CFA President Jim Barrett’s News-Gazette Op Ed on University Finances

This op-ed from CFA President Jim Barrett appeared in the paper version of the News-Gazette on Sunday, September 9, 2012. We think it answers some very important questions about whether changes within the university are really motivated by financial problems or other issues.

The University’s Financial Situation: A Matter of Priorities

By this point everyone understands that the state’s fiscal crisis has presented the University of Illinois at Urbana-Champaign with challenges, but Chancellor Wise’s recent message on the subject, reprinted in the News Gazette commentary section, skirts the real issue which is one of priorities. This question of university finances is important because the rationales for large tuition increases and low faculty and staff salaries are often expressed in the language of financial crisis. The chancellor notes substantial decreases in university revenues and seems to imply further belt-tightening ahead. One might observe that the belts of most university employees are pretty tight by this point, but let’s consider the facts.

If we look at the sum of tuition and state appropriations that the university receives, the total money available from these core sources actually increased by 7% in 2010 and by another 5% in 2011. Although it is commonly assumed that tuition increases have been necessitated by the need for faculty and staff raises, recent pay freezes, pay cuts, and meager raises below the cost of living all suggest that the tuition money is going elsewhere.  The dramatic increase in administrative positions and pay over the past decade is one part of that puzzle.

The university’s own statistics show that its financial position is stronger than the administration suggests. Its independently-audited financial statements, available at www.obfs.uillinois.edu/about-obfs/annual-reports, show the university sitting on considerable and growing resources. For example, the balance sheet shows unrestricted net assets growing from $65 million in mid-2009 to $387 million in mid-2010 and then to $687 million in mid-2011, the last year for which reports are available. (It seems that the university imposed wage cuts (“furloughs”) on its employees while accumulating over $300 million dollars in that year.)  Looking at cash and cash-equivalents, the university’s “bank balance”, we see it growing from $450 million to $709 million to $859 million in those same years, that is, increasing at a rate of over $200 million per year. So the university is now holds resources close to $1 billion. This picture of strength does not even factor in the endowment (the U of I Foundation), which has done well recently as a result of the capital campaign and the stock market recovery.

There may be an answer for all of this, but the university’s supporters and employees will not have it until there is an open discussion of its spending priorities. The point is not that the university does not need and deserve greater support from the state, it does. But there is also something wrong with campus priorities.  Why have class sizes been allowed to balloon and salaries to fall behind inflation? Why have the physical conditions in many classrooms been allowed to deteriorate? And why, if the university really does face budget problems, has the number of high-priced administrators and consultants continued to grow?

The UIUC faculty needs a stronger voice in financial and other university matters.  Unionization represents a tried and true method to achieve this end.

James R. Barrett, President

Campus Faculty Association

One response to “CFA President Jim Barrett’s News-Gazette Op Ed on University Finances

  1. These are important and legitimate questions that need a response if the administration is to regain the credibility it has recently lost

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