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FEATURE STORY — March/April 2006

What will it take for the University of Illinois to remain competitive?

By Jim Dey

University of Illinois junior Allison Lale serves as a resident adviser in the residence halls to help pay for her education. Despite expecting to owe $20,000 upon graduation, she considers herself lucky to have received some form of financial aid. Studio One Photography

Editor's note: Tuition, the state, private support and sponsored research - these elements are the historical wells of funding that have kept the University of Illinois running for most of its history. Now the University - like its fellow institutions of higher education - faces a dramatic shifting of those components, while new issues and challenges, like globalization and online education, are showing up. How will the University adjust, not just to keep pace but to excel? Will the face of the U of I change as we know it? With this story, Illinois Alumni begins a series that examines the challenges that lie before the University and the status of higher education as a whole.

When the University of Illinois opened 138 years ago as a land-grant institution, horses plowed fields, Americans lived an average of 40 years, and googol signified the numeral 1 with 100 zeroes after it.

Today, combines have replaced horses, the average life span has nearly doubled, and few among us could get through a day without googling the Internet.

While American society has changed, so too has the University of Illinois. From its humble beginnings as the Illinois Industrial University (which charged $15 for annual in-state tuition), it has grown to a $1.3 billion operation on its Urbana campus, which tends to more than 40,000 students.

But while President Abraham Lincoln used the Morrill Act to pioneer the availability of higher education to the general public, today the Land of Lincoln is offering less and less support to its pre-eminent state university.

With the state's stance on funding - thereby leaving college students to provide extra University dollars through higher tuition costs - what hard realities and societal changes now face the University? Will those realities hinder the University from preserving its distinguished status?

What will it take for the University of Illinois to remain competitive? And in today's world - with more and more competition for how and why public and private dollars are spent - what is the price of not maintaining that excellence?

'We're on our own'

Allison Lale, a junior from Wilmette, hustles to make ends meet as she works her way through the University of Illinois.

Majoring in integrative biology and hoping to attend medical school, Lale covers the cost of her room and board by working as a resident adviser in a University residence hall. A General Assembly scholarship spared her costs for tuition in her freshman year, but now she's relying on loans and grants to cover the rising costs of her education. By the time she graduates and is ready to attend medical school, Lale estimates she'll owe roughly $20,000 for education loans and considers herself fortunate that it's not more.

"Most people don't get a General Assembly scholarship. Most people aren't RAs," she said." I've seen people in school struggle with financial issues."

Lale, of course, was referring to her fellow students. But students are not the only ones feeling the financial pinch. From his office in the Henry Administration Building, UI President B. Joseph White is engaged in a continuing struggle to maintain the University's historic reputation as an outstanding academic institution while keeping tuition affordable and the University's buildings, many of them decades old, in good repair.

For now and for the foreseeable future, White said the U of I faces the challenge of meeting those demands without additional financial help from the state.

"There is an unmistakable message from Springfield," said White, who's entering his second year as the University's president. "We're on our own. We're not betting our future on increased state support."

Getting dollars from somewhere else

So the University by necessity is looking elsewhere for funds. It's looking toward its students for higher tuition payments, to its faculty to attract greater research funds, to alumni for more financial support and to its own administrators for tough decisions that establish new priorities and make dollars go farther. Those four factors - plus the state resuming its vital role as a contributor to UI finances - are what White calls "a new compact to support the University of Illinois" that is "critical to our University's future."

"I'm not pessimistic about the future, but it's going to take a lot of different things," he said.

The financial pressure on the University to which White refers is not new. Indeed, the cost of tuition has increased more than 100 percent - to $7,042 since the 1996-97 school year - as the University has struggled to fill the gap caused by declining state support. But the problem goes back considerably farther than that.

In the 1980 fiscal year, the Legislature appropriated 44.5 percent of the University's $641 million budget, while student tuition represented 5.5 percent of University revenues. By the 2005-06 fiscal year, the UI budget had grown considerably, up to $3.5 billion - but the Legislature's share had fallen to 19.9 percent of the funds, and student tuition had jumped to nearly 14 percent.

If tuition costs continue to rise, the cost of a University of Illinois education could end up looking more like a private one, says UI President B. Joseph White. Matt Ferguson Photography

Making University finances even worse, competing demands for scarce tax dollars and a national economic slowdown prompted the Legislature in recent years to reduce its support not just in percentages but in actual dollars. Direct state appropriations, which exclude money for employee pensions and health benefits, have fallen from $803.6 million in FY2002 to $670 million in the 2005-06 fiscal year, a reduction of more than $133 million.

"The problem had been like a chronic disease. ... Then it's been exaggerated in the last four or five years with a significant downturn," said Randy Kangas, MS' 88 BUS, PHD '96 BUS, UI assistant vice president for planning and budgeting. "Looking forward, the best we can hope for is increases that account for inflation. And in the short term, we won't even get that."

Education spending around the nation

Declining state support reflects both national trends as well as economic problems and political decisions peculiar to Illinois. For starters, over the last 20 to 30 years, all state governments have been asked to do much more than they used to do, particularly in the area of social welfare spending.

But former Illinois Gov. Jim Edgar, who's now affiliated with the University's Institute of Government and Public Affairs, said the U of I's funding reflects not only tight state budgets but current Gov. Rod Blagojevich's decision to give a higher priority to increased spending for elementary and secondary education, rather than for higher education.

In that respect, Illinois is out of step with its sister states. A recent study conducted by the Center for the Study of Education Policy at Illinois State University ranked Illinois 49th in state appropriations for support of higher education and indicated that Illinois is one of just four states to appropriate less money for its public universities from the preceding year. The other states in negative territory were Missouri, Mississippi and West Virginia.