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4 of 6 Stories

Behind the Eight Ball
Illinois resorts to budgetary sleight-of-hand and one-time fixes to maintain higher education funding

By Susan C. Thomson


Urbana-Champaign, Illinois

THE ILLINOIS GENERAL Assembly ran overtime in 2009, as usual, against an unusual political and economic background. The regular session began in January with the impeachment and removal from office of Governor Rod Blagojevich, arrested on federal charges that he tried to sell President Barack Obama’s vacant U.S. Senate seat. With that task completed, legislators got down to wrangling over the state’s yawning budget deficit, variously estimated at $9 billion to $13 billion and dwarfed only by the fiscal shortfalls in California and New York.

 
Sharon K. Hahs, president of Northeastern Illinois University in Chicago, was relieved that the state kept university funding at the same level as last year
When the legislative dust cleared in July after a special session, however, Illinois public higher education appeared none the worse off for the state’s sorry finances and the bleakest U.S. economy in decades. For operations in the fiscal year that began July 1, the state’s 12 public universities were allotted the same $1.4 billion as in 2008, and its 48 community colleges were budgeted for a 0.7 percent boost—to a total of $358.2 million.

Yet it would take more than a one-year breather from a streak of annual state cuts to allay college and university leaders’ lingering sense of falling ever farther behind the financial eight ball. Moreover, they found more to fear than cheer in a sleight-of-hand budget that relied on one-time fixes and threatened to push the state—and, along with it, its public universities and community colleges—into an even deeper fiscal hole next year.

W. Randall Kangas, assistant vice president for planning and budgeting at the University of Illinois, saw no immediate relief in sight from his school’s “huge financial pressures.” He summed them up: rising utility costs, escalating salary demands of top faculty and, symbolized by his water-stained office ceiling, “hundreds of millions” in deferred campus maintenance.

At Northeastern Illinois University in Chicago (which is, by virtue of an enrollment that is more than a quarter Latino, the state’s only federally designated Hispanic-Serving Institution), President Sharon K. Hahs said she was briefly relieved that the state kept university funding at the same level as last year. But, she added, “Level funding is never a good deal if you want to move forward and do things.” So much, then, for the university’s plans to catch up on technology and deferred maintenance, build its core of tenure-track faculty, and possibly erect its first residence hall.

What’s more, as Hahs and other higher education leaders were quick to note, the funding was not as level as it first seemed. For one thing, the legislature failed to provide any money for state veterans’ grants. The program offers free tuition and fees for four undergraduate or graduate years at any Illinois public university or community college to any Illinois veteran choosing that state benefit over those of the new federal GI Bill. Even without state money for it, the entitlement remained, creating an unfunded mandate for the colleges and universities to pay from their own coffers.

Northeastern has prepared to spend up to $900,000 to make good on the grants; the University of Illinois will provide as much as $10 million for its three campuses, depending on demand, which can not be predicted. “We don’t know exactly how this will pan out,” said Kangas.

Nothing, however, created more financial uncertainty and more alarm for more Illinois colleges and universities—and, more importantly, for tens of thousands of Illinois college students as well—than the legislature’s decision to slash $220 million from the year’s budget for the Illinois Student Assistance Commission (ISAC).

Though $220 million is a drop in the state’s budget bucket, it represented a 50 percent cut to ISAC—most of it money that would have gone to the commission’s signature Monetary Award Program (MAP) grants for the state’s lowest-income college students.

Every year ISAC gives out about 90 percent of its state appropriation in these grants, made on a sliding scale that considers a student’s financial need and tuition cost. The awards are available to Illinois resident undergraduates for tuition and fees at any Illinois college or university—two- or four-year, public or private. In 2008, for instance, the money went to students at about 150 schools—including all 12 of Illinois’ public universities, all 48 of its community colleges, almost all of its 96 private colleges and universities, and a handful of proprietary schools.

 
W. Randall Kangas, assistant vice president for planning and budgeting at the University of Illinois, sees no immediate relief in sight from his school’s “huge financial pressures.”
 
For students depending on the grants, the timing of ISAC’s budget cut was doubly devastating. First, it came in a brutal recession year that swamped the agency with a record number of aid applications, prompting it to suspend approvals in mid-May, ten weeks earlier than previously. Second, the ax fell after ISAC had notified successful applicants of their MAP awards for academic year 2009-10, all based on the assumption that state funding would continue as usual.

