Feb 19, 2015 update

Main Content

Greetings:

Most of you are keenly aware of Gov. Bruce Rauner’s FY16 budget proposal for Illinois, delivered Wednesday to the General Assembly. The key word is “proposal”— this is Act One in a very long drama as work now shifts to the General Assembly to adopt a budget. I was in the House Gallery for the governor’s address and had a chance to talk with a number of our legislators throughout yesterday afternoon. We’re going to be doing a great deal of that in the coming months … as you’ll note below.

Although the governor did not address higher education in his speech, the details of his proposed cut to Illinois’s public universities were available in his budget book also released yesterday—and that magnitude of cut would be severe to ALL of the public institutions. The governor proposed a 31.5 percent — $387 million total — cut from the universities’ combined appropriation for next fiscal year, beginning on July 1. Under this draconian scenario, the SIU System would incur a $62.5 million cut: $44 million to the combined SIU Carbondale/School of Medicine budget, and $18.5 million to SIU Edwardsville, including its operations at the Alton and East St. Louis campus sites.

Some have contended that if we consider all revenues from all sources for the universities (tuition and other “local” sources, state, and federal) that the cut in our state appropriation averages a little more than 5 percent across the publics. That average may be skewed by the University of Illinois, because even though we’ve had just a day to analyze the proposed budget numbers, the reality instead is that the revenue percentage is likely closer to 10-12 percent … and that’s just looking at some numbers we pulled together quickly for SIUC.

Another of the talking points coming out of the governor’s budget presentation is that public universities also can rely on the private donations that come through our respective foundations. However, as most everyone in higher education knows all too well, those funds are not available for general operations. The vast majority of monies held by our foundations is restricted by donors for specific purposes, primarily scholarships and other named endowments. We are extremely grateful to our generous donors; private-public partnerships take on even greater importance during the challenging budget times such as what we now face.

So, we have our work cut out for us … but it is work we absolutely must do. We’ll proceed along two parallel tracks throughout these remaining months of the legislative session.

The unfortunate reality is that we must prepare for the worst, so we will continue identifying and publicly releasing potential specific cuts on our campuses. We can’t just sit idly by until May 31 when the General Assembly is scheduled to adjourn and hope this all goes away. It was stated best by my colleague president, Bob Easter at the U of I, in his comments for today’s Chronicle online: “Reality dictates that we immediately begin preparing for the impact if the legislature ultimately approves a large-scale reduction in funding.” The leadership of each of our SIU campuses will work with our multiple constituencies in as public and transparent a fashion as possible to identify cuts that this reduction in our state appropriation would require.
I’m not going to sugar-coat the impact. Education is a human capital enterprise and any strong organization wants to protect its people. But if this proposed cut isn’t mitigated through the legislative process, the difficult truth is that there will be layoffs; at such a level of reduction, they can’t be avoided.

So as we now move forward with reduction plans at the campus and system levels, we also will be communicating the realities — along with the many positive contributions of SIU — to the members of the General Assembly. The governor said in his speech yesterday that he wants to invest in Illinois. We have to show that we are part of that investment, and that enacting such a cut to our budget would rather be a disinvestment in our state as a whole … and not just in higher education. And when I say we need to be advocating with legislators, I mean all of us, including our loyal alumni and many friends of SIU statewide.

While this will be a political process, we have some numbers that help us make a strong case for continued investment. If we average together economic impact studies conducted in recent years at both SIUE and SIUC, we know that every dollar we spend roughly generates between $7.72 and $8.60 in economic activity to our region. (You can do the math on a $62.5 million hit.) We also know that for every dollar of state appropriation spent on payroll, about 41 cents is returned to state and local governments. And we can’t fix things on the backs of our students’ tuition. Quick calculations suggest that it would take at least a doubling of tuition rates to make up the proposed loss of state support and that kind of increase is untethered to reality and something we won’t be doing.

I agree with Gov. Rauner as he opened his speech: We must right the financial ship of Illinois. Now is indeed the time. That will require a massive effort, and I further agree with the governor when he stated that it took years to get to this point. Higher education is going to have be part of that solution, and yes, there are places where we can increase efficiencies and productivity across SIU’s operations. We stand ready to work with all of our state leadership toward that end. But it’s also hard to fix a decades-old problem all in one year. An additional challenge going forward as the budget negotiations take place may well be articulating the case for a new source of state revenue to offset the losses from the recent expiration of the temporary income tax increase. Again … a long process has just begun …

Let me close by once more emphasizing the need for all of us to advocate on behalf of SIU during this period. We have a powerful story to tell — a story that transforms both individual lives as well as our region and state — and that history is something that we all are charged to ensure for many years to come. I appreciate your patience, counsel, and continuing good will over these next few months.

Randy J. Dunn
President