Return of state funds could cause problems for University

By Mary Versaci

In light of the declining state of the Illinois economy, the University put aside $21 million of its state budget for the 2009 fiscal year to prepare for a reduction in state support.

The governor’s office issued a press release Tuesday, stating the governor will propose legislation allowing him to hold back as much as 8 percent of total appropriation and distributions in the state budget for all general funds spending, which includes higher education.

Doug Vinzant, senior associate vice president for planning and administration, said the University’s decision to put some of its funds aside was a result of the condition of the national and state economies.

“It’s a direct reflection of both the national and state financial challenges,” he said.

Vinzant said the University has held some money in reserve in the past if it was facing a fiscal year where general revenue projections were down.

“This was just a prudent management decision to make,” he said.

The press release was the first time the University had heard there was any specific expectation from the governor’s office, Vinzant said. Because the release was in general terms, the University still does not know exactly what it is expected to do and has not received an exact number from the governor’s office regarding its own funds.

The University received $760 million as its allocation, and if the governor calls for agencies, including for higher education, to return 8 percent of their general revenue fund support, then the University will be expected to give about $60 million back. This exceeds the $21 million the University had already set aside.

“We can’t absorb a reduction of that magnitude and not have it affect what we do to some degree,” Vinzant said. “We’re doing everything we can to minimize the impact on academic services and programs.”

In order to prepare for the possibility of decreased funding, the University had also begun to slow down spending, which mitigated the effect of the economy somewhat, he said.

He said the reason for the state’s rescission of funds was not the state’s way of asking to spend the money somewhere else.

“They’re running out of money,” Vinzant said.

Other Illinois universities were also prepared to some degree for the possibility of decreased funding from the state.

Julie DeWees, budget director of Western Illinois University, said Western puts 2 percent of state funds aside every year in case of emergencies.

The general revenue fund support Western received for the 2009 fiscal year amounted to $59.9 million. If the state calls for an 8 percent rescission, Western will have to give back close to $5 million.

“We don’t know at this point what we’ll have to give back,” DeWees said. “But we’re hoping we won’t have to give 8 percent.”

DeWees said most of their state appropriation goes to personnel services. The administration will have to look at what they will have to cut back on.

“Eight percent will have a huge impact on all public institutions in Illinois,” she said.

Duane Stucky, senior vice president for financial and administrative affairs at Southern Illinois University, said Southern also sets aside 3 percent of its allocations from the state every year.

Vinzant said the biggest worry right now is if the level of reduction carries into 2010.

“If we have to sustain this same level of reduction for another year, it will be a much greater impact,” he said.