Q&A with Provost Linda Katehi
Just like corporations and families across the nation, colleges and universities are faced with some difficult decisions as revenues fall below targets and the economy slips deeper into recession. Some state governments have announced significant reductions in appropriations for higher education, forcing colleges and universities to reallocate funds and stretch each dollar further to support crucial programs and personnel. Provost Linda Katehi discussed the economic forecast for higher education in Illinois and the UI’s strategy for weathering adverse conditions.
Has there been any communication from state of Illinois officials in Springfield as far as budgetary rescissions or cutbacks that will affect the university?
In order to address the state’s $2 billion Fiscal Year 2009 budget deficit, Gov. Rod Blagojevich proposed to the General Assembly legislation that would “give him authority to hold back in contingency reserve as much as 8 percent of total appropriation and distributions for all General Fund spending, including agencies under the governor, the state Board of Education, higher education, state pension funds and funding to local governments.” The legislature, however, did not move that initiative when it met in November and the Illinois Board of Higher Education last week called on public universities to hold 2.5 percent of their fiscal 2009 state appropriation in reserve – a total of about $18 million for the UI and its three campuses. So, those are two possible scenarios of mid-year budget rescissions, and others are possible.
Are there units on campus that have already begun to identify creative solutions?
Yes, the university’s leadership in the central administration and on the three campuses have been developing various options for operating budget reductions and are expected to make recommendations soon. All the deans and vice chancellors have been working with their units to explore best practices for absorbing these reductions. We have a campus filled with creative people, and through them we will find creative means to address this situation.
Will federal grant-funded programs be reduced?
We will need to watch very carefully for developments of this sort. I do not believe that we will see federal grants already in place reduced, but we do not know yet what effect this financial situation will have on future funding opportunities with the major federal agencies.
Will tuition increases be a possibility or what alternate revenue streams will the campus investigate?
The university is keenly aware that the financial distress reflected in the need for higher education institutions to return funds to the state also affects the finances of our students and the families that support them. Every effort will be made to use our financial aid programs to protect the ability of our students to finance their education at Illinois. It is unlikely, however, that the university can absorb a dramatic reduction of state funding without a careful analysis of possible tuition increases targeted to nourish our capacity to provide first-rate education. The UI Board of Trustees has the ultimate responsibility for these decisions after receiving recommendations from the central administration and campuses.
What principles/goals will guide the resource allocation decision-making process in the coming months?
The goal is to emerge from this financial situation as a stronger, more effective university, one that uses its resources more efficiently, and one that is poised to extend its traditions of academic excellence into the future. We will be guided by values and initiatives articulated in our Strategic Plan: protect our excellence in teaching, research and engagement with our broader constituencies; provide an environment in which our students learn from our formal instruction and from each other; and sustain the infrastructure in which our productivity as students, teachers, scholars and researchers is grounded.
Is an across-the-board budget cut the solution?
No, an across-the-board budget cut is not the solution. The potential cuts we are facing are sufficiently deep that no unit will be spared the responsibility to economize. But the first priority will be to ensure that we maintain excellence in our chief missions – teaching and research. Differential cuts will be used to protect that priority. We are planning an approach that will both identify new revenue streams and redeploy existing resources. Additionally, we anticipate some attrition through retirements, resignations and selective cuts.
What is the greatest risk we face as an institution?
The greatest risk we face is loss of faith in our ability to deal with this financial situation, equitably and effectively, to preserve our fundamental strengths. We must stay focused on what is most essential to the greatness of the UI, and we must keep our nerves steady, and we will emerge from this financial situation strengthened as an institution and ready to move on.
Is the international financial situation a threat or an opportunity?
I think it depends a great deal on how we approach these times. There is no doubt that the financial situation feels threatening to most of us. However, outside threats can bring rich opportunities if we plan ahead. It is crucial to use each instance of budget reduction as an opportunity to create new efficiencies, to think hard about what is most essential to each of our activities, and to shape the future by choosing wisely those activities most vital to preserve, extend and develop.
What do we have going for us?
We have enormous resources on our side – chief among them, extraordinary students at every level; a world-class faculty; a large and loyal and generous alumni base; experienced, reliable staff performing excellent work on essential tasks that make the university function effectively every day; and a beautiful, high functioning infrastructure that reflects the investment of Illinoisans in our campus over decades.
What does all of this mean to me, the faculty member/staff member/student?
We will all have a better experience if we bring a spirit of cooperation, civility and trust. We will all be touched by the effects of this financial downturn, and we will need our individual and collective resourcefulness to manage it. The essentials, however, will remain in place, because we have talented students, dedicated staff, and faculty who find deep satisfaction in excellent teaching and path-breaking research and scholarship.
How can I (faculty member/staff member/student) help?
All of our units will need to engage in thoughtful discussions about their missions, their strategic plans and their financial resources. Those discussions will be most fruitful if everyone participates – faculty and staff members and students. Our ability to be innovative and nimble hinges on participation from all members of our academic family. In addition, these times demand that we all be open to change. If we are to emerge as a stronger institution, we have to adopt an approach that encourages creative thinking about how we best use our resources to accomplish our goals.
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With the nation officially in a recession, restrictions on hiring and other expenses have been announced by all three campuses as the UI anticipates a rescission in state funding for this year’s budget.
Gov. Rod Blagojevich in early November sought legislative authority to hold back a contingency reserve of as much as 8 percent in appropriations to state agencies, but the legislature has not acted on his request.
The Illinois Board of Higher Education last week asked Illinois’ 11 public universities to set aside 2.5 percent of their FY09 appropriation in reserve, a total of about $18 million for the UI’s three-campus system.
Although a definitive fiscal 2009 budget reduction hasn’t been set, “What is clear is that to ensure the success of our campus in these challenging times, it is critical that we carefully manage the use of our financial resources in the near term,” Chancellor Richard Herman and Provost Linda Katehi wrote in an e-mail to deans, directors and department heads on Nov. 20. “We know and appreciate that you have a tradition of careful financial stewardship. At this difficult time of financial distress, however, it is essential that we are extra vigilant of expenditures.”
Hiring must be limited to essential positions and jobs can be filled only with approval from top-level administrators, the announcement said.
Nonessential expenditures for equipment, supplies and travel must also be delayed.
The chancellors at the Chicago and Springfield campuses have issued similar statements.
In late October, UI President B. Joseph White directed university leaders to prepare a budget contingency plan for the next six to 18 months.
“Experience has taught me that to deal with the effects of a recession wisely, we must plan for the worst while we hope for the best,” White said.
Top university administrators will be meeting over the next weeks to implement specific strategies as the amount of the rescission is finalized.
“The financial challenges we face are not unique to Illinois and there is no doubt that the financial situation is extremely disquieting to most of us,” Herman and Katehi said in the e-mail. “However, external pressures can bring rich opportunities if we plan well and remain strategic in our thinking. It is crucial to use each instance of budget reduction as an opportunity to create new efficiencies, to think hard about what is most essential to each of our activities, and to shape the future by choosing wisely those activities most vital to preserve, extend, and develop.”
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