Budget Planning

Chancellor Susan J. Koch
Tuesday, November 1, 2011

To Members of the Campus Community:

With this letter I am initiating what I expect to be regular letters to the campus community on issues of importance to the University and to our overall goals and mission. The topic of this particular letter is budget planning, specifically the necessary budget reduction contingency planning that we are initiating in order to plan effectively and responsibly for the coming year and beyond as we face the possibility of state budget cuts or rescissions.

As I am writing to you, the State of Illinois is behind approximately $350 million in payments to the University of Illinois, including over $200 million for expenses incurred in the last fiscal year. I met with Governor Quinn this past week and, while I am cautiously optimistic that our governor and legislative leaders will do everything within their power to eventually deliver the promised appropriations and continue support for higher education, we must also recognize the economic realities.

According to analyses by the University of Illinois’s Institute of Government and Public Affairs, the Illinois economy is improving but has not fully recovered. Moreover, there is some concern that the national economy continues to be vulnerable. Under these circumstances, we cannot ignore the possibility of cuts in state support for higher education.

UIS is more dependent on state funds than are our sister campuses within the University of Illinois organization. For this fiscal year, FY12, UIS was scheduled to receive 40.7% of its unrestricted funds from the State of Illinois. The percentage for the University as a whole is 35.4%. More telling is the percentage of state support as a percent of total funds. UIS receives 24.3% of its entire budget from the state, while the university percentage is 13.8%. Thus, the impact of any state budget reductions will be proportionally greater at UIS than at the other two campuses.

In the last fiscal year, the University of Illinois strategically made advance plans to deal with a potential $100 million state fund shortfall, which would have amounted to a 13.5% reduction of state support. The UIS share of that reduction would have been just under $3 million. Even with the tuition increase last year, a budgetary rescission of this magnitude would have forced us to reduce the overall UIS operating budget by 5.2%.

Thankfully, the anticipated budget reduction was significantly smaller than expected and it was not necessary to fully implement the budget reduction plans last year. However, we continue to face the possibility of significant reductions in state support, and we must continue to be prepared. As painful as such planning can be, by engaging in advance planning, good stewardship of our resources, and careful control of costs in the last year, UIS managed to conserve some reserve funds to help protect our core functions in the event of a modest rescission. For now, our reserves will help us to protect our core academic functions and operations. But our reserves are one-time funds only and cannot carry the campus through a permanent budget shortfall, so our planning must also involve more proactive efforts.

Thus, in preparation for the possibility of budgetary reductions, I will be working with UIS senior leadership to develop contingency plans, even as we hope that such plans will not be needed. These contingency plans will be developed in consultation with departments and units affected by them. We will keep the campus community informed by providing updates on the budget situation to the Campus Planning and Budget Committee and the Campus Senate.

At the same time that we make short-term contingency plans, we also need to be looking ahead at our proactive longer-term strategies. As I stated in my convocation remarks several weeks ago, how we interpret our university’s original “innovation mandate” and our continued focus on our vision to be a “premier public university” provide the launching pad for the next decade of growth. I invited you at convocation to “engage with me” in determining how we can be, as our Board of Trustees Chair, Chris Kennedy, is fond of saying, “… the best at what we do in everything that we do.” I very much appreciated our discussions at the recent campus forums and look forward your continued input.

Although the state of Illinois will continue to face budgetary uncertainty, I am confident that, working together as an academic community, we will be able to build on our strengths and overcome the challenges that lie ahead.

Thank you for everything you do every day to provide our students with an outstanding educational experience. I deeply appreciate your efforts.

Chancellor Susan J. Koch