The University announced Tuesday that it will use furloughs and wage and hiring freezes to help fight mounting problems resulting from a lack of state appropriations. In an e-mail to all faculty and staff obtained by the Daily Illini, Interim President Stanley Ikenberry outlined the reasons behind the actions.

January 5, 2010

Dear Colleagues and Friends of the University of Illinois,

The University of Illinois is a 142-year-old institution that has

weathered every challenge and ultimately thrived. We will continue to

thrive, but we now face a cash crisis triggered by the state’s financial

situation which is grim and worsening. The state budget is out of balance

with a backlog of unpaid bills nearing $5 billion and short-term borrowing

covering roughly a comparable amount. The state’s credit rating has been

recently downgraded and among the 50 states only California is worse.

The consequences for our University and others in this state are

unprecedented and worsening. In our case, the University of Illinois has

received only 7% of this year’s state appropriation since the first of

July. The shortfall is more than $400 million and mounting. At some point

we will be unable to meet payroll and complete the academic year unless

there are significant payments from the state as promised. My hope is that

the Governor, leaders and members of the General Assembly will come

together immediately to address the state’s escalating financial crisis.

As they do so they will have our full support and the support of the

people of Illinois who understand the tragic consequences of inaction.

Until we see signs of this financial crisis lifting we must implement the

following short term measures to conserve cash:

* Earlier in the fiscal year, we set aside $20 million in reserves and in

November we directed units to reduce expenditures by 6% to yield an

additional $45 million. Unfortunately, we now need to use all of this $65

million to address our immediate cash crisis. While addressing only a

fraction of our overall shortfall in state payments, this action is

essential to help sustain the University’s payroll.

* We have struggled this year to avoid furloughs for faculty and staff,

but that is simply no longer possible. Personnel expenses represent the

majority of our budget. I am hereby directing the chancellors, deans and

other University administrators to join me in taking a total of ten

furlough days — or two days per month beginning in February and through

the pay period ending on June 15, 2010. Additionally, I am directing

faculty members and academic professional staff to take a total of four

furlough days, beginning in February and through the pay period ending on

May 15, 2010, or essentially one day per month. A furlough is a temporary

leave of absence without pay and this measure will contribute $17 million.

Exceptions to furlough day policies are: employees whose annual base

salaries are $30,000 or less; graduate assistants and fellows; employees

with retirement agreements for retirement no later than August 15, 2010;

and individuals paid 100% from grant or contract funds as of December 15,

2009. In the case of Civil Service staff, we will seek comparable cost

reductions in accord with Civil Service rules and bargaining obligations.

* The chancellors and I have reinforced an earlier directive to all

academic and administrative units to avoid, eliminate and/or delay

expenditures so as to conserve cash. Effective immediately, an absolute

freeze on all hiring or interim wage increases is declared. Exceptions to

the hiring freeze, such as hires to honor offers extended by or before the

date of this letter, commitments required to support specific research and

contract activities, (e.g. federal stimulus research grant activities), or

emergency compensation adjustments must be approved by the appropriate

Chancellor and the President.

Beyond the immediate cash crisis we face significant uncertainties in

2011. In anticipation of next year’s challenges, academic and

administrative support units should consider issuing notifications of non-

reappointment for selected individuals in employee classes whose terms and

conditions of employment require advance notice of termination.

A work group to recommend administrative reorganization and restructuring

was appointed in mid-November 2009. This group has focused on savings in

the areas of information technology, purchasing and consolidation of

administrative support services. I have asked it to provide a preliminary

report to the Board of Trustees and University Community on January 21.

Our overall goal must be to preserve the strength of our faculty and

academic programs by reducing administrative costs.

These are difficult measures and yet they represent an incomplete list of

steps we must take. We need to take innovative measures not just to “cut

budgets” but to grow revenues and reduce actual costs. At the same time,

deans, department heads, chairs and faculty must strategically reassess

the scope of our academic programs and search for opportunities to

consolidate or cut offerings that we value but may no longer be able to

afford. In the process, we must protect our core Land-Grant missions of

teaching, research and service, including clinical care; remain

competitive for faculty, staff and students; maintain essential services,

but eliminate duplicate and lower priority activities; consolidate and

share services and resources; make efficient use of facilities; and take

such other steps as are necessary to sustain the University’s quality and

continuity of operation long term.

All of these steps are being taken to mitigate the negative impact of the

state’s escalating financial crisis. Unfortunately we cannot anticipate

when state leaders will act on a plan that reorders priorities and places

education first, makes the painful but essential cuts in state

expenditures, and increases state revenues essential to restore the

financial integrity of this state and its institutions of higher learning.

As acknowledged repeatedly by many state leaders, education at all levels,

and especially at the University of Illinois, is the economic engine and

future of our state and its people. I urge our leaders to act now.

With your help, we will get through this difficult period, determined to

grow stronger and better. But we will only be able to do that if, like the

state, we make the painful but essential decisions now. I thank you for

your understanding and support and I welcome your counsel as we move

forward.

Stanley O. Ikenberry

President (Interim)

More information is available at

http://www.uillinois.edu/our/news/budget/2010Furlough.cfm