Pay change could cost UI system

By Patrick Wade

The University of Illinois system could potentially lose up to $500,000 it could have earned through investments as a result of a modification in the way the state pays the three campuses.

Because the state is planning to spread out payments over the entire fiscal year, the University system will have to dip into tuition money earlier than in the past, meaning that the University system will not earn extra revenue on money held in the bank.

The total amount of state appropriations to the University system for the 2007 fiscal year will not change. The University will still receive $711 million, a $12.7 million increase from last year, said Becky Carroll, spokeswoman for the Governor’s Office of Management and Budget.

However, instead of direct appropriations to the University system being paid in nine months, as it has been in the past, payments will be spread out over the entire fiscal year, which ends on June 30, 2007. Because the new plan did not start until September, payments will span approximately 10 months, Carroll said.

“This makes it easier to manage the flow of cash month to month throughout the entirety of the fiscal year,” Carroll said.

The new plan also makes it easier for the state to deal with expenditures at the end of the year, Carroll said.

“When you’re spending a big block of money in your first nine months, that can make it a little more difficult in the latter months of the year, when you’re dealing with an influx of bills,” she said.

Randy Kangas, assistant vice president in the University’s Office of Planning and Budgeting, said that this is not the first time that the University system has helped the state out with cash-flow issues.

“There are times during the year when the state has very little in the bank, and we’ve always helped the state with those kinds of cash flow issues,” he said.

Kangas said that although $500,000 is a substantial amount of money, it should not create any significant budget cuts. The University system uses this money to pay for expenses such as utilities.

“We use this money to pay for costs in a non-recurring way,” he said.

Carroll said that this is only a temporary solution, and so far the state only plans to implement this payment schedule for the 2007 fiscal year. However, payment of appropriations towards public universities may be reviewed on a year-to-year basis.

Carroll said that this plan will also help the state to save more money in the long run. The state will be able to pay bills in a more timely manner and avoid interest charges on late payments.

The payment plan was also spread out for the Southern Illinois University system, Carroll said.

The University system and the Southern Illinois University system receive the largest amount of state appropriations of any of the Illinois public universities.