$4.45 billion plan also includes 2.75% raise for most faculty, staff
URBANA — Reflecting a modest growth in tuition revenue and a relatively flat state appropriation, the operating budget for the University of Illinois this year is just over 1 percent higher than last year, representing one of the smallest percentage increases in recent years, according to officials.
The university is planning for a $4.45 billion operating budget for the current fiscal year ending June 30, 2014, up 1.2 percent from 2013. Add to that figure a hefty $1.18 billion for payments-on-behalf, money the state pays the university for health benefits and pensions, and the number reaches about $5.6 billion.
The budget shows a $52 million increase in tuition revenue (the UI Board of Trustees in January raised tuition for incoming students by 1.7 percent) and a 0.2 percent increase in the general fund appropriation from the state.
As previously reported, the operating budget calls for a 2.75 percent average salary increase for most faculty and staff. Those raises take effect this month.
As has been the trend in recent years, the state appropriation makes up a smaller portion of the revenue pie while more money is expected to come in from tuition.
"The university is relying more and more on tuition to meet its needs," said UI Vice President for Academic Affairs Christophe Pierre. Tuition revenue is the main driver of unrestricted revenue growth for the university, he said.
But because trustees have agreed to keep tuition rates from rising dramatically, the university should not count on big increases in tuition to drive its revenue growth in the future, Pierre warned.
"The growth in tuition (revenue) is constrained. We don't have much more room to expand. ... We recognize pension reforms will add costs to the university, and we are worried about federal research funding," he said.
The bottom line is new campus initiatives will be primarily funded by reallocations, Pierre said.
Campus and university administration-led reviews of administration, academic programs and external activities are underway.
"The take-home message for me," said UI trustee Tim Koritz, "is we're going to have to down the road ... decide what we're good at and what we're not good at and maybe have to pare down our activities to center on our excellence in the academic realm. It's going to become more and more difficult to be able to do the scope of what we do right now, unfortunately."
As of Wednesday, the state owed the university $204 million — $59 million from fiscal year 2013, which ended June 30, and $145 million for the current fiscal year.
The general appropriation from the state for 2014 increased by $1.2 million or 0.2 percent for about $668.7 million. That direct appropriation is below the 1997 amount in nominal dollars and below the 1966 level when adjusted for inflation.
As for the $1.18 billion payments-on-behalf, the state is paying a "whopping" $161 million more, or 16 percent, this fiscal year for health care and pensions, Pierre said.
As for tuition revenue, it is expected to come in at $1.06 billion for 2014, and it represents nearly 24 percent of the money coming in, followed by $772 million (or 17.4 percent) from grants and contracts, $759 million (or 17.1 percent) from the hospital and medical service plan, $668.7 million (or 15 percent) from the state or 15 percent, $667 million (15 percent) from auxiliaries and other departments, plus institutional funds, gifts and endowments and student fees earmarked for deferred maintenance on facilities.
A board committee reviewed the budget overview Wednesday; the 2014 operating budget, including all the salaries and raises, goes to the full board for approval next week.