An Update on the Financial Status of Our Campus Urbana-Champaign Campus
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Transcript of An Update on the Financial Status of Our Campus Urbana-Champaign Campus
An Update on the Financial Status of Our Campus
Urbana-Champaign Campus
Today’s Discussion:
• State of the State
• Strengthening our Financial Foundation
• Moving Forward– Investing in Illinois– Planning for FY12 & beyond
The Condition of the State has Changed
State Financial Issues• The state’s General Revenue Fund budget for
operations is approximately $26 billion.
• Started FY 2011 with >$3 billion in unpaid vouchers. There is no revenue source to pay these past due bills.
• One-time funds ($5.7 billion from borrowings, $2 billion stimulus funds, $300 million fund sweeps) used to help cover FY10’s costs.
• Many one-time funds no longer available
The state started FY11 with a minimum shortfall of $13 billion—50% of the
state’s operating appropriation!
The 11th Hour Tax Increase
• Tax increase should cover structural deficit• Borrowing for payment catch-up was not
yet approved—maybe later in spring• Until then, some cash flow issues remain
While it will take weeks to fully sort out implications of increase, the State’s
financial position has improved dramatically
While Risks Remain, Campus has Taken Decisive Action
Campus Planning Efforts: Taking action so that Illinois can
thrive
• Protecting our ability to:–Hire & retain the best faculty—our
reputation depends on it– Protect quality and access for our
students– Ensure Illinois remains a leader in
higher education
Ensure Financial Stability
Reduce Central Costs
Reduce College Costs
Enhance Our Revenue Base
Strengthening our Foundation
Through interconnected efforts to:
Enhancing Financial Stability
Improving our Balance Sheet
• Increased financial oversight:–With Business & Financial Services,
monitor financial health of units– Colleges aggressively eliminating
deficits– Central involvement required for some
deficits• Utilities• IP discovery and patent defenseImproved cash position will facilitate a
smoother transition to lower GRF
Managing Human Resources:Our Largest Cost
• Reducing staff size to control costs and accelerate efficiencies:– Incentive program reduced staff levels by 420
people– $17m in net savings anticipated– Constrained hiring tied to critical needs
• Development of service centers, consolidation of responsibilities and elimination of non-essential activities
Net effect: 585 FTE decrease on state/tuition since FY09!
Reducing Central Costs• Implementing sunset provisions for
centrally funded projects• Investing in energy conservation—
$8m+ in annual savings
• Expanding central & cross-college service centers
• Advancing IT initiatives to save millions
• unified communications• server consolidation
Reducing College Costs• Colleges are accountable for their
finances• Colleges are reducing administrative
costs:– Consolidating HR, Business & IT services– Extension reorganization—from 70 to 30 offices
– Administrative consolidation—School of Languages & Literature; Education (3 units); School of Earth, Society & Environment; others
Allowing reallocation of funds to highest academic priorities
Stewarding Excellence Projects
• IT @ Illinois• Public Engagement• Scholarships• Teaching Support• Small Academic
Units• Aviation• Police Training Inst.• Initiatives & Small
Centers
• Graduate College• Revenue
Generation• Extension• Advancement• Biology Education• Library• VC Research• Space Utilization• UtilitiesTwo new projects: Beckman & IGB and
NCSA
Stewarding Excellence @ Illinois
Savings/Income from Selected Efforts
• IT projects: ~$20-25 Million over 5 years
One Example: FY 11 est. savings for servers/server rooms consolidationCampus Savings (Utilities): $149,640Unit Savings (capital, maintenance): $532,375Cost Avoidance: $303,000
Stewarding Excellence @ Illinois
Savings/Income from Selected Efforts
• PTI—self-supporting or closure: ~$900,000
• Institute of Aviation: $500,000-$750,000
• Scholarships: $500,000 over 5 years$500,000 in tuition waivers reallocated
from DIA to general student population
Stewarding Excellence @ Illinois
Savings Through Transformation
• All of the SE@I projects investigated opportunities for structural, programmatic or process changes
• Additional savings, revenue streams and increased efficiencies (cost avoidance) are anticipated as a result of several SE@I reviews.
Stewarding Excellence @ Illinois
When it ends
• Process is winding down—perhaps one more project
• However, in depth self examination will continue:– Graduate College review of doctoral
programs launched this year– Instituting ongoing academic program
review
Enhancing Revenue
• International student tuition and fees– Pay for additional costs– Offset declining GRF– Fund increase in Illinois resident
financial aid
• Summer session—on-line programs keep this revenue at Illinois
• Self-supporting master’s programs
Conservation of Cash
• Campus cash management efforts
• Limited hires and deferred expenditures allowed units to build needed reserves
• Greater focus on financial control throughout campus
• College revenues grew while costs declined
Year-end Outcomes
• Cash balances held by academic units increased significantly
• Deficits were reduced by 23% this past year
Our permanent & cash set-asides, held by college & campus, will allow us to
move forward in a deliberative manner
Investing to Protect & Advance our Campus
Protecting Access and the Student Experience
• Financial Aid– Significant investment—growing by $4.5m– Access Illinois—the final major theme for
“Brilliant Futures”
• Expansion of James Scholars program• College efforts—iFoundary, LAS OnLine, Library
Learning Commons, FAA career services. . .
• Expanding small UG classes (Discovery & others) & establishment of UG research office
Protecting Quality of Life• Investing in Scholarship– Research Board– Center for Advanced Study–Humanities & Arts Research Fund– Expansion of Turing Cluster– Library collection catch-up
• Supporting research compliance & safety
• Supporting Classroom Technology• Improving our facilities
Hiring and Retaining the Best Faculty
• FY11 preventive retention program• Increased campus promotion increment• Supporting aggressive retention efforts• Faculty searches approved across campus
in FY11• VRP program will allow strategic hires in
critical areas (133 faculty approved)
Planning for FY12 and Beyond
Macro Level Planning
• Macro level planning—looking at new costs and revenue over a multi-year period
• New costs driven by:– Core operations: salary program,
financial aid, facilities costs. . .– Strategic needs: retention of faculty,
diversity, protecting quality programs, selected investments
Actions guided by strategic planning
Macro Level Planning (cont.)
• Revenue projections:– UA’s 3-year GRF estimates– Tuition estimates showing declining growth– ICR growth based on current trends– Highly differentiated unit assessments
• Improve financial position will allow multi-year phase-in of reductions
We have the resources & ability to move forward in a manner that protects our
quality
What we have learned
Beginnings of Cultural Change
• Financial sustainability—we can’t deficit spend our way to excellence
• Making choices regarding new directions—few institutions can do everything
• The capacity to adjust our footprint—we have a long history of new ventures but are just learning how to make difficult decisions & adjust our scope
Moving Forward• Nationwide, higher education is
facing continuing challenges—Illinois is no exception– Texas, California, Indiana and other
states are calling for a new round of major cuts to higher education
–While challenges remain, a NY Times editorial says: “the Illinois Legislature has begun to show residents and corporate leaders that it is serious about fixing the budget” (1/16/11)
Some Final Thoughts
• As an institution, we are learning new skills and changing our culture—that takes time
• However, in this remarkably challenging period, we have shown the capacity to take necessary steps to protect & advance our institution