BG.05.01
March 28, 2005
Senate Committee on the
Budget
(Final;Information)
BG.05.01 Recommendations
on Budget Process, Access, Benefits, University Development and Faculty
Excellence
BACKGROUND
Each year, the Provost asks
the Senate Committee on the Budget for recommendations on the following fiscal
year’s operating budget request, specifically salaries, benefits and general
price increases.
During the fall semester,
the Committee met with Provost Delia and Associate Provost Bill Adams,
representatives from the Office of Development, and the Director of Financial
Aid at Miami University. In addition, Chair Goldsmith and Faculty Benefits
Chair Barclay Jones met with various campus representatives to discuss health
insurance options. Based on these discussions, the Committee prepared and
submitted the following report to Provost Delia, which focuses on: 1)
State-University budget process; 2) University commitment to access; 3) benefits
and faculty/staff recruitment; 4) University development and faculty excellence.
RECOMMENDATIONS
The University continues to
grow not only in size but impact, reputation, and ambition. The University of
Illinois is and continues to be an exciting place to be. As the University
flourishes, and changes occur in its footprint, the University community needs
to constantly reassess, as with any organization, whether the resources and
institutional arrangements that have historically served it well, are sufficient
to support its growth and ambitions. Do additional sources need to be secured?
Do structural relationships and processes need to be adjusted to match the
strategic direction of the University; a gap-mapping process. Particular to
this committee we ask: are our financial needs well matched to the available
resources and the associated institutional arrangements?
In general one can be
pleased as the University, in a relatively short time period, has developed many
new financial resources outside its traditional base and diversified its funding
sources. Research grants, industry partnerships, and philanthropy continue to
grow. The State’s role as a percentage of the total has declined but it still
remains our most important patron. The committee lauds the administration for
understanding the importance of a dual strategy of embracing our traditional
funding sources while aggressively pursuing new sources. Only by pursuing a
multi-legged funding model can the future potential of the University be
maximized.
With this in mind the Senate
Budget Committee of 2004-2005 has focused on four issues relevant to the 2006
budget process and structural change: 1) State-University budget process; 2)
University commitment to access; 3) benefits and faculty and staff recruitment;
4) University development and faculty excellence.
1) State-University Budget
Process
The University’s budget
process has historically been tied to the State at both the legislative and
gubernatorial levels; which has resulted in Illinois becoming one of the world’s
finest public institutions. Over time a structural change has arisen where
University needs have outstripped the State’s capacity to be the leading source
of funds for the University. While it is impossible for the State to be the
leading source of funds, it does not signify that the State is any less
important to the mission and identity of the University. Being a true public
institution with all it connotes is a core value—access, service, and
aspiration.
The Urbana-Champaign campus
though continues to struggle with the impact of declining state resources, and
cumulative reductions pose increasing challenges for both academic and
administrative units campus wide. At both the college and department levels,
effort has been made to protect the quality of our instruction, research and
outreach programs to the extent possible, while still meeting required budgetary
reductions. Many units have suffered reductions in administrative and support
functions to do this, resulting in additional challenges as units seek to
support faculty and programs in an environment stressed by implementation of new
administrative information systems. This is happening at all levels of the
organizations and should be of significant concern moving forward.
Two of the most pressing
strategic impacts are on the undergraduate experience and efficiency of the
research grant process. Maintaining a high quality undergraduate experience is
critical for not only intrinsic reasons, but practical reasons as well. First,
as we raise tuition, students and their families will reassess our value
proposition. Second, as we look to expand our development efforts and initiate
the new campaign, a strong undergraduate program will be essential to selling
the University and connecting with patrons.
The second pressing impact
area is our granting process and the efficient execution of research proposals.
As more and more non-faculty resources are cut to preserve the core faculty,
faculty members do more and more secretarial and administrative functions.
While faculty need to share the burdens of cost cutting, it is important that in
our cost saving efforts we don’t start to negatively impact our revenue
generating abilities.
Recommendations
:
1)
That the
administration work with the Legislature and the Governor to rebuild the strong
covenant between the State and the University. The relationship rebuilding
should be based on mutual respect and understanding: Respect about the
limitations that the State faces and an understanding of the contribution the
University makes to the fabric of life for all Illinoisans.
