President Robert Easter and Chancellor Phyllis Wise
This hour on Focus, host Jim Meadows talked with University of Illinois Chancellor Phyllis Wise and President Robert Easter. We asked them about the sequester and how it would affect the University and research efforts on campus, how the state's budget issues are affecting the university and if the UIUC will be getting a new mascot.
We also want you to have the opportunity to interact directly with your leaders. Do you have questions for President Easter or Chancellor Wise? If we didn't get to them today, post to our Facebook page, tweet us @Focus580 or post in the comments section below. We'll be talking with the President and Chancellor again on Focus.
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Susan Davis said on February 26, 2013:
Over the last two years, many of the top UI administrators have gotten large salary increases, some of them adding up to more than thirty thousand dollars spread over those years.
Yet the University Administration is pushing the food service and building service workers on campus into a strike by refusing to bargain a wage increase that would keep these employees above the poverty line.
Why is this? Doesn’t it send the message that some members of the Illinois family are more deserving of fair treatment than others? —Susan Davis
Andre said on February 26, 2013:
I have a question for the chancellor or the president.
Recently I heard that most major companies (80 % or so) have employee wellness programs that include incentives and facilities to help curb obesity and smoking cessation. These companies obtain a large benefit in terms of savings to the health insurance premiums. I was wondering why the university does not provide similar services especially regarding facilities? As you may note we have state of the art gymnasiums at this campus and it seems that it would make sense to provide the employees access to said services on a low cost or free basis would improve the insurance costs of the university. However, today, it costs employees three times more to use campus facilities rather than paying for private gymnasiums. With disincentives of this type, is it any wonder that the insurance premiums for the university are so high?
Darold Barnum said on February 27, 2013:
During President Easter’s Feb 26 interview on WILL public radio, he tried to explain UI’s reason for accumulating an extra $1 billion in cash in the last few years. He said the extra cash reserves were necessary to ensure that UI would have the money to pay its bills, because the state has been slow in sending the money that it owes UI.
Very unfortunately, he confused the total balance owed by the state and changes in the balance. Suppose for example that the state is always exactly one year late in making its monthly payments. Then the state accounts-receivable balance, the total amount of money owed UI by the state, would always be exactly $700 million. This sum is already offset. That is, if the state suddenly paid off the entire balance, then UI cash reserves would jump over current levels by $700 million. So the current balance owed by the state has no relationship at all to the current level of cash reserves needed.
The reason for accumulating more savings is if the total balance might fluctuate upward. So if the average balance is $700 million, but the monthly balance fluctuates between $500 million and $1 billion, then it would be necessary to have an extra $300 million available for those months where the balance hits the high end.
Even in this case, setting aside the extra $300 million would be a really bad idea. Keeping the cash means that the money is unavailable for critical expenditures such as infrastructure repairs, abatement of safety hazards, or even replacement of the many burned-out light bulbs in classrooms. A much better alternative would be for UI to obtain a $300 million line of credit account. A line of credit gives you the right to borrow money by just writing a check (up to a $300 million max), then repay the money when you get it. So for the months when more than $700 million is owed by the state, UI could draw on its line of credit to make up the difference, and repay the loan when the state money comes in.
The line of credit balance would vary over each year from $0 and $300 million, depending on the month. And since interest on short-term loans is a hair’s-breadth above zero, any extra costs would be trivial. If for some reason this option would not work, there are more excellent alternatives to holding extra cash.
However, the underlying problem with President Easter’s answer is not the fact that it is wildly incorrect and would earn a zero on an undergrad intermediate accounting test.
The true problem is that he is far too dependent on the top non-academic professionals in the Central Administration. It is they, not senior academic administrators, who are running the school, and have been for many years. My guess is that their advice cannot be effectively questioned by top academic decision makers; top academic deciders seldom have the business acumen to do so. So top academics have to take the non-academics word for it, and therefore do what they suggest, which in truth means that the non-academics are making the decisions. And my guess is that their training and experience is primarily in the private, profit-making sector, hardly an appropriate background for forwarding the mission of a public university.
This problem is just one more reason why both the UIUC administration and faculty should welcome a faculty union with open arms. Then the top non-academic professionals would be forced by law to consider the input of a plethora of the most accomplished subject-matter experts in the world. And these academics would also bring back the values that define a great university and that are missing at UI at present. Further, the legal requirements of shared decision-making would gradually replace UI’s autocratic, command and control culture with an empowerment culture similar to that found in all high-performance organizations.
For a better university,
Darold T Barnum
UIC Professor of Management
UIC Professor of Information and Decision Sciences
Founding Director, UIUC/UIC Center for Human Resource Management
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