University News
WIU President Jack Thomas Remarks from Monday, Jan. 25, 2016 Board of Trustees Meeting [1/25/16]
January 25, 2016
Higher education in the state of Illinois has changed dramatically over the last decade. Our story with regard to state funding, unfunded state mandates, enrollment and related tuition and fee income, and competition for students is similar to other Illinois public universities.
• We are now in the seventh month of the current fiscal year with no state appropriation for Illinois public higher education.
• Compared to Fiscal Year 2015, the State of Illinois has reduced appropriations to the 12 Illinois public universities by $107 million or 8.2 percent since FY2011 and by $295 million or 19.7 percent since Fiscal Year 2002.
• In January 2016, the Illinois Student Assistance Commission reported to the Kankakee Daily Journal that Illinois Colleges and Universities provided $168 million of institutional funds to support the Illinois Monetary Assistance Program, which provides financial aid to students and was previously funded by the state. A January 2016 article in the Champaign News Gazette demonstrates how this is not a sustainable practice for many institutions.
• CBS Money Watch reported that in May 2015 that national college enrollment in the spring semester fell nearly 2 percent from a year ago, to 18.6 million, according to data provided by the National Student Clearinghouse Research Center.
• Enrollment at Illinois public universities is down 10,653 students or 5.2 percent, from 203,649 students in Fall 2011 to 192,996 students in Fall 2015.
• Competition for students will continue to intensify. CBS Money Watch provided data from the U.S. Census Bureau to show that the number of 18- to 24-year-olds in the nation has ceased growing, and the Census Bureau projects it will stay relatively flat for the next 10 years or so.
• A July 2014 Study of Interstate Migration of College Freshmen between 1986 to 2012 by Post-Secondary Education Opportunity shows that Illinois is a lead exporter of high school graduates.
Like its fellow state institutions, Western Illinois University continues to experience cost increases and unfunded state mandates, coupled with declines and delays in state appropriated funding and lower student enrollment, resulting in significant fiscal challenges. The current and the unprecedented state budget impasse further compounds this difficult situation, requiring the University to make difficult decisions to address the serious challenges facing our great institution.
I would like to take this opportunity to provide context to assist you in understanding the gravity of this situation.
Benchmarking data paints a serious picture that, unfortunately, we are all too familiar with. Since 2002, state appropriated funding has decreased by 20 percent. Adjusted for inflation, this percentage increases to a staggering 39 percent. Since 2006, full time equivalent student enrollment has declined by 25 percent. In response, my leadership team and I have implemented measures over the last five years to build a monetary reserve and strategically reduce expenditures in as many areas as possible to mitigate the impact to students, faculty, and staff.
Since 2011, we have combined academic and administrative departments to achieve streamlined operations and efficiencies, decreased facilities and maintenance services, and realized attrition savings. Some of the most recent cost containment strategies have included closing the Learning to Lead Program, discontinuing our lease with the Macomb Area Economic Development Corporation (MAEDCO), and eliminating the Men's Tennis program. Over this five-year period, these measures have reduced budgetary costs by over $16 million, while protecting the academic core and mission of Western Illinois University.
I believe very strongly that one should lead by example. As such, I have asked the University Leadership Team and some Academic Affairs leadership to consider taking a salary reduction equivalent to a 10- or 20-day furlough, depending on their salary, or to provide the equivalent amount in donations to the WIU Foundation. Many, including myself, have accepted this challenge. We expect to realize over $65,000 in savings between FY2016 and FY2017 and realize over $27,000 in new Foundation revenue.
The retirement incentive implemented in late 2015 resulted in 59 employees retiring. This program required an initial cash expenditure of $1.7 million. However, we expect to realize approximately $1.5 million in salary savings annually if some of these positions are not filled.
Despite the reductions, we have continued to increase recruitment efforts through new academic programs and formats, expanded high demand distance learning opportunities, created the Western Commitment Scholarship program, and enhanced marketing initiatives. These efforts are designed to increase enrollment and University Income Fund revenue, and have slowed the enrollment decline to three percent last fall, which could have been much more had we not put in measures to aggressively recruit students. Four Illinois public universities had double digit declines in new freshmen enrollment when comparing Fall 2015 enrollment to Fall 2014 enrollment. Western Illinois University did not. Yet, at current enrollment levels and with the current lack of state funding and impending future declines in state appropriations, a spending gap exists.
Growing enrollment and exercising conservative, mission-driven fiscal management and cost containment alone is not enough. Without further action to reduce expenditures, we will be required to deplete our monetary reserve to bridge the revenue gap. Quite simply, once the reserve is gone, it is gone.
Clearly, we cannot make the lack of state funding become a tuition burden on our students. True to our mission, we want to remain an affordable institution. Over 75 percent of Western Illinois University students receive financial assistance, and the recently completed student price sensitivity study demonstrated that Western Illinois University, similar to other public institutions throughout the state and across the country, is at risk of pricing itself out of the market. In response, we have recently reduced tuition by three percent for incoming undergraduate students and set in-state tuition for all domestic undergraduate and graduate students.
