URBANA — The state’s worsening financial picture has forced the University of Illinois to consider raising freshman tuition by up to 20 percent, as well as borrowing money to ease its cash crisis — something it opposed just last month.
Interim President Stanley Ikenberry told the Champaign News-Gazette that the state is now $487 million in arrears to the university and the figure could soon exceed $500 million.
“That’s not sustainable,” he said.
Ikenberry, who previously predicted a tuition increase of about 9 or 10 percent, said the figure could be as high as 20 percent.
He said the most likely figure is in the mid-teens. Since tuition is held steady over four years, the annualized rate for a 10 percent increase would be less than 4 percent, he said.
Ikenberry said the UI must weigh social policy, the importance of keeping the flagship university open to lower- and middle-income students and competitiveness with other institutions in setting its tuition rates.
For the first time, tuition and fees account for more of the UI’s funding than state aid, Ikenberry said.
“Students and parents are the only thing keeping our heads above water,” he said.
For the current fiscal year, which began July 1, the UI has submitted more than $600 million in bills to the state but received just $133 million in reimbursements, officials said.
“We’re bumping up against the $500 million mark,” Ikenberry said.
With no state money forthcoming, the UI could end its fiscal year June 30 with $550 million in unpaid bills from the state. And it appears those numbers will continue to escalate in fiscal 2011, “certainly up to $750 million,” he said.
He said the university probably has enough money to last through the school year, and perhaps the fiscal year, but the state’s IOUs are piling up at an increasing rate. The state was $120 million behind last June.
The UI initially declined to sign on to a bill that would let universities borrow against tuition income or expected state appropriations because of the state’s financial crisis.
But after spending a day in Springfield last week, with no apparent budget solution in sight, Ikenberry changed his mind.
“I’ve done a 180,” he said.
The UI is already borrowing from other cash sources, including tuition, insurance reserves and related funds that are spoken for down the road. Its only other options are borrowing against future revenue or “shutting down,” Ikenberry said.
The UI is reviewing its budget to identify savings through program consolidations and other cuts. Ikenberry said it’s likely the university will be smaller in coming years in terms of programs and its “overall footprint.” But enrollment probably won’t go down, he said.
There is no easy answer, Ikenberry said.
“I don’t think we can cut our way through this, and I don’t think we can tax increase our way out of it,” he said.
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Information from: The News-Gazette, http://www.news-gazette.com
Read the original article from The State Journal-Register.
Distributed via Chicago Press Release Services