March 04, 2011

Dear Colleagues,

      On Wednesday I had an opportunity to testify before the state Senate Appropriations II Committee. It was a great forum for me to articulate the "value proposition," as one senator put it, of the state's investment in the University of Illinois. I was able to share our many outstanding accomplishments, including:

  • The University of Illinois produces about $13.1 billion per year in direct and indirect economic impact on the Illinois economy – a return of more than $17 for every $1 the state invests through its annual appropriation to the University.
  • University of Illinois operations directly and indirectly generate more than 150,000 jobs in the state annually.
  • The annual activity of our University creates more than $1.3 billion in future tax revenue to the state, resulting in a net annual gain to the state of about $535 million.
  • The vast health sciences complex on our Chicago campus educates a significant number of health care professionals practicing in Illinois and provides state-of-the-art care through more than 400,000 patient visits each year.
  • Our Springfield campus, among the best public liberal arts universities in the Midwest, has garnered national recognition for its advances in online education and blended learning.
  • Graduates of the University of Illinois at Urbana-Champaign have the highest median mid-career salary among graduates of all Big Ten universities, and the ninth-highest median mid-career salary among all U.S. public research universities.
  • Our Urbana campus students have the second-highest graduation rate in the Big Ten and second-lowest debt upon graduation.
  • The combined federal research funding across our campuses puts us in the top five among U.S. public research universities.
  • The wages and salaries of our alumni contribute about $21.2 billion annually to the state economy and about 265,000 jobs.

      The senators were very impressed by all our contributions to the state. The exchange also gave me an opportunity to highlight the distinctive missions and exceptional performance of each of our campuses. This resonated positively with the senators. At the same time, they articulated, as they must, the State's profound long-term budget crisis. Their questions covered a wide range of subjects, from faculty and staff salaries to tuition waivers to academic programs and administrative operations. I aggressively defended our policies, particularly on salaries and graduate tuition waivers. I explained that, among other things, appropriate compensation adjustments are one of my highest priorities. Of course, they wanted to know what we're doing to help ourselves, and how we might replace lost positions and increase salaries, when there is no additional support for either in the governor's fiscal 2012 budget proposal. That gave me an opportunity to explain we are making progress on the Administrative Review & Restructuring (ARR) reforms.

      I reported our efforts to streamline business functions across the University, with the expectation of building, over three years, annual savings of $60 million or more – funds we must reallocate to manage any future cuts in state support, avoid furlough days, make compensation adjustments, and replenish some of the faculty and staff positions we have lost. I also had an opportunity to explain how the reforms implemented thus far have already saved over $5 million in the first half of the current fiscal year, and we expect another $5 million by July 1.

      These savings come at a minimum net cost to the University, as we've reconfigured four of five positions, rather than creating entirely new ones, to implement the reforms. We just announced the appointment of Dr. Larry Schook, as interim Vice President for Research. The VP-Research role takes on the portfolio of the former Vice President for Technology and Economic Development position, along with the added responsibility of advancing our research enterprise across the three campuses and in state and federal arenas. Also, we've expanded the portfolios of three existing and highly experienced administrators: Steve Veazie, who'll add oversight of collective bargaining across our campuses to his responsibilities as Deputy University Counsel, is taking on the added title of Executive Director of Labor and Employee Relations; Maureen Parks, as Executive Director for Human Resources, will add to her responsibilities oversight across our campuses of HR services and processes involving civil service and academic professionals whose work doesn't entail a direct academic role; and Michael Hites, who'll work with campus chief information officers (CIOs) as the University's Executive CIO to enhance enterprise IT services and infrastructure delivered on all our campuses. Finally, we added just one new position, an Interim Vice President for Health Affairs, which will be supported by clinical revenues. We've appointed Dr. Joe "Skip" Garcia to this position and charged him with enhancing our clinical healthcare mission, which has the potential to realize substantial new revenues and savings, while improving education and research opportunities and enhancing service to the hundreds of thousands of patients we serve.

      I've heard that some might not be aware of these changes or are confused about how they're being made. The new cost is nominal, because, as noted above, we've reconfigured existing positions, rather than adding new ones (except for the VP-Health Affairs). We expect these changes to drive the reforms that will produce the $60-plus million in savings that our estimates indicate we can achieve. Most important, these changes will improve the financial circumstances for each campus, enabling each to remain competitive and enhance its performance and its distinctive mission. Additionally, our effectiveness in these cost-savings efforts will inform the Board's tuition decision, under the policy it adopted at the January Board Meeting.

      In the midst of the state's profound budget problems and our efforts to deal with the implications for our great University, I'm proud that so many of you are working collaboratively on these reforms, are focusing on the big picture, and are recognizing the opportunity for positive transformation, which improves services and saves precious resources.

      As I've been doing, I'll continue to keep you informed of our legislative work and our progress on ARR reforms. Since joining our great University last July, I've spent hundreds of hours on more than 60 meetings with campus senates and their leaders, student groups, deans, department chairs, collective bargaining unit leaders, academic professionals, and other constituencies comprising our shared governance system. Some may wish I could spend more time with them and I'll continue to do my best to visit with you. These consultations have been very beneficial and at the urging of faculty, staff, and students we've made many changes to proposals under consideration before I arrived and shortly thereafter. These include: taking the proposal to combine the campus chancellor and provost positions off the table; reversing the decision to combine the VP-Academic Affairs with the VP-TED; keeping the provost title for vice chancellors of academic affairs; changing the VP-Research, TED title to "VP-Research;" and ensuring that the VP-Health Affairs description includes alignment of the clinical enterprise with our academic and research missions. All these adjustments arose from my consultations with so many of you. I'm grateful for your good advice and welcome it as we continue to move forward.

      None of this would have been possible without your support and the help of chancellors, vice presidents, and others on the ARR Steering Committee. Also, I'm grateful for the participation of President Emeritus Stan Ikenberry, who launched the ARR efforts before I arrived and remains a close friend and advisor.

      As my session Wednesday with the committee of the state Senate demonstrated, we have a great story to tell – one that impresses our senators and the people of our state. I urge you all to keep telling it, as I will. Our story is one of sustained success and accomplishment, even in very challenging times. Leaders throughout the state and nation are looking to the University of Illinois to bring the exceptional talents of our faculty, staff, and students to bear on the pressing issues of our time. I couldn't be more proud of how we are rising to these challenges and of the tremendous progress we are making together.



Michael J. Hogan
University of Illinois