The University of Illinois Board of Trustees on Thursday approved a $6.74 billion budget for fiscal year 2021, continuing to focus on key priorities such as academic excellence, financial aid for students and economic development while addressing new challenges brought on by the ongoing COVID-19 pandemic.

The budget for the fiscal year that runs through June 2021 is down 3.3 percent, or $232.9 million, from last year’s $6.97 billion. The U of I System will draw on an additional $121.3 million in reserve funds to help meet expenses anticipated to combat COVID-19.

The U of I System projects that it will incur more than $270 million in negative impacts during the fiscal year due to the pandemic.

President Tim Killeen said the budget reflects the system’s continued commitment to providing opportunity to the people of Illinois, even amid challenging times.  

“The U of I System has a duty to educate the next generations of Illinoisans and help build an economy that will serve the state for generations to come,” Killeen said. “We believe this spending plan will allow us to maintain the sense of momentum and progress we have built while balancing the need to both keep our students, faculty and staff safe and use resources responsibly in this difficult period.”

Trustees, meeting virtually due to the pandemic, also approved a request for an 8.3 percent increase in state funding for the next fiscal year that would, if appropriated and signed into law, move the state appropriation to $673.4 million.

With the additional funding, the U of I System and its universities in Urbana-Champaign, Chicago and Springfield would be able to continue building on educational and affordability initiatives that help maintain academic excellence and drive the state’s economy. These efforts have grown enrollment across the system to a record of more than 90,000 students this fall.

“The state’s investment in our universities helps drive innovation and opportunity in communities across Illinois, training the future workforce and seeding the ideas that lead to new jobs and new companies from border to border,” Killeen said. “We deeply appreciate the state’s support, particularly as we work toward solutions to problems brought on by the pandemic, from pathfinding vaccine trials that help protect the population, to innovative approaches that aggressively test for and contain the virus, to the fundamental education and research that will put people back to work and on a path toward progress and prosperity.”

Fiscal 2021 budget

The budget is built on funding projections in four categories:

• The fiscal 2021 budget includes $2.4 billion in general operating funds, a 1 percent increase. General operating funds primarily include tuition revenue and state funding, and cover most educational activities and day-to-day operations.
• The budget projects a 2.7 percent increase in the Hospital Fund Budget to $861 million. These funds are restricted and used to support operations at the university hospital in Chicago.
• The budget also projects a 1.6 percent increase in other restricted-fund revenue, to $2.1 billion. These restricted funds include research grants, private donations, medical service revenue, and auxiliary operations such as campus housing and food services. This money must be spent for specified purposes in accordance with donor and contractual restrictions.
• Finally, the budget includes $1.4 billion in estimated payments from the state of Illinois for employee healthcare and pension benefits, down 18 percent from fiscal 2020.

The budget includes $628.6 million in state appropriations, unchanged from fiscal 2020.

Tuition revenue increased 1 percent to $1.3 billion, comprising 57 percent of the general operating fund. Despite the pandemic and related economic pressures, enrollment across the university system grew to an eighth-straight record high this fall, increasing 1.2 percent to 90,343 students.

Elsewhere, private donations and endowment income increased 5.2 percent to $188.9 million.

The budget will provide $402.6 million for scholarships and financial aid, an increase of 20.4 percent and a demonstration of the system’s ongoing commitment to greater affordability and accessibility.

The estimated $270 million in pandemic-related financial repercussions include $135.5 million in additional costs to pay for COVID-19 testing for students and employees; quarantine and isolation for students who test positive; personal protective equipment and other needed supplies; and the continued transition to partially remote learning. The figure also includes an estimated $134.2 million in lost revenue generated by housing and dining services, conferences and events, concessions and merchandise sales and fees for on-campus services.
  
Fiscal 2022 budget request

The state budget request for fiscal 2022 would allow the system to continue to provide increasing levels of financial aid to maintain affordability for Illinois residents while also strengthening efforts to attract and retain faculty to match the historic student-enrollment growth.

The U of I System would dedicate $15 million of the requested increase to student scholarships and $10 million to recruiting additional faculty. Another $23.9 million would be dedicated to providing competitive compensation for faculty and staff.

Enrollment across the system has increased 17.5 percent over the past decade. That growth includes a 10.7 percent increase in undergraduates from Illinois since 2015. Enrollment growth was boosted by efforts to hold tuition costs down and provide more financial aid.

Tuition for in-state undergraduates was frozen from 2016-2020. Institutional financial aid spending increased 123 percent over the past decade to $239 million a year. The U of I System now provides 53 percent of the total financial aid that its undergraduates receive, and fewer than half of in-state undergraduates at each of the three universities pay full tuition – 62 percent are paying less than the full cost at Urbana-Champaign, 71 percent in Chicago and 81 percent in Springfield.

Faculty hiring, however, has not kept pace with enrollment growth. The number of tenure-track faculty across the system has been essentially flat since 2009.

The FY 2022 request also seeks $602.3 million in capital funding aimed at addressing the most urgent needs at the three universities. This includes $202.3 million for repair and renovation work on each of the three campuses. Another $166 million would be devoted to innovation and workforce-development projects, including renovation and expansion at the Roger Adams Laboratory for chemistry at Urbana-Champaign; the new Clinical Decision Unit for rapid testing and screening of a wide range of medical issues at UI Health in Chicago; and the remodeling of the Brookens Building in Springfield. An additional $234 million would fund improvements at academic libraries and digital learning centers across the system.

The request is the first step in the annual budget process, and will be submitted for consideration by the Illinois Board of Higher Education, the governor and the legislature.