SIU trustees postpone loan from Edwardsville to Carbondale — for now

There is no loan pending from Southern Illinois University’s Edwardsville campus to Carbondale — at least for now.

The SIU Board of Trustees met in Carbondale on Thursday morning to discuss the proposal for SIUE to lend its sister university reserve funds in order to help Carbondale weather the financial storm caused by the state’s budget stalemate.

As the proposal was added to the agenda after the agenda was published, a unanimous vote of the board was required to consider it. Trustee Dr. Shirley Portwood voted no, and thus the item could not be considered.

However, that was not the final vote on the matter, according to SIU President Randy Dunn.

“I anticipate we will have a special meeting in early- to mid-May,” he said. The board was likely to need such a meeting anyway, he said, as it is coming close to naming a new chancellor for SIUC. Dunn said Carbondale should have sufficient operating cash to get that far without deficit spending.

While the Edwardsville campus will need to cut another $4 million on top of the 9-percent budget cut already implemented, Carbondale is facing a cut of at least $30 million and is anticipated to be in deficit spending within a month. Edwardsville Chancellor Randy Pembrook has assured SIUE employees that there will be no layoffs or furloughs; no such promises have been made at SIUC.

According to Dunn, SIUC has gone through $80 million in reserves from its own campus and the Springfield medical school, and without a loan from the SIUE reserves, it faces tapping into restricted funds from grants and bonds — a legally questionable choice that would lead to default status on its bonds and audits.

SIUE faculty and staff opposed the prospect of lending some or all of its $70 million in reserves when the Edwardsville campus has enacted round after round of budget cuts to stay ahead of the state’s budget problems, while Carbondale has not.

The unrestricted reserve funds are in essence an emergency “rainy day fund” for the campuses, according to Dunn. Those reserves can’t be used for general operating funds or to pay an expense that is permanent and recurring, such as raises.

“We understand the faculty at Carbondale are not responsible, and we don’t want the students to suffer,” said Kim Archer, president of the SIUE Faculty Association. “But considering how much we had to suffer to put that money aside. ... We want clear parameters for how much they can take, when they can take it and exactly how they will put it back. We feel we owe our community and our students to make sure they are getting it back.”

Archer was among four members of the SIUE faculty who went to Carbondale for the board meeting to protest the decision.

“SIUC’s flagship status seems to have enabled this board to allow virtually unchecked borrowing without accountability for needed change,” Archer said in a statement to the board. “So why would they change? Or cut? Few do until they are forced to. And those who have gambled on restored state funding have simply lost.”

But SIUE didn’t gamble, Archer said. SIUE simultaneously cut $12 million from its budget and increased contingency funds from 5 percent to 25 percent. Faculty members gave up having phones in their offices, lost teaching assistant and graduate assistant positions and watched class sizes grow.

Meanwhile the faculty have gone without raises for years, she said, and some full-time tenure-track professors with doctorates are earning less than $45,000, below market value.

However, Archer did not call for the board to refuse the loan. Rather, she said, they would like to see it a one-time loan for basic operations only for this year, rather than an at-will indefinite drain; with defined terms of repayment to make sure SIUE has reserves in case it falls into crisis; and that there are no “exigent circumstances” to allow SIUC to default on repayment.

Dunn said the trustees could request such terms to be added into the loan proposal if they wish. “The idea was to keep this as open-ended as possible so that there is a sufficient ceiling so we only have to do this one time,” he said. Dunn said they do not know how long they will have to function without any state support, or whether there will be a stopgap funding bill from the state.

Dunn said that the administration would not draw down SIUE’s reserves beyond a certain point. “If it turned out that it went on too long or to such a significant amount that we pull the reserves down too low ... we would end the borrowing,” he said. While he could not say how much “too low” might be, he said they would certainly reevaluate the situation if they had drained 50 percent of SIUE’s reserves.

Last week, Dunn spoke at SIUE and told a mostly-full auditorium of faculty and staff that the Carbondale campus has to do a complete structural reorganization. He said that as SIUC’s student population has dropped, it has not downsized its programs and course offerings along with it. SIUE’s student populations continues to grow while SIUC’s has declined.

But Dunn said Carbondale would need the loan even after the $30 million budget cut. He said the main reason that the series of budget cuts SIUE has undertaken didn’t take place in Carbondale is that they have had a “revolving door” of chancellors.

But Archer pointed out that since the recession of 2008, both campuses have had four chancellors, and yet SIUE managed to enact cuts anyway.

“The leadership required for a system resides not in a chancellor and certainly not in the faculty,” she said. Instead, she said, it lies with the administration and the board. “(The board of trustees) is responsible for the welfare of three campuses, equally, without favoritism, and for holding each campus accountable to both its academic mission and its financial responsibilities,” she said.

Dunn said the state House Appropriations Committee has voted out a bill that they’re calling the “Lifeline Stopgap” that was to go to the House floor Thursday. If it passed and was approved by the governor, Dunn said it would provide $27 million for the SIUE system. “That would be very close to getting Carbondale through the end of the fiscal year,” and possibly negating the need for the loan, he said.

This story was originally published April 6, 2017 at 5:01 PM with the headline "SIU trustees postpone loan from Edwardsville to Carbondale — for now."