The University’s proposed budget for fiscal year 2012 is set to increase by approximately 5 percent — even during a time when the campuses are facing declining financial “support”:https://www.dailyillini.com/index.php/article/2011/05/facing_budget_crisis_ui_increases_tuition_for_next_year from the state.

The recommendation, which was reviewed by the Board of Trustees’ audit, budget, finance and facilities committee on Wednesday afternoon, proposes $5 billion in spending for the University, which is up from the $4.8 billion in fiscal year 2011.

University president Michael Hogan said the spending plan reflects rising costs in order to maintain the University’s world-class academic and research missions.

“The University continues to weather the economic storm that has roiled our economy for several years with our excellence intact,” he said in a press release. “Sound budgeting, cost-cutting efforts and prudent spending have enabled us to preserve and advance our standing as one of the world’s elite universities, despite historic financial challenges.”

The budget proposes a $693 million state appropriation for operating costs, down more than $7 million from fiscal year 2011.

The state would also “owe”:https://www.dailyillini.com/index.php/article/2011/08/state_funding_for_ui_delayed_again about $793 million in “payments on behalf,” which the state pays directly to agencies such as the University to cover employee health and pension benefits.

These payments would increase by about $70 million for fiscal year 2012 ­— or by 9.7 percent — as the state seeks to catch up for past underfunding of employee pensions, according to the press release.

The state still owes the University $313 million for fiscal year 2011.

State funding has gradually declined since 2002.

“We have been very cautious about committing funds, and we are monitoring cash flows on a daily basis,” said Randy Kangas, associate vice president for planning and budget, earlier this year. “All of the departments and colleges have done an excellent job of expense control, restricting expenditures wherever possible.”

Walter Knorr, University comptroller and chief financial officer, told the committee during his budget presentation Wednesday that the University has saved” money”:https://www.dailyillini.com/index.php/article/2011/08/ui_costcutting_initiatives_prove_fruitful in response to the state’s “significantly” delayed payments using cost-cutting measures, such as not filling open positions and reducing travel.

Knorr added that the revenue from the tuition increase has brought in $96.5 million more than last year.

Tom Hardy, University spokesman, said even though the fiscal year has already started, the University has been operating under a preliminary budget resolution, which was approved in the Board’s June meeting.

The budget will now go to the full board for formal approval at its Sept. 9 meeting in Urbana.