Reduced to half rations, ISAC cut this year’s grantees’ awards in half by canceling their second-semester payments—the only action that was possible at the time, according to Andrew Davis, the commission’s executive director. This action meant that, come January 2010, for the first time in the commission’s 32-year history, their cupboard would be bare. And about 138,000 approved recipients would have to make up for the cash they had been banking on to see them through the year.

Miguel Loeza, a junior and the vice president of student government at North-eastern, said he and many other recipients there panicked when they got the MAP news. “The first thing that came to my mind was not going to school in the spring,” he said. True, he could apply for a loan, but that would be a “last recourse” for him, he said.

Having once declared bankruptcy, Elena Herrera feared she wouldn’t qualify for loans. She hoped to stretch her fall MAP money through the spring, when she expects to graduate with an associate’s degree in health sciences at Moraine Valley Community College in Palos Hills.

For 12 years, she had been working toward that degree, fitting classes around full-time jobs such as packing and shipping appliance parts in a warehouse and, at home, looking after her ailing parents who are now in their 80s. Without her grant, the future she’d planned—a bachelor’s degree from the University of Illinois at Chicago, a career as a surgical nurse, a chance to “make a difference in the lives of others”—suddenly seemed “very uncertain.”

Danielle Sterczek, a freshman at the University of Illinois at Urbana-Champaign, had qualified for the maximum annual MAP grant of $4,968 and hadn’t planned to work during her first college year. “But now I’m going to have to,” she lamented.

Officials were quick to tally the potential costs to the universities and colleges in lost students and tuition revenue.

John Peters, president of Northern Illinois University and “convener” of an informal group of his public-university peers, envisioned MAP students statewide registering but not being able to pay their bills, applying for loans but being denied, and about a third of them dropping out never to return.

Kangas calculated that on University of Illinois’ three campuses together—Urbana-Champaign, Chicago and Springfield—spring semester MAP grants would have added up to somewhere between $25 million and $30 million, money that students would not be getting, money the university could not easily afford to make up to them.

With 73,000 students on those three campuses, the University of Illinois is by far the state’s largest university. As such, it had not just more money but more students at risk of losing MAP aid (roughly 13,000 of its total of 50,000 undergraduates).

The threat also hit home hard at DePaul University, with 25,000 students on two main campuses and four small satellites in the Chicago area. The state’s largest private university or college, DePaul had more MAP grants and dollars at stake than any other, with one-third of its 14,000 undergraduates in line for second-semester awards totaling an estimated $10 million.

 
The Illinois Student Assistance Commission cut this year’s grantees’ awards in half. Andrew Davis, the commission’s executive director, says it was the only action that was possible at the time.
 
Those numbers are a function not just of the university’s size but also of what Rev. Dennis Holtschneider, president, proudly says is its high proportion of low-income, first-generation and underrepresented-minority students, the kinds his Vincentian order had most in mind when founding DePaul in 1898.

“We have always had our focus on people at the edge of society who need our help to move forward,” Holtschneider said, adding that MAP grants are critical to the university’s ability to continue its mission of keeping college affordable and accessible for the neediest students.

ISAC left the task of notifying MAP awardees about their endangered grants to the colleges and universities, many of which waited to do so until the state’s budget deal was sealed in July, and all hope for reprieve seemed lost.

This timing of the notices meant that, as first semester got under way, the MAP news had not begun to register, let alone sink in, with most of the potentially affected students. Nonetheless, financial aid offices around the state were swamped with students pleading other, more immediate financial needs. Susan Swisher, director of student financial services at Chicago’s Saint Xavier University, and president of the Illinois Association of Student Financial Aid Administrators, said her group’s members were reporting up to double the usual number of students at their doors. “We’re dealing with so many families where parents have lost their jobs,” she said.

Declining to let the MAP matter rest, higher education leaders were focusing by mid-September on the General Assembly’s autumn veto session, scheduled for two three-day periods in October. Here, they hoped, was a last chance to pressure the legislature into restoring the second-semester grant money. In preparation, they began meeting with politicians and speaking out publicly. Peters said the MAP cut made him “angrier and more alarmed” than anything in his ten years as president of Northern Illinois.

An organized offensive began, with ISAC spreading the word, especially among students, who responded by holding rallies, distributing flyers, circulating petitions, and writing letters to legislators and newspaper editors decrying the cut.

In an online website and a series of special hearings around the state, ISAC collected testimony from hard-pressed MAP recipients. Financially struggling single parents, children of single or unemployed parents, students maxed out on loans, students already working more than one job in order to afford college, students who said their grants were all that stood between them and having to quit school were among the hundreds weighing in.

