University of Illinois has decided to award salary hike to some of the faculty and staff based on the merit from this fall semester.

The university's board of trustees will give a 2.5 percent raise to the staff in order to keep up with the market value of the faculty, which is on the rise.

The pay hike is announced at a time when the university is facing budget issues. The raise will cost the university $30 million, reported Daily Illini.com, the independent student newspaper at the University of Illinois.

"It's a very modest increase and we know there's a lot of hurt and trouble out there in the world," Daily Illini.com quoted Randall Kangas, associate vice president for planning and budgeting, as saying pointing out at the budget issues.

"But we have to be competitive in the marketplace for top faculty. We have to," he said.

"This is a world class institution, that's one of the tops in the world," Kangas said. "President Easter says that this is a stretch, but it was necessary to do, and that's kind of where we are, he added.

The university has been facing budget issues due to a strong decrease in state funds. The university saw a drop of 6 percent in the state funding that prevented them from giving a raise. A number of faculty and staff have left the university regarding salary issues. In order to keep up with the market value for the faculty, the university has decided to increase the pay.

Earlier in 2009, the university offered a 1.5 percent increase after which there was no salary hike for the next two years. In 2011, the university awarded an average 3 percent raise. The current increase will differ from one faculty to the other. While one may receive 2 percent hike another may receive 3 percent hike.