University Of Illinois officials plan to dismiss Chancellor Phyllis Wise rather than accept her resignation and pay her an agreed $400,000 bonus.
But President Timothy Killeen says he intends to offer her a faculty position in which she would report directly to him.
Killeen and university trustees announced those moves at a meeting of a trustees committee Wednesday, nearly a week after Wise tendered her resignation.
The action followed calls by Governor Bruce Rauner and others to rescind the bonus amid a number of scandals, including Wise's use of private emails to avoid public scrutiny.
The university also faces lawsuits from former athletes alleging poor treatment by coaches and staff, and a lawsuit over the decision to rescind a professor's job offer.