Repository: UIHistories Project: Board of Trustees Minutes - 1946 [PAGE 14]

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1944]

UNIVERSITY OF ILLINOIS

II

On motion of Mr. Jensen, these appropriations were made as recommended, by the following vote: Aye, Mr. Livingston, Mr. Davis, Mr. Jensen.

APPROPRIATION FOR DEFICIT IN ILLINI U N I O N BUILDING (12) As has been indicated from time to time to the Board, the marked decrease in enrollment on the Urbana campus has had a serious effect on the financial operations of the Mini Union Building. T h e activities of this building are divided into two categories: ( a ) income-producing activities, such as food service, bowling alley, and billiard room, and (b) general building. Income-producing activities are expected to meet all expenses out of their own income, including pro-rata charge of utilities and a charge for rental of the space occupied by them, and a reserve for replacement of equipment. T h e general building account provides the general services of the nonincome-producing portion of the building, debt service on the entire building, and provision for replacement of general furnishings. A reserve also has been necessary for general taxes assessed against the building. In the past all such expenditures have been financed from the building service charges paid by students or appropriated by the University to cover staff and exemptions. Through the year 1042-1943 the budget of the building was maintained on a balanced basis in accordance with the foregoing principles. F o r the year 19431944 the income from student fees dropped to 40% of what it was in 1941-1042. As a result, the operation of the building, after providing reserves for replacements and taxes, shows a deficit of approximately $50,000 as of June 30, 1944. F o r the year 1944-1945 a budget has been prepared showing a net deficit of about $55,000, which may be further increased if the Navy activities are withdrawn from the building as a result of the termination of the Signal School. This figure again allows for a reserve for general taxes of $17,000 a year, which reserve is necessary until the matter is finally settled by the Supreme Court. T h e budget of each year includes the sum of $25,000 paid on the principal of the debt of the building, title to which will shortly be transferred to the University as a result of refinancing arrangements recently concluded. T h e budget of the building also includes approximately $7,700 for the social program over and above the income received from that program through the use of the Ballroom. It has been the intention from the beginning that this building would be made self-maintaining and self-liquidating. If the enrollment of the University had continued as it was when the building was opened there is little doubt but that that result would have been achieved. It is reasonable to assume that a balanced budget can be accomplished again when the Urbana enrollment returns to a normal basis. In the meantime, the University faces the necessity of assisting temporarily with the financial obligations or permitting the debt obligations to go into default. All payments on the principal of the indebtedness increase the equity of the University in the building, which equity eventually will be completed. T h e Union has accumulated a substantial sum for replacement of equipment. There is also a considerable reserve relating to taxes which may not be required. Consequently, the cash operation of the building does not require that the entire deficit of the current two years be provided from outside sources, since a substantial amount can be provided by loans from these reserves. I n view of these circumstances, the Comptroller proposes and I recommend that an appropriation of $50,000 be made from the General Reserve of the University to apply toward the deficits of the Illini Union Building for the current biennium, 1943-1945, with the understanding that when the operations of the building show a net surplus which would be available for the repayment of these sums, they be repaid to the University from this surplus. It should be noted that these payments will be made out of the General University Income Fund from its students and other general income and not out of any appropriations from state tax revenues.

On motion of Mr. Jensen, this appropriation was made as recommended, by the following vote: Aye, Mr. Livingston, Mr. Davis, Mr. Jensen.