It was a packed house at the Chancellor’s Open Forum as students, faculty and staff waited to hear from university administrators about how Illinois Gov. Bruce Rauner’s recent budget proposal, if enacted, could affect SIUE.
With the earliest answer to the budget proposal estimated for late May, Chancellor Julie Furst-Bowe and other members of SIUE’s Chancellor’s Council have taken the initiative to educate the university community on the impending cuts. Budget Director Bill Winter said the university has already faced a challenging amount of budget cuts in the past.
“The level of state support per student has been going down pretty significantly over the last 13 years. We’ve basically cut all the easy things,” Winter said. “It’s not like we’re starting now where we’ve gotten all this money year after year, and all of sudden we’re having budget cuts. We’ve already been dealing with four years of large budget cuts at least, out of the last 13. As a result, all the easy, low-hanging fruit, has already been cut.”
According to Winter, the state of Illinois already owes the university a huge chunk of change.
“The state owes us, right now, about $27.5 million for things we’ve had to expend on, which they have not been able to pay us back,” Winter said.
But SIUE is not the only university who will be hit with cuts if the budget plan is enacted — all 12 public universities in the state of Illinois may see future budgetary changes.
“Across the board, cuts for all 12 Illinois public universities are 31.5 percent of their [state] appropriation, [which is] close to a third,” Winter said.
The breakdown of the university’s budget numbers is handled by Winter, who also shared the numerical technicalities and percentages of state appropriation in response to the budget proposal for the university.
Breaking down hard numbers in the university’s budget
According to Winter, the university receives the majority of its funding from two groups of money that are collectively known as the state operating budget. This budget primarily pays for the cost of instruction. One of those groups of money within the state budget is known as state appropriation, which comes from the state, while the other group of money is the income fund. The income fund is mostly revenue the university makes from tuition. The governor’s budget is focused on the state appropriation money.
“It’s been the historic view that providing a historical college education is a public good. It’s good for the state and for society. At the state level, there are public universities, and they take taxpayer revenue from people in the state, and they allocate a small part of it to universities in what’s called state appropriation,” Winter said. “That state appropriation is a subsidy to offset the cost of tuition. For example, if you had the situation where your tuition revenue budget and state appropriation equaled each other, that would mean that every dollar a student is paying in tuition, the state is matching it with a dollar. And without that one dollar match for subsidy, it would be twice as expensive.”
In order to figure out the amount of money the state appropriation fund will provide for universities in Illinois, Winter said a four-step process is used, beginning in the fall when the university turns its requests into the state. That is then followed by the Illinois Board of Higher Education giving its recommendations.
“So now we’re at the third step, which is [Gov. Rauner’s] recommended budget, and it’s not the final step. The final step is when the legislature, or general assembly — the House and the Senate — approve a budget,” Winter said. “What that means is during the next few months — March, April, May, perhaps June and July — there will be negotiating between the House and the Senate leaders and the governor for the final budget.”
Although the procedure is a step-by-step process, Winter said things could change as decisions are made.
“Historically, we’ve had a flat recommendation, meaning the same level of funding in the governor’s budget, and we wind up having a cut. Or sometimes, we have a cut in the governor’s budget, and we get flat funded,” Winter said. “I don’t know if we’ll have a reduction at the level of [Gov. Rauner’s] budget, and I don’t really have any inside knowledge on this, but being at the level it’s at, I would still expect us to have a large cut.”
2015 serves up largest budget cut yet
According to Winter, the budget situation the university is facing is drastic in comparison to the previous year’s budget struggles.
“Before, a 20 percent budget cut seemed pretty severe because it was much larger than anything we had before. In fact, our highest level of funding was back in the year 2002. And since then, our total state appropriation [has been] cut since 2002 — and we’ve had some challenging years in there — over what is essentially a 13-year period [which] is about 13 percent, or $18 million,” Winter said. “Now, if this happens, we’re facing in one year $19.6 million and about 32.8 percent. It’s much bigger, and it’s happening much faster.”
Winter said this year’s recommended budget reduction is larger than what the university has seen in the past.
“When we’re looking at this year, the level of cut for SIUE in state appropriation — now this is not the total state operating budget, this is one piece of it — would be 32.8 percent. Our worst actual budget cut was right after 9/11 happened in the early 2000s, and it was just over 8 percent. I think there was two years in a row where we had back-to-back budget cuts leading to a total of about 14 percent. This is almost 33 percent in one year,” Winter said.
The severity of the budget cut is large, and Furst-Bowe said it comes with harsh truths, such as layoffs.
“This is a process that will play out over the next several months. … It’s serious; this could be the most serious budget cut we ever had to deal with. There’s no way we can basically take out a third of our state-operating budget, and not lose jobs. That’s a reality,” Furst-Bowe said. “But we’re working with everyone, and some of the scenarios will certainly make cuts that don’t involve jobs. So those will be further cuts to supplies, to travel, to utilities, to deferred maintenance, but we can’t come up with this amount without getting into personnel costs — it’s as simple as that.”
While the university searches for areas other than personnel costs, in which the spending can be reduced, Furst-Bowe said in time, job losses will have to occur.
“We’re not planning for large-scale layoffs, large-scale program [and] building closures — none of that is on the horizon. Although, like I said, there will have to be reductions, there will probably be layoffs in isolated areas, but the sky isn’t falling quite yet,” Furst-Bowe said.
Even though the vice chancellors within the university prepared for budget cuts of the 4-to-9 percent range, the new recommended governor’s budget will impact these plans.
“That’s what we were told to plan for, so the 4-to-9 [percent budget plan]. If we got the governor’s budget, [it] would now be increased to over 13.2 percent,” Winter said. “There’s some other stuff in the governor’s budget that shifts costs onto us and when you have to pay for things you didn’t have to pay for before, or if you don’t get any more revenue to offset it, it was essentially an increase in the budget cut. If we got this budget, it could even be above 13.2 percent.”
