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University of Illinois Furloughs

January 15, 2010

Ikenberry announces furloughs, hiring freezes to staff

Andrew Maloney Assistant news editor

Posted: January 5th, 2010 – 1:40 PM

Repost from Daily Illini

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

Stanley O. Ikenberry
President (Interim)

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