Illinois Public Universities Face Dire Funding Crisis

As the second semester gets under way, many college students in Illinois are facing substantially higher fees—and dire warnings that some of the institutions they attend may not survive.

The higher education crisis is closely linked to the unending budget impasse between the state’s Republican governor and the Democratic-controlled legislature. Many programs have been operating since July 1 at fiscal 2015 levels, and some experts believe that no budget will be negotiated before fiscal 2016 concludes at the end of June. Public universities, and a student aid program that helps students in both public and private institutions, have received no appropriations.

The latest dire warning came on Feb. 5 when Moody’s Investors Service issued a statement titled “Pressure Builds on Illinois Public Universities.” Moody’s noted that one of them, Chicago State University, had just declared “financial exigency” and said this fate might await others in the public system. Moody’s already confers very low investment grade ratings (Baa1 negative) on most of Illinois' public universities, and it said that they are facing “escalating financial and liquidity pressures.”

Layoffs of non-instructional personnel have already occurred at one of the universities, and enrollment in some has been dropping as students leave for financial reasons or go to neighboring states to find lower costs. The issue has been gaining visibility in the media, as thousands of students brave the cold with demonstrations to protest the impasse in Springfield.

Systemic Problems

The Illinois network of public universities suffers from fragmentation, parochialism and almost total lack of coordination. Redundancy of instructional offerings, unnecessarily high administrative costs, and the occasional big-spending scandal have given the system a public relations black eye in recent times. By refusing to continue business as usual, Gov. Bruce Rauner may be hoping to force reforms.

The University of Illinois, with its three campuses at Chicago, Springfield and Urbana-Champaign, is the flagship institution. It enrolls more than 80,000 students, and is relatively stable when compared to others in the system.

The state’s public university system includes nine other institutions in Chicago and other all points of the compass around the state. Together, the 12 campuses enroll about 200,000 students.

Illinois, notes political scientist Christopher Z. Mooney, has never adopted a statewide approach to higher education, unlike New York with its SUNY system  or the University of California system in the Golden State. Mooney heads the University of Illinois’ Institute of Government and Public Affairs.

The Illinois Board of Higher Education has conducted a study of the both public and private institutions in the state and concluded that 17 percent of the 1,189 bachelor’s and master’s degrees are superfluous. But the board has no authority to order change and, says Mooney, there is precious little incentive for any of the institutions to drop programs offered by others.

Higher education is a huge industry in Illinois, spending $7 billion a year, employing about 50,000 people and conferring nearly 40,000 bachelor’s degrees annually.

But at the same time, it’s an industry without much clout, says Mooney. In the budget impasse, “we are sort of hanging out there as the biggest expense, the biggest thing left unfunded,” he adds, noting that the governor had signed a K-12 funding bill during the fall.

“Higher ed doesn’t command all that much sympathy. For one thing we have our own revenues, from tuitions, and for another, we are viewed as just a bunch of college professors.” In fiscal 2015, the state spent $1.95 billion on higher education. It has spent nothing in the past seven months.

Seven public university presidents sent a letter to Rauner in early October complained that the budget impasse was damaging to their institutions. “The uncertainty of not knowing when, or at what level, appropriations will be forthcoming is resulting in some students and faculty questioning whether Illinois is the best place to learn or to teach,” they wrote. “We are on the brink of serious operational damage.”

In January, the presidents of all nine universities. led by Illinois State University President Larry Dietz, sent another letter asserting that the budget impasse could result in damaging public higher education “beyond repair.”

But Mooney said this “hand-wringing” was not effective, adding that as a lobbying force, the presidents “are hardly a juggernaut.”

Nor are sympathetic Democrats in the state legislature. They managed to pass a bill in late January providing nearly $400 million for the state’s Monetary Awards Program of aid to students and another $320 million for other higher ed programs.

But, state Sen. Matt Murphy, who serves as the deputy Republican leader, called the bill “a hollow, empty gesture” that was unaffordable. Rauner is expected to veto the measure after it reaches his desk later this month.

Rauner has insisted on efficiencies in the system. He and his staff have also alluded to a variety of scandals. One was the firing in October of the president of the state’s largest community college, the College of DuPage, in the wake of mismanagement charges and his negotiation of a $763,000 severance package that was promptly rescinded.

Another involved a $400,000 package negotiated last summer by Phyllis Wise, the chancellor at the University of Illinois’ Urbana-Champaign flagship campus, in exchange for her resignation; that too was rescinded.