Because of the proposal, the university is asking its vice chancellors for more planning, and the University Planning and Budget Council plans to continue its meetings until the final decision.
“Now we’re asking the vice chancellors to provide one more scenario at the governor’s recommended level,” Winter said. “The University Planning and Budget Council, which includes faculty, staff and student senate representatives, has been meeting and will continue to meet throughout the spring semester to plan for the challenges ahead.”
According to Winter, the increase in the recommended budget cut is due to factors that are out of the university’s control — it has to do with the state income tax being at a lower level in comparison to previous years.
“We had been paying three percent [of] state income tax years ago, and there was an increase to take it to five percent. Now it’s gone back down, and it hasn’t gone down to three [percent], I think it’s down to about 3.75 [percent]. It was reduced Jan. 1,” Winter said. “We were hopeful last fall that the state would work to increase the taxes again because it was just for about a three-or-four year period, and that expired — we hoped it would be renewed. Well, up to this point, it hasn’t been. So that was already going to create a loss in funding. And [Gov. Rauner] is having to recognize that.”
As the amount of state funding required for other schools increases, Winter said the university’s state appropriation will decrease.
“Higher education has to make up more than its fair share because there was actually a funding increase in [kindergarten through 12th-grade] education,” Winter said. “There was virtually flat funding for community colleges, and there was a flat funding for [the Monetary Award Program], which is a good thing for our students who have MAP funding. But because they basically got flat funding, or an increase, universities had to make up even more.”
The budget cuts for the 12 public universities stands at 31.5 percent, but since the School of Pharmacy received an appropriation cut, which is kept in a separate pool of money, that made the total cut add up.
“But because of our state appropriation for pharmacy also got cut, that adds us up to 32.8 percent,” Winter said.
Budget reforms’ effect on tuition rates
Tuition rates could fluctuate based on the potential upcoming budget changes. Winter said the university would go before the Board of Trustees to discuss tuition increases in March, but a numerical amount was not yet finalized.
“One thing about tuition increases is we try to keep a balance of being affordable for students, but also trying to increase tuition to the level that we need for operating,” Winter said. “Having the four-year tuition guarantee is good for students because it does mean that when you’re an existing student for four years, you’re not going to have a tuition increase. But what that does mean is that we can only raise undergraduate tuition on the new incoming students. So that is a very small percentage of the student population, meaning you don’t get very much money from that increase.”
In fact, Winter said the tuition would have to be increased by a value between about 120 to 130 percent, more than double current tuition, in order to even meet the deficit.
Despite the fact that no final decisions have been made about the budget, Winter said the implications of Gov. Rauner’s recommended budget largely impacts the state appropriation budget. However, it has a much smaller impact when the other funds of the state operating budget are taken into account.
“I can tell you that if the governor’s budget were to become SIUE’s final budget, then we’d be looking at a reduction in state appropriation of about $19.6 million, which is big, and it would be about 32.8 percent,” Winter said. “But when you factor in tuition revenue and everything else, that would be just over 13 percent of our total state operating budget. And that’s without increasing tuition.”
Even though the budget cuts imply drastic changes to SIUE’s spending money, Winter said everyone is doing their best to ensure some things remain consistent.
“One of our primary goals is to protect instruction in the classroom. So students will be sure that they will have high-quality professors and instruction. That will be a very high level goal,” Winter said.
In order to begin planning the budget cuts, Winter said the budgets within the different colleges in the university will be analyzed by the deans.
“I can’t tell you how much the 32.8 percent from each college because in the planning process we’re evaluating things that are decisions that will be made at the deans’ level. And they will be looking at a variety of factors, but they’ll look at things like enrollment, demand for programs and we’re also looking now at existing vacancies,” Winter said.
The finalized budget will take place once Gov. Rauner, the House and the Senate come to an agreement. Winter said in recent years, the process has gone on until June, July or even August.
“And we actually start our fiscal year on July 1, so sometimes we start the year without an approved budget,” Winter said. “The Board of Trustees has to take action that says that temporary financial arrangement so that we can keep operating at the same budget we’ve been operating with. So there will be a lot of negotiating and lobbying, and we’ll be working.”
The news about the budget cuts is very recent, and planning is being done as quickly as possible on how to handle it. In the meantime, Furst-Bowe said communication between faculty and legislators is crucial.
“Try to stay informed — this is in the news all the time. We’ll be sending out emails,” Furst-Bowe said. “To all the SIUE employees, you can certainly feel free to contact your legislators — there’s nothing wrong with that. Someone said, ‘Well that’s against our ethics code.’ Well, it is if you spend all day doing that instead of your job. … If you want to on your own time, phone, email or write to legislators on behalf of SIUE, on behalf of students, on behalf of employees. The more they hear about this issue, everyone else will be out there as well.”
Even though input from everyone is critical, Winter said it is also the limiting reagent in budget situations like this one.
“The bottom line is that it’s really too early in the process to tell. We haven’t done planning, at this point, beyond the nine percent level. We’ll be moving in that direction, but when you involve so many different people who have other responsibilities, it just takes time,” Winter said. “The value of shared governance in this whole process is that you get a better product because you get input from everybody, but we can’t do it in a day.”
While the road ahead is seemingly a long one, it is not due to wrongdoings by the university. Winter said SIUE will find a resolution and handle the situation appropriately.
“At some level, it’s not a situation which the university created. It’s the hand we’ve been dealt. And it’s not like anybody involved in this process enjoys this process. We just have to do the best we can with what has been given to us,” Winter said. “One of our greatest strengths is when everybody pulls together, and works on a solution together, and I believe that will happen again.”