Trustees discuss budgetary concerns at Sept. 11 meeting
With the winter heating season rapidly approaching and predictions that energy prices will continue to escalate, the UI Board of Trustees approved a plan that will allow the university to save money by contracting for future deliveries of natural gas.
When the trustees met Sept. 11 in Urbana, they approved a natural gas cost management policy that authorized Walter Knorr, vice president and chief financial officer, to buy up to $60 million in natural gas for each of the fiscal years 2010 and 2011.
The plan will protect against price volatility and provide budgetary predictability, Knorr said. Knorr will chair a natural gas cost management committee that will include university administrators and members from UIC and Urbana, and will be responsible for implementing the policy. The university is in the process of hiring a third-party market agent as an adviser about market performance and to facilitate transactions.
By monitoring market prices and strategically purchasing gas when prices were favorable, the university achieved a $4 million savings for FY09.
The trustees approved a request for $113 million in new operating and capital budget appropriations for FY2010. An additional $4 million was added to the original request for $109 million after some trustees expressed concern that the 3 percent salary increases called for would not be sufficient to make faculty salaries competitive with peer institutions.
Trustees Robert Sperling and Kenneth Schmidt urged staff members to “go after what we really need” when submitting the budget request to the Illinois Board of Higher Education.
“We will be doing a disservice to students and their families if we water down their education,” Sperling said. “I strongly urge you to reconsider the $85.8 million (originally requested to strengthen academic quality).”
Schmidt voiced similar concerns at prior meetings and voted against past budget requests that he felt were inadequate.
Board chair Lawrence Eppley asked the trustees to support the budget request and the chancellors and provosts as they re-evaluate the allocation of resources. “If we’ve grown too large to support what we do, we need to fix it,” Eppley said. “There are harsh realities to all this. If we get more (state appropriations), somebody has to pay for it.”
President B. Joseph White said that he, Knorr and Richard Herman and Richard Ringeisen, chancellors at the Urbana and Springfield campuses respectively, and Eric Gislason, interim chancellor at UIC, would re-evaluate the request, and it was increased by $4 million.
The proposed capital budget request of $454.1 million contained $22.6 million for repairs and renovations at the three campuses, including $56.2 million to renovate Lincoln Hall at Urbana, a capital project that was approved by the state in 2002 but has yet to be funded; $14.2 million for the College of Medicine building at Rockford; $20 million to modernize the dentistry building at UIC, and $42 million for an electrical and engineering building at Urbana.
The Lincoln Hall remodeling is the second item on the FY2010 priority list of capital projects. No regular classes are being held in Lincoln Hall during the current school year, and the university is considering stop-gap maintenance to shore up the building until capital funds become available.
Michael Bass, executive assistant vice president for business and finance, gave an update on the financial performance of Willard Airport. Willard has fared better than many other airports despite the national economic downturn and steeply rising fuel prices, but will have reduced revenues in FY09 and a possible deficit, Bass said. Willard lost two of its eight daily flights to Chicago’s O’Hare Airport when American Airlines reduced its service.
University officials are exploring new route options with the airlines, are preparing a federally funded land-use plan, and working on modernization plans that include a new control tower and a new instrument landing system.
UI officials also are exploring the possibility of an independent airport authority operating Willard, which would facilitate access to a larger capital base, Bass said. The UI Board of Trustees’ Buildings and Grounds Committee will do more analysis and provide an update when the trustees meet in November at UIS.
The Global Campus ended FY08 about $2.8 million under budget, and its current enrollment of 121 students is 20 percent less than targeted, Knorr told the Trustees.
“The driving force behind the Global Campus is to bring high quality, highly accessible, highly affordable education to people” who can’t attend the UI as traditional on-campus students, White said. “This is today’s version of the land-grant mission. But there’s a huge gap between that and the trajectory we’re on.” White said that staff members would be developing a plan “to ensure we fulfill that mission” and would present it in November.
The challenges facing the Global Campus include extensive prerequisites for some programs, and attracting faculty members to develop and teach high-demand programs, White said.
Joseph Flaherty, dean of the UIC College of Medicine, and John DeNardo, chief executive officer of the HealthCare System, presented the system’s FY08 Performance Report. The medical center ended FY08 with revenue of $1 million as a result of vigorous pursuit of collections and growth in patient days, outpatient visits and discharges. The medical center’s ending cash balance was $129.9 million, an increase of $70 million over FY07.
“We’re one of the only hospitals in the country (that is operating) in the black,” a significant accomplishment given the number of uninsured patients the system serves, Flaherty said.
The medical center “had tremendous growth in strategic areas” such as women’s health and robotic and neurological surgery, Flaherty said. During FY08, the UIC physicians performed more than 300 robotic general surgery procedures, more than any hospital in the nation. UIC performed more than 400 robotic surgeries in all surgical specialties combined, and in the city of Chicago ranked second only to the University of Chicago, which performed more than 600. Additionally, UIC ranks first in the state for its volume of neurological surgeries.
The UI’s Ethics Office will coordinate ethics training for all nine four-year colleges and universities in Illinois effective Jan. 1, as the result of a mandate from the state of Illinois. With the UI’s Ethics Office developing and administering the ethics program, which has been the purview of the Office of the Executive Inspector General until now, the UI will be able to tailor the content to the needs of higher education. The UI’s annual online ethics training is scheduled for October.
The participating colleges and universities will pay half the costs of the program, with the UI funding the other half, which White said would be “several hundred thousand dollars.” White said university officials have made “a vigorous request” for state funding and will seek a vendor to assist in instructional design and hosting.
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