PUBLICATIONS Inside Illinois Vol. 24, No. 23, June 16, 2005

UI to receive flat funding from state

By Sharita Forrest, Assistant Editor
217-244-1072; slforres@uiuc.edu

The UI will receive the same level of state funding next fiscal year, which begins July 1, as it did this year, under the appropriations bill passed recently by the Illinois General Assembly.

The UI’s total state support will exceed $1 billion in FY06, including about $700 million in state appropriations and $325 million in payments on behalf of employees’ retirement and health-care benefits.

While some projects, such as an Early Outreach program at the Chicago campus and a mental-health rate reimbursement study by the Institute of Government and Public Affairs, were not funded, the state did allocate $750,000 for Illinois VENTURES, the university’s venture capital company, and $1 million for the CHANCE educational retention program at UIC.

For the second consecutive year, the university will not have any capital budget to fund new construction or help address its backlog of more than $617 million in deferred maintenance projects.

In a June 7 e-mail message to faculty and staff members, UI President Joe White said: “In light of the state’s serious budget situation, I appreciate the level appropriation for the university in FY06. I am, of course, disappointed that we did not receive the 1 percent ($7 million) increase in our budget recommended by the Illinois Board of Higher Education. In appropriations hearings and personal meetings with legislators, I found that most lawmakers recognize the tremendous value of public higher education. But legislators and Gov. Rod Blagojevich faced a very difficult task in producing a balanced budget due to a structural imbalance between necessary expenditures and available revenue.”

The state is facing a potential deficit of more than $1 billion in the coming fiscal year, and with little support for increasing taxes to cover the shortfall, lawmakers passed a pension reform bill that included a “pension holiday” that would allow the state to scale back its contributions to the State Universities Retirement System for the next two fiscal years.

In FY06, the state’s contributions to SURS would be reduced from approximately $365 million to about $167 million. In FY07, they would decrease from $432 million to approximately $252 million.

Other reforms contained in the bill include eliminating the money purchase formula – one method by which state employees’ retirement benefits are calculated – as a method of calculating retirement benefits for employees hired on or after July 1; giving the state comptroller, rather than the SURS Board of Trustees, the power to set the effective rate of interest credited to member contributions for money purchase formula retirements; and requiring a SURS member’s employer to pay directly for end-of-career benefit increases that exceed 6 percent.

The bill, which Blagojevich is expected to sign with few modifications, also would establish an Advisory Committee on Pension Benefits that would prepare a report for the governor and the General Assembly by Nov. 1.

In a news release on the state of Illinois Web site, Blagojevch said that the pension reforms are expected to save more than $30 billion over the next 40 years.

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