With state funding still uncertain, university plans $24M in cuts

As the state approaches its fifth month without a budget, the University of Illinois is preparing to make $24 million in cuts to central administration.

The impasse between Gov. Bruce Rauner and the General Assembly has left the state without a budget since July 1, a scenario that’s unprecedented, said UIC economist David Merriman.

“It’s kind of astounding,” said Merriman, professor of public administration and economics. “It’s really surprising that government can continue without a budget. It doesn’t really seem possible for it to happen, but it has happened.”

University President Timothy Killeen on Monday announced nearly $24 million in cuts for central administration programs such as data processing and building maintenance. The cuts were recommended by a committee he appointed to find ways to cut costs while protecting the university’s academic and research missions.

“To help Illinois overcome its current financial challenges, every agency that relies on state support must do its part,” Killeen said.

“These cuts will reduce university spending while protecting programs that provide for world-class and affordable educational opportunities, workforce development and cutting-edge innovation that are all crucial to the state’s future prosperity.”

Rauner has proposed cutting the university’s state appropriation by 31.5 percent — nearly $209 million. The state legislature proposed an 8.5 percent cut, about $57 million.

The longer the state goes without a budget, the more likely it seems that higher education will face cuts, Merriman said. “The university and many other organizations are operating without any guidance about what their budget will be and it’s a very unfortunate situation,” he said.

Killeen joined presidents of all nine Illinois public universities in signing a letter to Rauner and legislative leaders Oct. 1, urging them to pass a budget.

“It’s really surprising that government can continue without a budget,” says UIC economics professor David Merriman.

“Through efficiencies and careful financial management, we have maintained operations without disruption to students, and we will continue to honor all commitments to employees and vendors,” Killeen said in an email to the campus community.

“But operating without a critical source of funding is not sustainable in the long term. The funding lapse poses threats for both the current academic year and for our future.”

To address the state’s fiscal problems, lawmakers need a long-term plan, Merriman said.

“We almost certainly need an increase in revenue and cuts in spending simultaneously,” he said. “So far, very modest cuts in spending have been suggested by either the Democrats or Republicans. There’s a good possibility that cuts in spending for higher education are going to be on the table for sure.

“It isn’t a very happy picture.”

Pension payments

Illinois Comptroller Leslie Munger announced Oct. 14 that the state would likely delay its pension payments in November and December, but university annuitants will still receive their payments from the State Universities Retirement System.

The delay would mean that SURS will receive its money from the state later than promised, but SURS will continue to pay university retirees, said Brenda Russell, president of UIC-SUAA, the UIC chapter of the State Universities Annuitants Association.

“The state will delay the money because there’s no budget, but they have to move the money eventually,” said Russell, professor emerita of physiology and biophysics. “SURS benefit payments are not tied to that transfer — SURS has their own money in their accounts. People are really worried that they are not going to get their pension, but they will.”

SURS has a safety net of funds to make sure university retirees are paid on time, Russell said.

“The one who is getting shorted is the SURS agency,” she said. “It’s the same situation for the university — the state is not paying the university but the university is still paying its employees.”

The state may delay payments to pension agencies such as SURS, but it is required by law to pay its pension obligations without making cuts. The Illinois Supreme Court in May unanimously declared unconstitutional a 2013 state pension law that would have diminished employee benefits.

“The state is spending at a faster rate than they’re taking in — you don’t need to be an economist or mathematician to know they can’t do that,” Russell said. “This is a crisis and everyone should be contacting their House representatives and state senators and Gov. Rauner and saying, ‘Do something.’

“People are worried and they should be. They need to lean on the politicians.”