Editor’s note: This is the first of a two-part series taking a closer look at the rising tuition rates at the University.

University Provost Linda Katehi remembers a time when it was much less expensive to attend a flagship state school. She paid $234 per quarter to attend the University of California at Los Angeles in 1979.

This year’s incoming freshmen at the University of Illinois at Urbana-Champaign, on the other hand, will be faced with record high costs after the University Board of Trustees voted for a 9.8 percent increase in tuition March 26.

The new price tag, which totals more than $20,000, is the result of salary concerns, funding complications and decreasing financial support from the state, Katehi said.

“I don’t believe we can increase (tuition) by this much for too many years,” Katehi said. “If the state doesn’t give more, we will have to look at ways to cut expenses.”

State Rep. Richard Myers, R-Macomb, said Illinois universities suffer from budget disputes between the governor and the General Assembly.

“The lack of funding of our state universities has resulted in dramatic increase in tuition and fees,” Myers said. “We’re essentially pricing ourselves out of the market.”

Katehi said that could cause various repercussions at the University level.

“Usually we try to be very modest with our faculty programs budget, but if we go too low, we risk causing instability in the system,” Katehi said.

A number of trustees said last month’s tuition increase was needed to retain faculty.

“If we allow the loss of faculty, I think we’re doing the public a disservice,” said trustee Robert Sperling at last month’s vote.

The average salary for a University professor is $95,700. That is almost $14,000 less than the national average for professors at other public universities, according to reports from the American Association of University Professors and the University Office for Planning and Budgeting.

Several trustees added that the University must find ways to maintain academic quality while lowering expenses. Some suggested admitting more out-of-state students who pay even more in tuition.

Katehi said the University would rather streamline its operating budget than eliminate campus programs, but rising expenses often outpace current University funding.

The University’s need-based financial aid is expected to increase in proportion to the tuition hike. W. Randall Kangas, assistant vice president for planning and budgeting for the University, said this will help students avoid prohibitive costs as long as it is a financially viable option for the University.

Financial aid is contingent on donations to the University, especially from alumni, said Donald Kojich, associate vice president for marketing and communications for the University of Illinois Foundation. The Foundation received $190.5 million in gifts from all donors, of which $4.2 million is specifically reserved for financial aid.

However, money donated to a specific scholarship or program has to be used as the donor directed, even if it is needed somewhere else, Kojich said. Few donors offer gifts the University can use at its discretion.

“Unrestricted gifts give us a tremendous amount of flexibility,” he said.

But unrestricted money is difficult to come by and even harder to depend on. In 2007, donors gave only $700,000 in unrestricted gifts – less than one-half the amount given in 2006.

Kojich said the Foundation rarely spends unrestricted gifts and instead chooses to invest them or add them to the University’s endowment, which totals about $2.2 billion.

The Foundation is in the fourth year of a $2.25 billion fundraising campaign for the three University of Illinois campuses. Kojich said $1.6 billion is slated for the Urbana-Champaign campus, but decreasing state funds make it unlikely that the funds will offset tuition.

Like the money from donations, income from school fees is usually restricted to a specific cause.

“It’s not that every dollar has been replaced by student dollars,” Kangas said. “There has been significant reallocation.”

Moreover, Kojich said it can be difficult to move funds around. Many of the Foundation’s financial resources are tied up in estates and stock, and even though the University’s endowment pays between 4 and 5 percent each year, this usually is not enough to lower tuition.

“Our tuition is directly related to the state budget,” Katehi said. “We see what kind of tuition we need. In the best case, the state provides lots of funding, and in the worst case, it provides none.”

Katehi said the University traditionally relied on state funds to keep tuition low.

But since state funding for higher education in Illinois is failing to keep up with the financial needs of the University, raising tuition is necessary to offset the costs.

“We have to agree on a funding source and that is the big question mark,” Myers said. “We need a very stable source of revenue.”

For the time being, both the state and the University are struggling to allot their limited funds.

“The pie is only so large,” Kojich said. “How do you cut that pie up to get your share and make your cause?”