2)
That the
administration conduct a structural assessment of the budget process and the
role of the State’s budget and the State’s budget process on the University’s
overall budget process. The structural change in States’ roles in public
universities is not a new phenomenon (Archibald and Feldman, 2003), yet little
has changed in the State-University budget process.
3)
That an
assessment be conducted of the cumulative impact of budget reallocations and
reductions on the undergraduate experience and our revenue generating ability
from research. Case studies of impacts to the undergraduate experience, for
example, may prove helpful in a number of ways.
2) University Commitment to
Access
The consistent drop in state
funding has produced unusually large tuition increases over the past several
years. We will need to be particularly vigilant to be sure that admission
continues to be determined largely by talent and not by a family’s ability to
pay. Up to this point, the campus has consistently increased financial aid
proportionally to increases in tuition. Going forward, though, one can imagine
significant tuition increases that will challenge the University’s laudable
commitment to access.
It is essential to continue
the policy of commitment to access in order to avoid a situation in which
admission is effectively determined by family wealth and not the applicant’s
abilities. The new Illinois Promise initiative will be vital to families below
the poverty line, and the Committee applauds this initiative. But Illinois
Promise will not address the problem of low income families above the poverty
line whose children might be discouraged from applying by the large increases in
tuition.
Recommendations:
1)
For those
families above the poverty line whose children might be discouraged by the large
increases in tuition, the only solution is to continue and to advertise
University policy that any increase in tuition is always matched by increased
funding for financial aid. As part of the University’s adjustment to structural
changes in the University’s financial model, strategically assess how this can
happen and what the cost will be.
2)
Given the
publicity associated with tuition increases, it will also be necessary to
publicize the University’s continuing commitment to provide adequate financial
aid to all families who qualify under existing programs. Going forward, the
challenges to the University’s core value of access should be unrelenting.
3) University Benefits
A third area of
budget-related structural change is occurring with respect to benefits,
especially pensions and health care. While there are many implications of
rapidly rising benefits costs and reductions in pension benefits, an important
strategic implication is the negative impact on faculty recruitment and
retention. The State’s pension system is under significant pressure due to
chronic under funding and increasing obligations (UI Office of Planning and
Budgeting, 2005). University faculty, staff, students and retirees are
concerned with the burgeoning health care costs and stability of the pension
system. Retaining quality and breadth of health coverage at affordable costs is
vitally important for all these groups.
More and more of the burden
of funding benefits, though, will be placed directly on the University going
forward. New resources and new institutional arrangements may be required to
keep the University as a salary and benefits leader among its peers.
Recommendations
:
1)
Study the
structural changes and the associated dynamic implications involving the
benefits question: changes in cost structure, changes in quality of the offer,
and changes in revenue sources. Within the study review alternative benefits
models, keeping in mind faculty recruitment and retention.
2)
Develop a
long-range benefits plan that is integrated with the University’s changing
revenue model.
4) University Development
and Faculty Excellence
The current campaign to
raise $1.5 billion with a focus on campus/unit and a long-term plan to position
the University of Illinois to be the preeminent public institution of higher
education in the nation is ambitious and encouraging. We support this
initiative and any further development along these lines.
Preeminent faculty are
paramount for achieving the preeminent status of the University, and endowed
chairs and professorships are part and parcel of maintaining a high-caliber
faculty. Our long-term goal should be to greatly increase the number of endowed
chairs and professorships.
Recommendations:
1)
We would like
to see named chairs and professorships as a high priority of the campaign.
Departments need help replacing lost funds and better integration with
Development and the campaign. This funding “leg” will be increasingly critical
for Departments to achieve their aspirations.
2)
The amount of
$2 million for an endowed chair and $0.5 million for an endowed professorship
may be difficult targets for many donors. We recommend exploring efficient and
creative ways of initiating and maintaining endowed support.
3)
A crucial way
for the success of strategic development campaigns is to involve units at the
basic level. At the moment the departmental involvement in such plans is rather
uneven. We recommend greater involvement for all departments. One viable way
is to help departments make regular contact with its alumni by way of
newsletters, on paper or electronic, whichever is feasible.
Respectfully submitted,
Senate Committee on the
Budget
Peter Goldsmith, Chair
James Barrett
Adam Blahnik
Tim Liao
Jason Plummer
Alison Schmulbach
Alex Winter-Nelson
Bill Adams,
ex officio
