As Illinois and other states discuss profound budget cuts as a result of the continued economic downturn, public universities set to lose millions of dollars in state funding will be challenged to provide a level of quality education on par with private schools that are less affected by the budgetary process.

With financial outlooks bleak for the upcoming fiscal year, some state schools have resorted to cutting faculty, raising tuition and halting construction projects as they expect funding to remain flat or be significantly slashed.

But as public schools feel the financial effects of the budget cuts, private universities like Northwestern may be looking to capitalize on problems faced by competitive state schools. In a Nov. 15 interview, University President Henry Bienen said NU will continue to make new faculty hires and even target some talented professors whom public schools can’t afford to pay.

“The state universities are going to be in very, very bad shape,” Bienen said. “One of the most vulnerable places now are the state universities, so it is a good time for us to get some really good faculty. At the same time, we have to do it selectively. The world’s changed, and the markets and economy have been softening for everyone.”

THE FISCAL OUTLOOK

While public universities nationwide are planning on decreased allocations from state legislatures for the 2002-03 fiscal year, governors of at least nine states have told schools they may need to cut their budgets between 1 to 7 percent for the current year. A plan by Iowa Gov. Tom Vilsack to remove $200 million from state spending would cut $13.5 million from the University of Iowa’s current budget.

To reduce its budget, Iowa already has eliminated 107 staff and faculty positions, postponed building renewal projects totaling $1.7 million, suspended six internal grant competitions and left some high-level administrative positions open rather than conduct searches for replacements.

“We realize the state is in a difficult time, so we have to do our part,” said Steve Parrott, Iowa’s director of university relations. “Recessions don’t last forever, and we think we can get through this while maintaining a quality education here.”

But Eugene Sunshine, NU’s vice president for business and finance, said making reductions to a budget in the middle of a fiscal year presents major problems for universities.

“Reductions during the middle of the year are especially difficult to accommodate,” Sunshine said. “You are into the year already and don’t have planning time to make the changes happen.”

With Illinois’ special legislative session still in progress, the University of Illinois has not yet received specifics on the amount of any budget cut. Bill Murphy, Illinois’ associate chancellor for public affairs, said he thinks any mid-year cut would be modest in size despite the state’s $500 million revenue shortfall.

But Illinois Gov. George Ryan announced Tuesday that construction on the university’s Post-Genomics Institute, set to begin in the spring, will be postponed in order to save the state $80 million.

Murphy said the university understands that the state is facing a budget crunch.

“It’s not appropriate for us to be whining, we just have to cope the best we can,” Murphy said. “One year isn’t a reason to panic. We’d hate to fall behind the advances at other schools, but one year doesn’t make or break a university.”

Other states experiencing budget shortfalls include Florida, which carved $106 million out of state school funding allocations; Arizona, which has approved a 4 percent mid-year cut on all state agencies including public colleges; and Colorado, which has put $340 million worth of campus construction projects at the University of Colorado on hold.

EFFECT ON EDUCATION

In spite of the massive cuts at Iowa, Parrott said the school will try to protect undergraduate education programs from the fallout.

“We are not going to cut financial aid or take money from the library system,” Parrott said. “We want to preserve the four-year graduation plan and make sure students take enough courses. We are trying to take the cuts out of administration-related areas instead of from educational programs.”

But as faculty members leave, class sizes will increase. At the same time, more public schools are discussing tuition hikes to make up for the decrease in state funding.

The Iowa Board of Regents, which increased tuition by 10 percent for the 2001-02 academic year, will vote next month on another 18.5 percent tuition hike for 2002-03. The University of Illinois also will increase tuition by 5 percent for returning students.

But Jon Fuller, a senior fellow with the National Association of Independent Colleges and Universities who monitors trends in higher education, said that although tuition increases may seem high percentage, the actual dollar amount is relatively small.

“The dollar difference doesn’t really change that much, because state school tuition is so low compared to private schools,” Fuller said. “Even if tuition goes up 20 percent, the amount might not be that large in dollar terms.”

For instance, the proposed 18.5 percent tuition increase at Iowa would raise in-state tuition by $643, while NU’s 4.8 percent increase last year jumped tuition about $1,200.

Fuller also said the length of the economic downturn will determine the possibility of state universities falling behind private schools in research due to less faculty and the delay of more technologically advanced buildings.

“If the downturn lasts a long time, it would probably have a comparative effect on the abilities of public schools to improve education against private schools,” Fuller said.

NU BUDGET CONCERNS

Although NU will not have to make any cuts to its budget, Bienen said the university will move out of the expansion phase that has characterized its spending during the past years.

“This is a good year for the university to take a deep breath and consolidate the significant expenses that were made for all of the new buildings,” Bienen said. “We will still make new hires in the mode of wanting to grow the university, but we’ll have to be selective about what we do. That may be a little frustrating to people.”

But while state schools are halting the construction of new facilities, Bienen said NU still plans to unveil one more building as part of Campaign NU, the university’s $1.4 billion fund-raising drive.

Sunshine said the financial officials at Big Ten state schools are finding it difficult to continue improving their universities because of the monetary constraints.

“It’s a heck of a lot tougher right now for them,” Sunshine said. “We are fortunate we don’t have the same dependency on government funding as state schools do and we aren’t faced with the same of degree of dilemma.”

But Fuller said private universities also are feeling the effect of the economy as fewer people are making donations and some are changing the nature of their contributions.

“People are stretching their gifts more, over 10 years instead of five,” Fuller said. “It’s not like private schools aren’t being affected by the economy, but they are not dealing with the same level of direct cuts.”

But overall, private schools like NU have a major advantage over public universities by being immune to the fluctuating nature of state budgets, Fuller said.

“State schools are obviously more vulnerable,” he said. “Private institutions always have greater control over their budgets and more freedom over the allocations. But it’s only when you have a major downturn in state revenue like this that the advantage that private schools have comes to the forefront.”