In a Jan. 19 memo to the General Assembly, Richard A. Goldberg, Rauner’s deputy chief of staff for legislative affairs, cited gold-plated spending at Chicago State University, quoting an aide at the school as defending giving the university’s president a “spectacular mansion on historic Longwood Drive in Beverly” where the school “has paid more than $32,000 just for landscaping and sprinkler service alone since 2013.”

Goldberg assailed the record of Chicago State—and other public universities—in serving minority students:

• While 83 percent of white CSU students graduate in six years, only 19 percent of African-American students and 15 percent of Latino students do the same. On average across Illinois public universities, white students have a 61 percent graduation rate while African Americans have a 39 percent graduation rate. In Illinois, Chicago State has the second-lowest graduation rate for African-American students (behind Northeastern Illinois University’s 8 percent graduation rate) and the second highest graduation rate for white students (behind Urbana-Champaign’s 87 percent graduation rate).  
• According to data from the Illinois Board of Higher Education, Chicago State’s enrollment fell by 45 percent from 1996 to 2014.  For those full-time students who enrolled in 2006, 4 percent graduated in four years while 21 percent graduated in six years.
• For those who enrolled in 2008, those numbers got worse: 2 percent graduated in four years, 19 percent graduated in six years. According to the Chronicle of Higher Education, that puts CSU in the 2nd worst percentile nationwide.

In his three-page memo, Goldberg also cited instances of “financial mismanagement and misconduct,” and concluded by emphasizing the governor’s position that tuition assistance and university support funding should come only after other “spending reductions or cost-saving reforms” are identified.

A Crisis Continues to Build

At Eastern Illinois University in Charleston between 2,000 and 3,000 demonstrators turned out on Feb. 5 to protest the budget situation—which hits many of them in the pocketbook since the Monetary Award Program is one of those left in limbo.

MAP grants average $2,700 per student but can range up to $4,720. The grants are an important component of the financial package that allows many low-income students to attend college. Federal grants, loans and work income make up the rest.

In the first semester, Illinois universities covered students’ grants, using financial reserves and tuition income to help the students and keep their programs operating. But now that the second semester has begun, the situation has worsened.  

Chicago State University has warned that by March it will not have enough money to meet its $5 million monthly payroll. “This is a crisis by every definition of the word crisis,” Thomas Wogan, spokesman for the university, told the Chicago Tribune in late January.

About a third of the institution’s annual revenues, some $36 million, comes from the state. With its declaration of  “financial exigency,” administrators can seek to rework labor contracts. Faculty may be asked to work without pay, and some of the university’s 800 employees may be laid off, the Tribune reported.

Others among the smaller schools have taken action to cut costs. Eastern is laying off 200 staff; Western has cut its men’s tennis team and cut some of its staff from 12 to 10 months a year. Illinois State has held off on pay raises since July 2014. Some of the schools have said they may ask the legislature for authority to borrow, a power granted to them for a brief time in 2010.

What’s Next?

The flagship University of Illinois, endowed with far more resources than the smaller schools, hasn’t yet had to take draconian measures.

“There have been vague suggestions that we’d better be ready” for belt-tightening, said Chris Mooney. Reductions in travel, and general admonitions to be “careful” about spending, are about all that’s happened so far, he added. Delays in improving information technology infrastructure have also been announced.

It’s entirely unpredictable when, or if, the dispute between the governor and the legislature may be resolved, Mooney said.

In the meantime, the situation may get worse. Students are already looking to other schools, including those offering lower tuition in adjacent states. Lower tuition revenue can only hurt the smaller universities—and Mooney speculated that Chicago State might actually be forced to close.

Former Gov. Jim Edgar, who now runs a fellowship program at the Institute of Government and Public Affairs, said in an interview that the “community colleges all hurting. Some are looking at cutting adult education, even though this was one of the reasons why they came into existence.”

Edgar, who served as the state’s governor for most of the 1990s, noted another problem: the absence of any guarantee that the reserves universities “have fronted during the first semester will be reimbursed” by legislative action.

Gov. Rauner, Mooney suggested, may be trying to “choke out” some of the smaller pieces of the system. “Maybe he’s thinking along the lines of ‘The Hunger Games’: the weaker players will go by the board, and only the strong will survive.”

Administrative expenses are under a particular microscope, and Mooney’s own institution is at risk, since the IGPA is not housed in the University of Illinois’ academic budget but rather is lumped together with mostly mundane administrative functions. Nonpartisan research aimed at improving the state’s public sector seems an entirely worthy goal, but Mooney says “we have to prove our value every day.”