Cash Flow, State Structural Deficit Continue to Plague University

Frank Goldberg, UIC vice provost for resource planning and management (right), and Todd Van Neck, UIC director, budgeting and program analysis, gave a budget update.

By William S. Bike

THE UIC BUDGET continues to be a topic of huge interest to Academic Professionals, faculty, and other staff as another near-capacity audience heard Frank Goldberg, UIC Vice Provost for Resource Planning and Management, and Todd Van Neck, UIC Director, Budgeting and Program Analysis, give a budget update at an APAC event for that purpose on March 3.

UIC IS “facing two problems,” Goldberg said. “A cash flow problem and a structural budget problem.”

IN TERMS of cash flow, Goldberg displayed a chart showing that in February 2008, for example, the UIC had billed the State $665 million and had received $542 million for a gap of $123 million. This year, UIC has billed the State $644 million but received only $189 million by February—a gap of $455 million.

IN ADDITION, in the University’s Monetary Award Program (MAP), “we give the money to students and then bill the State,” Goldberg explained. “The State is an additional $44.8 million behind in MAP money.”

ADDING The $455 million and $44.8 million puts the State nearly one-half of a billion dollars behind in payments to UIC.

“IF OUR units hadn’t been very prudent and reserved cash over the last several years, then you and I wouldn’t have been paid,” Goldberg stated.

GOLDBERG RECAPPED recent State legislation that resulted in pension reform affecting new hires, spending caps, Medicaid reform, and tax increases, and said further pension changes may be in the offing.

HE NOTED that Governor Patrick Quinn at the recent University of Illinois Board of Trustees meeting said that with the tax increase and with borrowing to make up shortfalls that he was optimistic that the State would be in decent financial shape by 2016. However, Professor David Merriman of the University of Illinois Institute of Government and Public Affairs was the next speaker and disagreed. Merriman believes even after the tax increase the State will continue to have a $4.4 billion structural deficit—an ongoing problem in which expenditures exceed revenues (see also APAC News, Feb. 2011).

“SO WHAT do you do about the cash flow deficit?” Goldberg asked. “The Governor’s solution is to pay for it by bonds, but the interest on the bonds adds to the structural deficit. And that doesn’t address the pension deficit.”

THE GOVERNOR’S Fiscal Year 2012 budget proposal keeps funding for State universities flat at FY 2011. “This is good news, because the Governor is not looking to cut University funding,” Goldberg said.

VAN NECK noted that in UIC FY 2012 budget plans, “not only do we need to meet our needs, but we have some ‘wants’ we’d like to fund,” he said, and showed a chart showing University goals such as growing the research enterprise, supporting diversity, ensuring the integrity of the physical infrastructure, information technology, and globalization. Moving forward with meeting these goals will require funding.

HE ALSO explained that “we’ve been saved over the past few years by increasing our tuition revenue. That has offset cuts in state appropriations. But as we compare ourselves to other institutions, our tuition is pretty high. So we can’t increase it much more, if at all.”

IN RESPONSE to a questioner who asked about State tax increases, Goldberg said the recent tax increase “was necessary, but it’s not sufficient to balance the budget. The State Legislature isn’t done yet, but they won’t raise taxes more. That means they’ll have to cut expenditures.”

FOR GOLDBERG’S and Van Neck’s PowerPoint presentation, see Presentations. For further information see, Planning & Budgeting, UIC Office of Budgeting and Program Analysis, and The Institute of Government and Public Affairs at the University of Illinois.