URBANA — University of Illinois employees could see their first general pay raise in three years this summer if current state budget proposals survive, UI President Michael Hogan said Monday.

Hogan said the raise would be something below 4 percent under the best scenario — a 1 percent to 3 percent cut in the UI's appropriation and no major new costs associated with pension reform or changes in health benefits.

Gov. Pat Quinn proposed flat funding for the UI next year, while the House budget would cut public universities by 1.1 percent and the Senate plan calls for a 3 percent cut. Hogan said any of those scenarios would be a "legislative triumph" given the dire state budget situation.

"That's as close to victory as you can get in this environment," he said in a meeting with The News-Gazette on Monday.

If the UI ends up with a 2 percent state funding cut and doesn't get "clobbered" on pensions or health care, he said, "we'll be in a good position to do something for faculty and staff." That would help make up for last year's furloughs and three years of no general salary increases, he said, calling a pay raise "one of my top priorities."

The difference between a 1 percent salary increase and a 2 or 2.5 percent increase depends on what happens with pensions, he said.

The state faces a huge deficit in its pension obligations, and new faculty are already treated differently under pension changes approved by legislators last year, Hogan noted.

State officials have discussed taxing pensions or requiring universities and/or their employees to shoulder more of the costs of pension coverage, he said. That would put the university at a competitive disadvantage in trying to retain or recruit top faculty, he said.

Any pension contribution would be a recurring cost, and that could affect how much the UI can put toward salaries, he said.

The UI has accumulated a cash reserve since last year's funding crisis hit, when a $400 million-plus backlog of state reimbursements forced the UI to order employees to take furlough days to improve its cash flow, Hogan said. As of Monday, the state still owed the university $312 million.

"I think we're in pretty good position to avoid furlough days next year," Hogan said.

The UI also has money to retain key faculty who are recruited away from campus, Hogan said.

"If we lose somebody, it's not because we're not prepared to match" outside offers, he said. Faculty who leave usually do so for other reasons, such as a spouse's job interests or geography, he said.

"I just want to do more than that this year," he said, referring to the general salary program.

He said the university hasn't seen "acute" faculty flight, though he has been personally involved in efforts to retain two high-profile professors, one in Urbana (unsuccessful) and Chicago (successful). He wouldn't name names, but award-winning Professor Harris Lewin of the Institute for Genomic Biology is leaving the Urbana campus later this month to become vice chancellor for research at the University of California at Davis, where he received his doctorate in 1984.

"They're leaving for other reasons. I can live with that. What I can't live with is losing high-quality faculty because we're sitting on our hands. There's always money in the system for that," Hogan said.

Hogan said the major worries he hears from faculty involve the state's decision to drop Health Alliance as an insurer; possible pension changes; salaries; and how soon departments can replace faculty positions left vacant from early retirements or voluntary separation programs.

According to a recent report, 483 employees have left the UI through incentives, and the last group, 70 professors, will leave by Aug. 15. The departures are estimated to save about $19 million a year.

Hogan said the university has to decide on its academic priorities in choosing which positions to fill. It has to put the money in the most distinguished, productive and high-demand programs "so what's made this institution great is rebuilt," he said.

Hogan estimated that the first eight months of an administrative restructuring program have resulted in $10 million to $12 million in annual savings, in part by integrating or consolidating purchases and capital planning for the three campuses. Other areas are also being centralized, such as human resources for civil service staff, labor relations and information technology, he said.

Next up for review are fundraising, including the balance between the UI Foundation and campus-based fundraisers; and enrollment management, which involves admissions, recruitment, transfer policies and financial aid. Hogan said outside reviewers are evaluating the UI's practices and are due to make recommendations in coming months.