Quinn seeks to reassess state’s 2010 budget, aid UI finances

The state owed the University’s Urbana campus nearly $200 million as of the end of January, and while state funds slowly trickle in, University administrators hope the governor’s new budget will appropriate at least the same amount of funding as in the 2010 fiscal year.

But they are not optimistic.

With the Illinois state budget facing a nearly $13 billion deficit, the governor’s office plans to release preliminary fiscal year 2011 budget numbers on a newly created Web site at noon Wednesday, two weeks before the governor’s budget address in front of the General Assembly.

The governor pushed back his scheduled budget address by two weeks in order to give the public and state legislators time to suggest changes to the preliminary numbers, said Kelly Kraft, communications director for the Governor’s Office of Management and Budget.

“We are hoping to be held harmless from one year to the next,” said University spokesman Tom Hardy. “We are hoping to have higher appropriations than the current year, given the circumstances it would be ideal if we get at least as much as this year.”

The campus’s current $200 million shortage is 28 percent of the operating budget, according the University’s newly created budget transparency Web site.

Hardy said the Web site has been a tool for the University to help explain the financial situation to alumni and the public.

He said more than 1,000 alumni have contacted state legislators in the past two weeks advocating for greater University funding.

“No question the best public policy is publicly informed policy,” Hardy said.

He added that the measures taken to balance the University budget, such as mandatory furlough days, could affect the quality of professors on campus.

“Other universities might come in and poach our better faculty members and staff members and hire them away,” Hardy said. “(The financial situation) will make it harder to recruit from other institutions.”

The mandatory furlough days for most faculty members will help take a chunk out of the $82 million in University budget cuts.

The furlough days will save the University $17 million this year, Hardy added.

The “executive group” of faculty, which includes the president, chancellor, deans and administrators who earn over $200,000 per year are required to take 10 furlough days, cutting five percent of their salaries.

Faculty and academic professional employees are required to take off four days, cutting two percent of their salaries.

“Like anyone, faculty and staff think to themselves ‘If I am making a long term commitment to this institution, what commitment is the state giving?,” Hardy said. “If they are not confident they may be more inclined to go elsewhere.”

The University is giving faculty and staff members the option of voluntary pay restrictions, but the trend has been toward the furlough days, Hardy said.

“It is a last resort in how big of a hole we are in right now,” said Student Trustee Matt Reschke, “We need to have money in order to maintain such great faculty, and faculty retention becomes a problem when we can’t give them comparable pay to other universities.”

Because of the financial situation, the University’s bond rating has been downgraded, which will force it to borrow the money needed to operate at a higher interest rate, Hardy said.

The University’s borrowing difficulties are a direct effect of the state budget crisis, Hardy said, which has caused the state’s bond rating to fall to the second lowest in the country.

“If we need to go to the market to get money to be able to do certain things we are going to have to pay more for it in terms of higher interest rates,” he added.

Kraft said rating agencies look at the state’s debt management and the ability to get things done in the legislature.

“One thing (rating agencies) look at is action. Revenues came in lower than expected,” Kraft said. “We wanted to borrow to help us but there was some inaction there.”

Kraft laid some blame on Comptroller Dan Hynes for the low rating because he was against short-term borrowing when the agencies rated the state.

The state’s budget crisis is due to the lack of tax dollars coming in, an effect of raises in unemployment, Kraft added.

The state plans to help the University by taking out loans, but the University will be forced to borrow money of its own this fiscal year, she said.

“We hope the governor and other elected officials have a plan,” Hardy said.