UIUC Financial Picture: From “Very Good” to “Even Better” in Past Two Years

cfa-howard-bunsis-056Creating new administrative posts while the faculty shrinks and tuition goes up is “just not right,” says Howard Bunsis.

Bunsis has an unusual passion: exposing the realities of universities which claim they are in a financial crisis. The professor of accounting at Eastern Michigan University visited UIUC in 2011 and gave a memorable talk to a CFA public forum.  His staggering array of figures demonstrated that the University was on a sound financial footing and had no need for furloughs, hiring freezes and massive increases in student tuition and fees.  On October 10, Bunsis returned with an updated financial portrait of our campus. Once again his information was devastating.  Wearing a nifty pair of suspenders and presiding over 75 Power Point slides, Bunsis was able to fully assure us that the financial picture of the University of Illinois has gone from very good to even better in the last two years.  In his words, the U of I is becoming “quasi-private.” A few facts from his presentation will illustrate his point:

•    Total reserves of the campus have risen from $150 million in 2009 to almost $700 million in 2012
•    Most of that increase sits in unrestricted net assets, which have gone up over $460 million
•    Operating cash flows are hugely positive, and increasing yearly; in 2012 the cash flow surplus reached almost $400 million
•    Enrollments and tuition are on the upswing; tuition increases have slowed recently, but in the last five years tuition revenues increased on average by 9.2% per year, through having higher tuition and more students

Despite this incredibly favorable financial picture, the university administration claimed until recently that times were tough.  It enacted a program of austerity with respect to faculty hires and salaries.   From 2007-13 the total increase in tenured/tenure track faculty was just two positions while contingent and adjunct posts rose by more than 200.  Meanwhile, administration positions have increased by 120 since 2007.

Ultimately this means the university is implementing what Bunsis calls “administrative bloat,” swelling managerial ranks while cutting back on instructional expenses per student. Adjunct faculty may cost only a quarter or a fifth of a tenured professor, and in some departments even less.  Money is moving to the top, with campus administrative expenses (“institutional support”) rising by 16% in a single year 2011-2012.  At the same time, tenure-rank faculty salaries languish near the bottom of our university peer group, and have been falling even farther behind the peer average.

These changes have gone hand in hand with an increase in class size.  From 2008 to the present the number of classes with 2-9 students fell by 96 whereas classes of over 100 rose by 47.  As Bunsis put it, the students are paying more and getting less.

The Administrations Claims and Plans

The administration is quick to blame the state of Illinois’s poor financial position for the alleged woes of the university. True, the state’s contribution to the U of I has steadily declined from a figure of 30% ten years ago to just 12% today.  But whatever the state’s problems with revenue, according to Bunsis they are not a major factor in the university’s financial condition.

Where the state’s fiscal crisis can be felt is in faculty pensions. Bunsis issued many caveats about the future of faculty retirement funds.  The state of Illinois is in arrears to the tune of almost $100 billion in its pension coffers. It has not made its full employer contribution for more than three decades. Now the plan seems to be to make faculty pay more each month to keep their benefits. One plan on the table proposes making faculty work for 36 years before becoming eligible for full pension benefits.

Bunsis criticized the University’s claims that hiring 500 new faculty will meet the needs of the campus and its students.  According to his projections, in the next seven years the University will lose anywhere from 440 to 620 faculty due to normal attrition―mainly retirements and resignations.  Hence, Bunsis says, the faculty should press for a net increase of 500 new positions, rather than simply a gross figure of 500 which would barely cover replacement hires (if that). A figure of 900 total hires would be closer to the number UIUC needs, to overcome attrition and catch up with growing enrollments.

Collective Bargaining: Key Part of the Solution

While Bunsis was generally pessimistic in his account, he did argue strongly that collective bargaining could help faculty to improve their situation. He referred to other universities where faculty unions have made a difference.  He cited the recently unionized University of Oregon where, for example, the collective bargaining agreement ties any shift in pension payments from the university to employees to an equivalent bump in salary.  Thus, faculty are protected against rising pension contributions.

He also noted that collective bargaining can be a source of pressure for more tenure-track positions and to improve the pay and working conditions of non-tenure-track faculty. It can also enhance the transparency of the University’s financial information. Currently, the U of I does not even issue audited financial statements for each individual campus – only one combined statement is released for the university system as a whole, and it comes out more than half a year after the end of the financial year. In addition to pressing for collective bargaining, Bunsis urged faculty to campaign for more transparency concerning the finances of our campus.

Bunsis serves as chairperson of the Collective Bargaining Congress of the American Association of University Professors (AAUP).  The AAUP co-sponsored his talk here, along with the Campus Faculty Association (CFA), the American Federation of Teachers (AFT) and the Illinois Federation of Teachers (IFT).

To see the presentation in slides, click on: Howard Bunsis presentation on UIUC finances (Oct 2013).