Illinois lawmakers have agreed to funnel $600 million into the state’s public colleges and universities to keep them afloat through the summer, but after 10 months of starving the schools of money, it may be too late to reverse some of the damage.
Universities in Illinois have not seen any money from the state for nearly a year as the Democratic-controlled general assembly and Republican Gov. Bruce Rauner locked horns over the state budget. The governor conditioned passage of the $36 billion budget on changes in collective bargaining rights for public employees and worker compensation to revive the state’s slumping economy, business-friendly moves that lawmakers refused to back. The impasse resulted in rounds of layoffs and credit downgrades, and threatened to shutter at least one school.
After several unsuccessful attempts to restore some funding to the universities, the general assembly approved a stopgap spending bill at the end of last week that the governor signed into law Monday.
“This legislation doesn’t solve our budget crisis or help our economy grow, but it does represent a first step toward compromise between Democrats and Republicans,” Rauner said in a statement Monday. “Now is the time to build on this bipartisan momentum and focus on enacting a truly balanced budget.”
The measure provides $356 million to the universities, $74 million to community colleges and $170 million for Monetary Award Program grants, a state scholarship for needy students. The money set aside for the schools is about 70 percent less than the funding Democrats tried to secure in the budget last year.
Still, James Applegate, executive director of the Illinois Board of Higher Education, said the allocation provides “much needed relief” for universities and community colleges as well as low-income students.
“We hope it is a harbinger of additional constructive conversations that will result in the passage of the overdue fiscal year 2016 budget and anticipated fiscal year 2017 state budget,” Applegate said, in an email. “That will be necessary to ensure the continued success of our students and the stability of our institutions.”
The budget stalemate has had the most significant impact on regional universities in Illinois. More than 500 employees at Western Illinois University are facing mandatory furloughs or reductions in pay, while 110 members of the staff have been laid off. Eastern Illinois University has laid off nearly 200 civil service employees and imposed up to 24 furlough days on faculty and staff through the end of June. The school’s finance are so precarious that Moody’s Investors Service downgraded its credit rating to below investment grade in February, signaling to investors that the revenue bonds issued on Eastern’s behalf are a credit risk.
Analysts at the credit ratings agency also lowered the ratings of Northeastern Illinois University and Northern Illinois University to just above junk status two months ago. Moody’s has held a negative outlook on all eight Illinois universities it rates since the fall because of their diminishing cash flow. The passage of the stopgap measure has had no impact on the outlook for any of the schools.
“Institutions are left with incredible unpredictability,” said Jennifer Delaney, an associate professor of higher education at the University of Illinois at Urbana-Champaign. “There is no end in sight [for the budget stalemate], and there is no sense of when institutions will receive funding or what those funding levels will be.”
Of all of the Illinois schools, Chicago State University appeared most at risk of closing. The historically black university sent layoff notices to all faculty, staff and administrators in February, a month after declaring a state of financial emergency to make it easier to fire tenured faculty and eliminate academic programs. Nearly a third of CSU’s funding, roughly $36 million a year, comes from the state. Lawmakers set aside $20 million in the stopgap bill to fund the university, but school officials say it is not enough.
“The amount provided is insufficient in solving the broader crisis the budget impasse has created,” school officials said, in a statement. “Limited allocation by the sate will still require CSU to make difficult cost-cutting decisions moving forward, including additional workforce reductions.”
In some ways, that is exactly what Rauner wanted. The governor has called on state universities to cut administrative costs and curtail their spending on goods and services. Still, there is no certainty that the steps universities have taken to weather the budget impasse are sustainable, Delaney said.
“These are knee-jerk reactions to try to keep the doors open while they are waiting for an indefinite end to something nobody predicted,” she said. “The cuts have really been low-hanging fruit, as oppose to some sort of strategic vision of doing things in a different way that might be more cost effective.”
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