\n\tAt the end of January the operating pool totaled about $800 million. About a third of that came from an influx of student tuition payments at the start of the second semester, said Doug Beckmann, senior associate vice president for business and finance.<\/p>\n
\n\tFor now, the UI has plenty of cash to keep paying its employees. But it’s going fast, Beckmann said.<\/p>\n
\n\t“We’re flush with tuition dollars at the moment,” he said. “Payroll will eat into that in the next couple of months.”<\/p>\n
\n\tWithout additional state payments, come April or May the UI will have to dip into the other reserves, officials said.<\/p>\n
\n\t“At any one time, we do have cash we can access. But many of those funds are obligated for other things,” Kangas said. Institutional funds, for example, go toward utilities, libraries and administrative costs.<\/p>\n
\n\t“We don’t have any big pots of unrestricted funds just sitting around for a contingency like this,” he said. “We will be taking funds away from units. This is such a huge problem.”<\/p>\n
\n\tThe UI has a bit more financial flexibility than other state universities because it can borrow temporarily from private-gift funds and indirect cost recovery money, Beckmann said. “We can weather the storm. We’re not quite as dependent on the state.”<\/p>\n
\n\tBut it will need the state money at some point.<\/p>\n
\n\t“We believe we can make it through the end of this fiscal year with a limited payment,” he said. “Ultimately, if we don’t get paid, it’s really going to be a problem.”<\/p>\n
\n\tIf the state were paying on its usual schedule \u2013 with a 30- to 60-day lag time for bills, rather than five months \u2013 the UI would have about $300 million more cash on hand, Beckmann said.<\/p>\n
\n\tUsually, the UI spends its state tax money first, saving tuition income for the summer months. This year it’s the reverse \u2013 tuition dollars, and other reserves, are covering payroll and operating costs.<\/p>\n
\n\tThat, in turn, means the UI isn’t getting interest income on tuition money it would ordinarily put into short-term investments. This year’s budget anticipated about $5.5 million in interest income, and “we’ll be lucky to hit $3 million,” Beckmann said.<\/p>\n
\n\tAnother way the backlog costs the UI: It has to keep more of its short-term investment pool readily available, in case it’s needed for payroll. Money that would have been invested in one-year increments has been converted into money-market accounts earning dismal interest, he said.<\/p>\n
\n\tThough $800 million may sound like a lot, Beckmann said the UI has “relatively limited reserves” in comparison to its budget. The state has audit rules against hoarding funds at the university level, with carry-forward limits even on institutional funds.<\/p>\n
\n\t“As a public institution, we can’t carry forward any of our state dollars. It’s either spend them or lose them,” he said.<\/p>\n
\n\tMost public universities across the country face similar limits, but “Illinois is at the tighter end,” he said. “It’s a good rule. The state doesn’t want to allocate more money than we need for our operations. It just doesn’t allow us to have a great balance sheet.”<\/p>\n
\n\tMoody’s Investor Service noted as much in its most recent bond rating earlier this month, citing the UI’s “highly leveraged balance sheet” compared to peer institutions and its “razor-thin cushion of unrestricted financial resources for a university of this size and reputation.” Moody’s kept the UI’s longstanding Aa3 bond rating intact, but gave it a “negative outlook” because of the state’s funding crisis.<\/p>\n
\n\tCritics of the university’s recently imposed unpaid furloughs note that the UI’s overall budget exceeds $4 billion, and state funding makes up only a small piece \u2013 about 18 percent. So why has the state backlog caused such a crisis?<\/p>\n
\n\tBecause much of the UI’s income is reserved for specific purposes \u2013 federal grants for research, state payments for employee health benefits, student fees that support the Assembly Hall and other auxiliary facilities, Medicaid funding for hospital patients in Chicago, private gifts donated to a specific building or scholarship, Kangas said. General-revenue funding from the state is used for the UI’s primary educational purposes: paying the faculty and staff who serve students.<\/p>\n
\n\tIn the big picture, the $17 million saved through the furlough program sounds like a drop in the bucket to some, but “you’ve got to start somewhere,” Kangas said. “We’re caught in a real bind.<\/p>\n
\n\t“I understand, as one who took a pay reduction, this is real, and it impacts lives. But what happens if we don’t get our state funds until this time next year? Are we going to be criticized a year from now for not having acted more aggressively?”<\/p>\n
\n\tLast year, the UI didn’t receive its final payment for fiscal 2009 until September \u2013 two months after the close of the fiscal year.<\/p>\n
\n\t“At this stage the message from the governor’s office and others has been, ‘You’re going to get your appropriation,’” Beckmann said. “That begs the question, ‘OK, when?’ It’s kind of hard to believe the state, being this far behind, will get caught up by June 30. It just doesn’t seem credible.”<\/p>\n
\n\tCarol Knowles, spokeswoman for Comptroller Dan Hynes, said the backlog of unpaid bills could reach $6 billion by the end of the fiscal year.<\/p>\n
\n\t“If we had the money, we would pay the bills,” she said.<\/p>\n
\n\tState sales tax receipts usually go up in the spring, but most of that money will go toward short-term loan repayments to ensure the state’s bond rating doesn’t fall any further, she said.<\/p>\n
\n\tPlus, sales tax receipts have fallen below budget projections, and the state is continuing to spend more money than it’s taking in, she said.<\/p>\n
\n\t“So we have a mounting problem,” Knowles said. “The situation is pretty dire at this point, and it’s going to get worse before it gets better.”<\/p>\n<\/p>\n
Distributed via Chicago Press Release Services<\/a><\/p>\n URBANA \u2013 If you’ve ever been overdrawn, or tried to stretch a paycheck over too many bills, consider adding a few zeroes to the equation. Suppose your bank balance, and your bills, reached into the hundreds of millions of dollars. And then a big chunk of your income evaporated. The University of Illinois faces a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-345955","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/345955","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=345955"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/345955\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=345955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=345955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=345955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/img><\/a>
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