Illinois' universities cope with chronic late payments
URBANA — Illinois' nine public universities are owed more than half a billion dollars by the state, part of an ongoing debt that contributes to rising tuition, spending cuts, increasing class sizes on some campuses and a need to carefully manage reserves.
The state's chronic habit of paying its bills months late has not crippled the University of Illinois, thanks to a diverse stream of revenue from research grants and other sources. School officials say they have tried to protect academic quality, but acknowledge that classes have grown larger, some are offered more rarely, and fewer specialized courses are available.
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The state doesn't owe as much to Illinois' other public universities. But some have had to cut back on staffing, faculty travel and renovation projects, even as they have managed to keep current in paying their own bills.
"If we don't have reserves set aside, we're in big trouble," said Glenn Poshard, president of Southern Illinois University and a former U.S. congressman.
"The state has got to do something to get its fiscal house in order. Every entity in this state is waiting."
As of early September, the state collectively owed the nine state universities more than $550 million. The U of I was due more than $300 million of that, but the university has been able to cover the gap using money from tuition, research grants and other sources.
"There has been a move toward fewer professors over the past few years, but it happened over a gradual period of time," said Doug Beckmann, U of I's senior associate vice president for business and finance. "We've done everything we can to protect the academic enterprise."
U of I spokeswoman Robin Kaler said 133 faculty members left as a result of a voluntary retirement program offered in early 2010. The UI recently approved filling that many positions — but in specific critical-needs areas.
Kaler said the cash crunch put further pressure on class sizes.
"There are fewer classes with fewer than 20 students, and more classes with more than 50 students in them," she said.
Some classes normally offered twice a year are now offered once a year. And fewer specialized courses are available because faculty must offer more critical required courses first, she said.
Meanwhile, tuition has been marching upward. At the Urbana campus, entry-level tuition and fees for a full-time resident taking 30 credit hours were $14,414 this year, up nearly 45 percent from five years earlier.
Tuition-and-fee increases at nearly all Illinois public universities topped 40 percent over that five-year period, statistics from the Illinois Board of Higher Education show. At Governors State University, the increase was 63 percent.
For fiscal year 2012, the state appropriated $1.294 billion for operations and grants at public universities. That is $336.1 million — or 20.6 percent — less than universities got from the state in 1997, adjusted for inflation, according to a report released in August by the Illinois Board of Higher Education.
As of Sept. 8, payments due U of I from the state totaled $305.98 million, according to a database of unpaid bills from the state Comptroller's office.
About $288.5 million of that was owed to the Urbana campus. Many of the overdue payments were OK'd six months ago, with some approved as long ago as December 2010.
Beckmann said that by mid-September, the UI was owed about $313 million for the fiscal year that ended June 30 and about $70 million for the current fiscal year.
Other state universities also have weathered late payments but found ways to operate despite them:
• Southern Illinois University was owed $80.8 million as of Sept. 8, according to the database. By the end of September, the backlog of unpaid state bills had reached nearly $95.9 million, Poshard said.
That included $74.6 million for the Carbondale campus and $21.2 million for the Edwardsville campus.
To prepare for lean times, SIU froze hiring of faculty and staff, except for critical positions, and didn't fill jobs when they opened up. Poshard said 280 positions at Carbondale remain open, while 75 to 80 positions at Edwardsville are vacant.
Class sizes haven't increased, though, because enrollment at the Carbondale campus has declined, he said.
SIU delayed or canceled renovation projects, scratched some travel and special events, and speeded up collection of accounts receivable, he said.
"We also set aside a 4 percent reserve to guard against the possibility that the state might (cut) the funds they owe us," Poshard said.
• Northern Illinois University in DeKalb was owed $45.6 million as of Sept. 8, according to the comptroller's database.
As a result of the late payments, Northern is filling fewer positions when people retire and is reviewing faculty travel more carefully, university spokesman Brad Hoey said.
Northern has also talked with vendors, including utilities, about adjusting payment schedules, he said. But the university hasn't expanded class sizes.
• Western Illinois University in Macomb was owed $25.5 million by the state, according to the comptroller's database. But two late September payments totaling $12.2 million reduced the amount owed.
President Jack Thomas said Western's cash balance allows it to meet payroll through December, but "we need to remain fiscally conservative" due to reimbursement delays for the fiscal year that ended in June.
Earlier this year, Western held about 60 positions open — 20 of them faculty positions — and merged units to save money.
• At Eastern Illinois University in Charleston, administrators relied on internal borrowing and expense cutting to get through the cash crunch, said William Weber, Eastern's vice president of business affairs.
Equipment purchases have been delayed, and travel reimbursements now require approval from the vice president, Weber said. Tuition has been increased, and the number of employees has been reduced, mostly by attrition.
Eastern was due $20.9 million from the state as of Sept. 8, according to the comptroller's database.
Weber said Eastern can't continue to deal with late payments this way.
"It's certainly not sustainable," he said. "It's manageable short-term, but it's not manageable long-term."
• Illinois State University in Normal — which was owed $37.4 million, according to the database — has instituted a non-faculty hiring freeze and delayed large equipment purchases.
"We essentially manage our cash-flow needs through tuition revenues and reserves since we are unable to predict when state payments will come through," said spokesman Jay Groves.
Meanwhile, U of I's biggest saving grace has been the flow of research money, because the university is allowed to use part of it to cover overhead, Beckmann said.
"The smaller schools are more dependent on their (state) appropriation, and in the past, the comptroller's office has made that recognition and paid them before us," Beckmann said.
At the same time, the state has made major appropriations for capital projects at the UI, Beckmann said.
Those include the release of $57 million for the renovation of Lincoln Hall, $60 million for a computing facility and $14 million for the U of I College of Medicine in Rockford.
Beckmann said the university is "not devoid of state support." But, he said, "the big question is, what is the ultimate solution to this? We don't know the answer to that."
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