Cuts, savings put UI budget in better shape

Wednesday, September 15, 2010

URBANA – Good financial news has been hard to come by at the University of Illinois, but the Urbana campus is in much better shape than a year ago, top officials said Monday.

It's not that the state's financial situation has improved. State spending still far outpaces revenue, stimulus money will soon dry up, pension systems are underfunded and a decision on a tax increase is in limbo. The state owes the university about $250 million, $120 million of that from last year.

"This is the same place we were at a year ago. What's different is where we are as an institution," said Mike Andrechak, vice provost for budget and resource planning, in a briefing for the campus Senate Executive Committee on Monday.

The UI has taken action "at every level" to deal with the budget crisis, he said, from energy savings to early retirements and furloughs.

Colleges and departments have squeezed costs out of administrative operations. About 400 people took advantage of a "voluntary separation program," and though some jobs may be refilled the campus expects "significant savings," he said. Voluntary retirements freed up money for departments to use for new faculty and could also lead to modest savings, he said.

Utility costs have declined dramatically, through energy efficiencies and a drop in consumption. The university's Administrative Restructuring and Review Committee has identified savings in information technology and strategic purchasing worth "$2 million and growing."

Colleges have cut millions in spending and set aside money to build up a cushion for what is likely to be a much leaner state funding picture for years to come, he said.

Cash balances held by departments are up by $62 million, though that includes private gifts and money restricted for certain uses, he said. Overall budget balances are up by $120 million, and deficits have dropped significantly, he said.

Budget cuts in individual units ranged from zero to 15 percent. But academic budgets actually increased by 1.9 percent, while administrative budgets were down by 2.5 percent, he said.

Andrechak said the campus can't count on those kind of cuts year after year. And with such a gloomy state picture, departments need to save their cash for the next rainy day.

"Our capacity to weather the storm has improved," he said. "The thing we want here is financial stability. We don't want to end up with lots of layoffs."

Interim Chancellor Robert Easter said the UI is moving to a "new equilibrium" with the state in terms of funding.

"My hope is the reductions we're going through between now and 2012 will get us to that point," he said.

That will require some tough decisions, he said. The areas affected most by the Stewarding Excellence budget recommendations are those the state should be responsible for, including Extension, he said.

"It is in some sense a re-evaluation of our mission and a re-establishing of our priorities," Easter said.