UI's take on Quinn plan: Relief
University of Illinois officials greeted Gov. Pat Quinn's budget proposal with relief but said it's just "opening day" of the budget process.
The governor's budget would provide essentially flat funding next year for the university, or $668 million — far better than an unprecedented 12.5 percent cut required if the state's temporary income tax increase is not extended, said UI Comptroller and Vice President Walter Knorr.
Quinn's budget also would add about $50 million to the state's Monetary Award Program, a need-based financial aid program that helps pay tuition for low-income college students. That could mean another $5 million to $7 million for UI students, Knorr said.
"That's all good," Knorr said Wednesday. "Obviously we're very relieved."
But he added, "Just like the baseball season, the governor's message is opening day for the budget season. There's been a lot of preseason activity, but now the process begins in Springfield. We'll be monitoring what goes on throughout the budget process and we will continue to advocate on behalf of the university."
The income tax increase approved in 2011, from 3 percent to 5 percent, is scheduled to be phased out starting in January. The governor proposed making it permanent to help avoid "extreme" spending cuts for schools and state services.
He tied the proposal to tax relief, with a guarantee of a $500 annual refund for every Illinois homeowner and increases in the earned income tax credit for low-income families — carrots that would cost the state millions, said Prof. Christopher Mooney, director of the UI's Institute of Government and Public Affairs.
"Mary Poppins had a spoonful of sugar; he had a table full of sugar," Mooney said.
"What I was encouraged about is that he did not deny at least that we have a significant problem — the fact that he didn't just say, 'Well, we'll grow our way out if it through (cutting) waste, fraud and abuse.' That is patently not the case," Mooney said.
A combination of spending cuts and tax hikes will be required, he said, noting that making the income tax increase permanent would only reduce the projected deficit by half — to $6 billion in 2025 rather than almost $13 billion.
"We've got a big problem. It took a lot of guts to propose what's essentially a tax increase as he's going into the political fight of his life," Mooney said.
Earlier this month, state higher education officials warned the UI and other state universities to prepare for a 12.5 percent cut in state funding for 2014-15 in case the income tax increase is not extended.
That would mean a loss of $82.7 million in the UI's state support, including about $40 million from the Urbana-Champaign campus, officials said. Since 2002, the UI's direct state appropriation has been reduced by $181 million, with the largest one-year hit coming in 2010-11 — 4.6 percent or about $42 million, said Randall Kangas, UI associate vice president for planning and budgeting.
"It is a very large number," he said.
A 12.5 percent cut would "be felt in every phase of our operation — student tuition, class sizes, the quality of academic and research programs, medical services and education, our workforce, and the University's ability to deliver the highly skilled graduates and leading-edge innovation that help drive the Illinois economy," UI President Robert Easter said in a prepared statement.
The UI has remained financially solid through prudent spending, cost-control efforts and tuition increases, he said, "but we cannot absorb yet another reduction of this magnitude without considerable pain."
"I am grateful that Gov. Quinn is seeking alternatives to avert deep spending reductions for higher education and maintain funding at current levels," Easter said.
For the campus, it would be a challenge to absorb a $40 million cut quickly, as most costs go toward personnel, said Mike Andrechak, associate chancellor and vice provost for budgets and resource planning.
"Faculty are tenured and academic professional staff have notice rights. That means our most vulnerable employees are those in the Civil Service system, where positions can be quickly eliminated, but the ability of many units to function effectively would diminish with the loss of these staff," he said via email.
The cuts would force the campus to consider a salary freeze, a tuition increase, larger class sizes, "dramatic reductions" in Extension programs, more deferred maintenance, major cuts to the library system and fewer offerings at museums and performing arts centers, Andrechak said. Reduced faculty support could also hurt the ability to attract large grants to the state, he said.
UI officials emphasized that the outcome of the budget talks will not affect tuition for this coming year, with rates already set for 2014-15. Trustees in January approved a 1.7 percent increase in tuition for freshmen entering the Urbana campus next fall, among the lowest in two decades. Those rates are locked in for four years under the state's guaranteed tuition law.
A 12.5 percent cut would put pressure on tuition rates in future years, Kangas said, "but there's also market pressures and every other kind of pressure. That would have to be evaluated after we get a final outcome from the Legislature."
"It only gets tougher from here," he said. "We will continue to prepare for the worst and hope for the best."
The MAP financial aid program received $373 million for the current fiscal year, but with rising tuition costs only about half of qualified students who apply receive the grants. The Illinois Student Assistance Commission, which oversees the program, closed applications for MAP grants earlier than ever this year, Kangas said.
"There's such a profound draw on those awards," Knorr said. "That's important to put some additional resources there."
In his address, Quinn also talked about creating a longer-term capital spending plan with help from a task force, but offered few other details. The budget document includes no new capital spending for the university, Kangas said.
The last capital bill to be approved came in 2010, with $31 billion in projects, including the renovation of Lincoln Hall and the new Electrical and Computer Engineering building.