the calendar year, and we hope they can be avoided completely," White and Ikenberry wrote.
Hardy said the UI could not make any promises for no furloughs in the spring semester.
He said the UI's problems reflect a nationwide recession that is the worst since before World War II.
Former Chancellor Mort Weir, who first came to the university in 1960, said the fiscal situation was the worst he's ever seen here.
"It sounds like they're doing all the things that need to be done, including setting aside for additional cuts should they recur," he said. "They've been tightening belts now for four or five years; it's been a very tough time."
Weir said the most likely rescue for the university was if Gov. Pat Quinn borrows money for departmental appropriations, as he has said he might do again.
"Without borrowing, it might be impossible to avoid further rescissions," Weir said.
White and Ikenberry noted that the problem even precedes the recession:
"In fiscal year 2002, the university's state general fund appropriation was $804 million. By fiscal 2009, that amount was down to $700 million after accounting for a $19 million rescission and a redirection of $24 million annually to cover part of our health care costs previously paid by the state. This is a reduction of 13 percent, excluding inflation, or 30 percent in real terms."
The UI's net general fund appropriation from the state for the current fiscal year is $719 million. That includes $45 million of federal stimulus funds that are unlikely to recur.
Hardy said the UI "continues to work with the governor's office and the budget office. We will try and manage our cash flow issues as well as we can. Basically, what we're intending to do here (with the mass e-mail) is first and foremost keep the employees informed about what's going on with the budget situation so we can plan ahead."
But White and Ikenberry also warned that the situation could worsen.
"Whether the governor and General Assembly will make downward adjustments to our current budget is unknown and may not be known for several months," they wrote.
"Given this possibility, however, we must take steps now to manage as prudently as possible.
"At the beginning of the year, the university put funds in reserve centrally in anticipation of difficult budget challenges ahead. We must now make further contingency plans to sequester an additional 6 percent, or $45 million, of the fiscal 2010 general fund."
Hardy said the university had prepared for that eventuality.
"The good news in this message is the contingency planning we did a year ago with a 10 percent contingency plan, telling people they need to be very careful with spending – travel, hiring, things like that. We've taken a very cautious approach and so far helped avoid furloughs that other states were forced to do," Hardy said.
"The bad news is despite all that, we are still in a very precarious and uncertain financial state," he added.
White and Ikenberry said they've asked administrators to safeguard academic and patient-care quality (at the Chicago hospital complex), serve students and maintain externally funded research programs, while identifying organizational changes and consolidations that will yield longer-term savings.
A spokesman for the governor said the UI is one of his top priorities.
"Governor Quinn is committed to supporting the University of Illinois as he continues to work to confront the historic fiscal challenges facing our state," Grant Klinzman said Tuesday.
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