To: All Faculty & All Academic Professionals & All Civil Service Staff
           <everybody@illinois.edu> 
    From: "Chancellor Cantor and Provost Herman" <chancellor@uiuc.edu>

Reply-To: kjc@uiuc.edu
 Subject: MASSMAIL - Budget Message to the Campus Community

Dear Colleagues,

With the Board of Trustees' approval of the tuition increase last week, 
the long process of determining our budget for next year is coming to a 
close.  

As you probably read in the newspapers, the $14.8 million budget cut for 
our campus forecast in our January letter to you has turned out to be 
$40.49 million (out of a cut to the UI system of $89 million).  As a 
result, we must make reductions that are large, will affect most every 
unit on campus, and will have real consequences.  We want to share with 
you the strategy we are following in making these cuts, how the strategy 
was developed, and what it will mean for all of us.

We began planning for these cuts last fall.  We consulted with students in 
town meetings about tuition policy and in discussions with the student 
Tuition Policy Advisory Committee.  We sought the advice of the faculty 
Campus Budget Oversight Committee and the Deans' Budget Committee, and we 
consulted with the deans throughout the planning process.  There emerged 
from these discussions a set of priorities that would guide our planning.

High priority was given to protecting the institution's excellence and 
stature by preserving its ability to attract and retain superb faculty 
members, its capacity for renewal and innovation by supporting new 
initiatives that can make signal contributions, and maintaining a research 
environment that nurtures scholarly achievement at the highest levels.  
High priority also was given to coping with budget cuts in ways that would 
maintain the quality of our educational programs and preserve students' 
timely access to courses needed to meet degree requirements and to 
graduate on time.  The campus' engagement with the state's citizens, 
communities, public agencies, and businesses was given priority as well, 
along with the need to maintain essential services for students, public 
safety, and equal opportunity programs.  We have also given priority to 
financial aid for students for whom the higher tuition would be a 
hardship, as we pledged to the students in our discussions with them about 
a possible tuition increase.

To protect these priorities as much as possible, we devised a budgetary 
strategy.  The first element of the strategy was the decision to make 
differential budget cuts, allocating lower cuts to units whose work most 
directly affects these campus priorities.  As such, academic units 
received lower cuts (average of 6%) than administrative and service units 
(average of 7.5%).  Among academic units, lower cuts were made to budgets 
of units where priorities of research excellence and major instructional 
responsibilities intersect, where engagement with pressing societal needs 
is fostered, and where the institution is investing in initiatives and 
opportunities.  The University Library's centrality to the campus' 
missions and standing, and its value as a public resource were recognized 
with a cut of only 1.5%, and no cuts were made to essential programs 
including graduate fellowships, the Division of Rehabilitation Education 
Services, and the Council on Teacher Education.  

Similarly, within the administrative and service units, cuts were made 
differentially based on the units' centrality to these campus priorities.  
No cuts were made to the McKinley Health Center, the Principal's Scholars 
Program, University High School, the Campus Honors Program, the Office of 
Equal Opportunity and Access, or the Division of Public Safety because of 
the importance of their special roles.  The essential contribution of 
Student Affairs units to serving students' needs and interests was 
recognized with a cut of only 3.14%.  

The second element of the budgetary strategy was a decision to use all 
available resources to mitigate the immediate damaging effects of the 
budget cuts and provide a "soft landing" that would allow the cuts to be 
absorbed over a period of time.  This approach mirrored the campus' use of 
more than $8M in reserves to help cover the FY02 rescission, and it became 
the institution-wide financial strategy.  At all levels of the institution-
the campus, the colleges, individual departments and units-every effort 
would be made to ameliorate the most harmful immediate effects of the cuts 
on the campus' core missions by reallocating all available resources to 
cover a portion of the necessary reductions where possible in the short 
term.

The third element of the budgetary strategy was a decision to use new 
resources strategically to support our highest priorities.  The new funds 
provided by the additional 5% tuition increase approved last week were 
allocated in a way that allowed the budget cuts to units to be made 
differentially, directing support to campus priorities.  Additionally, 
most of the funds generated by the FY03 tuition surcharge ($5.7 million) 
have been allocated to provide educational enhancements recommended by the 
student Tuition Policy Advisory Committee and identified as targets for 
investment in our covenant with the students concerning how surcharge 
funds would be used:  access to General Education courses, access to high-
demand majors and essential courses, library operations and services, 
vital student services, graduate fellowships, critical campus network 
maintenance, and essential classroom upgrades.  Using new funds in these 
ways will allow us to continue to move ahead despite the budget cut in 
areas that are most critical to our educational and research missions.  

We believe that this strategy for absorbing our budget cut will protect 
our core missions and activities to the extent possible.  Difficult 
decisions had to be made at all levels of the institution, decisions that 
no one wanted to make but could not be avoided.  They were made in a 
principled way, based on our priorities for the present and future of this 
campus.  Above all, we have sought to protect this institution's 
exceptional quality and make sure that it continues to be the kind of 
university that drew us all here.  But there is no denying that however 
much we wish otherwise, the budget cut will have costs to our people and 
our programs.  

Our students will pay higher tuition next year.  They will have fewer 
courses to choose from, and seats may be harder to find in their desired 
courses at their desired times.  In many areas, class sizes will be 
larger, and fewer elective courses will be taught.  Our resources to 
support research will be constrained, and our public engagement will be 
reduced.  The salary freeze will prevent our recognizing in a tangible way 
the exceptional accomplishments of our faculty and staff during the past 
year.  The most bitter consequence of all will be the loss of valued 
employees.  The size of our faculty will be reduced by approximately 75 
colleagues through normal attrition over the next couple of years.  Most 
reductions to other employee groups also will occur through attrition, but 
a number of terminations and layoffs will be necessary.  Indeed, this 
process has already begun.

The next several years will be challenging ones for all of us.  For our 
part, we will work energetically to bring new resources to the campus and 
manage our way through this financial crisis so that we emerge on the 
other side positioned to move ahead rapidly as new funds become 
available.  The excellence and dedication of all who work here are 
precious assets that have made this institution what it is.  This is 
perhaps our most valuable resource for coping with the stresses that this 
period brings.  The campus has for a long time been a wonderful place to 
make a career.  This downturn will not change that.  

The coming period will be a time of tight fiscal constraint and 
retrenchment in many areas, but it also must be a time of progress on some 
key fronts.  The ability to launch bold new ideas with early investments 
has led to some of our university's most important achievements, and we 
will continue to find ways to take advantage of exceptional opportunities 
and leverage quality across the campus.  We will find ways to fund 
strategic faculty recruitment and the retention of essential colleagues.  
And we will continue to encourage faculty members to come together to 
create new opportunities for achievement.  Our commitment to excellence 
through support of diversity, and opportunities to make signal 
contributions will continue to move the institution ahead along the paths 
we have laid out together.

Our university has long conducted its affairs by relying on the thoughtful 
judgments of decision-makers within the units - the heads of departments, 
schools, colleges, and administrative and service units.  Their tireless 
efforts in working with us over the last six months to craft our budgetary 
strategy have once again earned the trust we place in them.  And, the 
confidence we place in our outstanding faculty and staff has been earned 
many times over by your accomplishments and devotion.  We know that the 
last few months have been a time of uncertainty and anxiety, and we thank 
you for your continued dedication to one of America's great public 
universities.  

Cordially,
Nancy Cantor 	         Richard H. HermanThis mailing approved by:
The Office of the Chancellor

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