As staff are working on current FY25 expenditures and looking ahead to budgets for FY26, I wanted to take a moment to provide an update and perspective on Illinois State University’s recently released financial audit for Fiscal Year 2024, prepared by an independent CPA firm on behalf of the Office of the Auditor General. Established on a fund basis consistent with Generally Accepted Accounting Principles (GAAP) and the authoritative guidance issued by the Government Accounting Standards Board (GASB), the audit provides an unbiased and verified analysis of the University’s revenue, expenses, and net position.
The Statement of Revenue, Expenses and Changes in Net Position presents a consolidated view of the financial performance for FY24 and includes all funds. The FY24 financial statements for Illinois State University show an increase in Net Assets across all funds of $14.2 million. This is a healthy improvement over the FY23 increase in Net Assets of $0.4 million; however, it is essential to look at the performance of the individual funds. The FY24 increase in net assets was comprised of a surplus of $21.3 million in the restricted funds, and a deficit of $(7.1) million in the unrestricted funds. The negative balance of unrestricted funds is the definition of a structural deficit.
As a reminder:
- Restricted funds consist of student fees and other payments for services supported by bond debt with restrictive covenants. This includes assets such as housing and dining operations and parking. Restricted funds are not interchangeable with unrestricted funds.
- Unrestricted funds mainly consist of General Revenue or “GR” funds made up of tuition, state appropriation, and other revenue. These funds provide the vast majority of faculty and staff wages, salaries, and expenditures.
We are fortunate that Illinois State’s FY24 net consolidated funds are positive. Unfortunately, the deficit in our unrestricted funds has continued to worsen. In FY23, the unrestricted fund deficit was $(4.6) million. As noted previously, the unrestricted fund deficit for FY24 is $(7.1) million. This deteriorating unrestricted fund deficit is driven by inflationary pressures that have caused expenditures to outpace revenues. The current trajectory of the increasing annual unrestricted fund deficit is not sustainable and must be addressed for Illinois State to avoid the fate of many of its higher education counterparts who have faced similar challenges.
In September 2024, Illinois State implemented a comprehensive strategy, Resilience, Innovation, Sustainability and Excellence (RISE) to ensure long-term financial stability. RISE included several strategies that were immediately put in place to close the gap between revenue and expenses, including mandated divisional budget holdbacks, hiring reductions, deferral of non-urgent projects, and reduction in out-of-cycle and additional pay increases. These actions are anticipated to be the first steps in reversing the deficit trend and moving us closer to a break-even point.
In summary, I am pleased that the University’s all-funds net position is positive. However, our unrestricted funds have an unsustainable deficit that we must address to avoid significant financial problems down the road.
I encourage you to learn more about our financial position by reviewing the financial audit for Fiscal Year 2024, visiting the RISE Taskforce website, and attending future town halls. I also encourage you to share and discuss this information with your employees. I look forward to future opportunities to meet with students, faculty, and staff as we plan for Illinois State’s future.