Western has provided more than $11 million dollars to our students this year alone to cover the funds they should have received from the Illinois Monetary Award Program (MAP). If we had not covered the MAP funding for students, we had the potential of losing 3,000 students who were eligible for MAP funding. However, 2,700 students received MAP funding and continue their studies at Western Illinois University. There are Illinois public universities who did not provide MAP funding. Consequently, their enrollment declined. The state's failure to fund MAP grants would have irreversible and debilitating effects on already declining university enrollment, which, in turn, severely impacts revenue. This circumstance is another example of the close relationship between declining enrollment and institutional income. Likewise, we cannot afford to maintain the hope that we will realize a substantial increase in future revenue from the state or from enrollment increases. We must realize immediate savings to ensure that cash flow is maintained.
The question becomes: how will we realize our savings? As discussed above, we have significantly reduced operating expenditures and Western Illinois University is a very efficient university, operating well below state averages on instructional and administrative costs per credit hour. However, our operating funds only represent one-fifth of the University's appropriated budget.
As noted in Western Illinois University's Fact Book, 80 percent of our appropriated expenditures are allocated to personnel, or put another way, $105.5 million of a total $132.5 million budget. We have reduced full-time equivalent personnel by 7.5 percent over the last five years. A student enrollment decline of 11.6 percent over that same period underscores the imbalance of personnel to our student population. We have shrinking enrollment, a staffing imbalance, and our fiscal contractual obligations, negotiated years before the current state of affairs would have been foreseeable, continue to rise. Meanwhile, institutional revenue continues to decline.
In FY2016, the University paid $1.4 million in salary increases (two percent) to employees in negotiated groups. An additional $1 million was expended on salary minima and Professional Achievement Awards. Traditionally, the University had administered across the board salary increases to all employees. However, we did not have a state budget and did not award salary increases to all employees. Non-negotiated employees did not receive the scheduled two percent raise, which saved the University approximately $700,000. We are budgeting for a one percent increase ($700,000) for negotiated groups and another $1 million for salary minima and Professional Achievement Awards in FY2017. This is simply our reality. Therefore, we must realign our staffing to address this disparity for short-term operations and the long-term sustainability of Western Illinois University.
My Leadership Team and I have engaged all members of the University community to offer feedback regarding our fiscal challenges, and we have made decisions with that feedback in mind. The decision to lay off members of our University community is not easy. Interim Provost Kathy Neumann has worked tirelessly with academic leadership to identify a consistent methodology according to Article 24 and 40 of the Collective Bargaining Agreement between the University and the University Professionals of Illinois (UPI), which identified low enrollment while taking into account required factors to ensure that students would still be served. The other vice presidents too have worked through existing structures and processes where reductions in force were required.
In December 2015, I asked that the Board of Trustees to postpone their vote on the implementation of Article 24 and 40 of the UPI Agreement. My negotiation team and I have had numerous meetings with the UPI negotiating team based on our intent to discuss these Articles and implementation in depth. Both parties agreed to extend the notification deadline from January 15 to February 1 for PY3 and PY4 status employees. We agreed that we would try to remove as many individuals off the layoff list as possible. In the spirit of negotiation, the University offered to remove tenured faculty from layoff consideration in return for UPI agreeing to cancel the scheduled one percent raise UPI members will receive in FY2017.
In negotiations, there is give and take. We offered to make concessions to gain savings, while still focusing on over-staffing matters. We appreciate the input and hard work of the UPI team. However, we were unable to reach mutual agreement that would yield long-term cost savings and achieve necessary staff reductions.
My Leadership Team and I are still willing to remove tenured faculty as of today, January 25, 2016, from consideration for lay offs at this time. UPI did offer to postpone the one percent increase in salary for FY2017. However, they wanted the one percent salary increase to go into effect in FY2018. As you are aware, there is no FY2018 budget and we are not in the position to make another promise that is based on the hope that we have additional revenue.
I will not mince words: Like other universities in Illinois, we face very serious circumstances. We will continue to welcome feedback from every member of the University community. We will continue to work with all negotiated and non-negotiated groups, recognizing that we must work together to ensure that Western emerges from this stronger, more efficient, and competitive. We understand the emotional impact of these difficult decisions. Nonetheless, these decisions, including layoffs, must be made to protect the future of the University. And there may be more decisions to be made if the impasse continues, and/or if appropriations are significantly reduced. We are Western Illinois University. We are a family, with a rich history of working together to achieve our goals in challenging fiscal times. We will continue this proud tradition of working together.
Western Illinois University is a treasure that belongs to all of us. We are responsible for protecting this treasure. Despite the current budget impasse in Springfield, and individuals pointing the finger at one another, we cannot allow this to happen at Western Illinois University. We must work together to successfully get through this difficult time and the years to come.
Let us not forget throughout these challenging fiscal times, we continue to provide a quality, well-rounded education for our students. Our students continue to graduate and continue on to graduate and professional schools and into their careers. We continue to be ranked high in U.S. News and World Report, the Princeton Review, and many other national rankings, including those by the Economist and Washington Monthly. We continue our tradition as a Military Friendly University by G.I Jobs Magazine, and a Best for Vets by Military Times Edge Magazine.
Western Illinois University will survive this tough time, and thrive, for many years to come.
Posted By: University Communications (U-Communications@wiu.edu)
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