Office of Communications
470C Wohlers Hall
College of Business
June 28, 2002 -- News Brief
Illinois budget woes not unique
Many states are facing challenging financial climates, with decreasing revenues catching many state budget offices by surprise. The impact of a reduced level of state funding for higher education -- called the backbone of support by UI President James Stukel -- is significant. Stukel expressed confidence earlier this month in the university's ability to overcome the reduction for the coming fiscal year. Since that time Govenor Ryan vetoed the legislative budget and additional cuts have been proposed in an effort to meet the state-mandated balanced budget.
The University Board of Trustees moved up a scheduled vote on a tuition increase from the regular July 17-18 meeting to June 27. At that meeting the board voted 8-1 to increase tuition on the Urbana-Champaign campus by 10%.
The portion of the CBA budget derived from state funds is still being determined. Dean Avijit Ghosh and Assistant Dean for Administration Sandra Frank, who implements the budget, report that the college identified three goals when planning for the budget reduction. The first is to protect the intellectual and instructional resources of the College. Second is continuing to support the college's research agenda. And third is to ensure that the time to graduate for College majors is not lengthened. CBA administrators examined college activities and programs to prioritize needs and seek potential economies.
A June 14, 2002 article in the Chronicle of Higher Education (available online only to subscribers) reviewed recent recessions and the changing nature of funding for higher education and student support. Authored by David Breneman, professor and dean of the Curry School of Education at the University of Virginia, the article noted:
"In February, Raymond Scheppach, executive director of the National Governors Association, reported that the total deficits of 41 states are twice the level reached in the previous recession. Similarly, state budget cuts for higher education appear to be running higher than in previous downturns, while tuition increases at some public institutions are truly exceptional: 15 to 30 percent or more. ... Even though state dollars are a declining share of total revenues, the endowment required to produce that annual revenue stream is beyond the reach of most institutions.
The stress on state budgets comes as no surprise to those who study them. As Scheppach noted, the tax base that states rely on was designed for the manufacturing economy of the 1950s, "not the high technology, international, and service-oriented economy of the 21st Century." And, as the columnist Neal Peirce has observed, "State tax systems focus heavily on taxing goods but exempt most services -- even though services, from legal and accounting to real estate and information technology" are key sectors in today's economy.
Increasingly, tax revenues are insufficient to support the myriad social services expected of state governments, including public higher education."
Alumni and friends provide significant resources that help lessen the impact of the reduced state-provided support. Contributions to the annual fund or designated funds are important to continuing the quality of programs in the college.
Other articles on the state budget