The campaign enlisted a key ally in Governor Pat Quinn, the former lieutenant governor who automatically succeeded the disgraced Blagojevich. Quinn held pro-MAP town halls at several campuses. No opposition surfaced.

Amidst a blizzard of news headlines and favorable editorials, the MAP quest reached its pitch in Springfield on October 15, the veto session’s second day. As hundreds of students rallied near the capitol, the House and the Senate overwhelmingly voted Quinn the authority to spend the $205 million needed to make the current year’s grants whole. The senator who cast the single negative vote complained to the Chicago Tribune that Quinn could have avoided the uproar altogether by tapping funds at his disposal all along. Senator Ed Maloney, chairman of the Senate Higher Education Committee, agreed that Quinn could have gone ahead “without all that fanfare,” but that “for some reason he wanted approval from the General As-sembly.”

On October 18, the governor signed the MAP measure into law, saying he would borrow the millions from surpluses in other state accounts. In the run-up to the veto session, legislators had sparred over how best to offset the additional MAP cost, Democrats favoring a dollar-a-pack cigarette tax, Republicans proposing a special income and sales tax amnesty. The session ended without the subject of a funding source ever coming up.

 
Ed Maloney, chairman of the Illinois State Senate’s higher education committee, says that authorizing the governor to spend $205 million to sustain the Monetary Award Program grants “was a band-aid, there’s no question about it.”
 
“This was a band-aid, there’s no question about it,” Maloney commented. “Now we have to find a sustainable source of income for funding MAP.” Without one, Holtschneider saw the program as remaining in a “precarious place,” vulnerable to possible efforts to restrict it by tightening eligibility requirements.

Davis, on the other hand, sensed that the fuss had left lawmakers “strongly inclined” to support MAP in the future. “The General Assembly, right to left, top to bottom, Republican and Democrat, Senate and House, each and every one of them support this program, and it’s been very clear that the voters do too,” he said.

The fall’s down-to-the-wire exercise was a first for what surveys of the annual National Association of State Student Grant and Aid Programs have consistently shown to be one of the nation’s largest state-funded, need-based college grant programs. Even since 2002, when the General Assembly began trimming outlays to community colleges and state universities, it pretty much held the line on ISAC, enabling the agency to make as many as 150,000 MAP grants a year but not to increase the amount.

The maximum MAP grant was $4,968 that year—as always, about enough to cover tuition at the University of Illinois. It has stayed there ever since, while rising college costs and a floundering economy have combined to create a tide of more and more students needing more and more money, evidenced by the after-deadline but eligible MAP applications ISAC gets but can’t afford to fund. In 2009, the agency was on track to collect about 130,000 of these, twice as many as in any previous year.

Due to the year’s unusually early cutoff, these unfunded applicants are expected to include a more than usually disproportionate number of community college students, a group that tends to lose out on MAP grants anyway, because they enroll later than other students. To remedy what Davis terms “one of the strategic weaknesses” of the program, ISAC is considering changing application deadlines for community college students and issuing revenue bonds to raise grant money just for them.

The bonds would be paid back out of taxes the state would collect on the recipients’ future, presumably rising, incomes. “The hypothesis is, there’s a positive rate of return on education,” Davis said. Assuming the General Assembly’s approval, the plan could go into effect in 2010, and it could later be expanded beyond community college students, he said.

The MAP flap was both a symptom of, and momentary diversion from, the larger, longer-running fiscal woes plaguing Illinois and, by extension, its public higher education system. As state expenses have outrun revenue year after year, that system has become an increasingly discretionary state budget item, resulting in a 17.2 percent drop in state support since 2002, according to the Illinois Board of Higher Education.

Students have borne the brunt in tuition levels that have been growing at rates exceeding inflation, even by double-digit percentages in some cases. Inflation-free times proved no antidote to tuition increases, as only six community colleges stood pat on tuition and fees together for this year, but the other 42 raised them, from 2.3 to 12.2 percent. In tuition alone, the public universities imposed increases of between 2.6 percent and 11.4 percent for full-time, state-resident undergraduates.

Under the state’s novel “Truth in Tuition” law, in effect since 2004, the universities’ new rates apply each year only to entering students, and are locked in for them for their next four years. Except for those who have overstayed certain time limits, continuing students, like Northeastern’s Miguel Loeza, this year pay whatever rates they were guaranteed when they started out.

Higher tuitions and hard economic times notwithstanding, the students have kept coming, this year in record-setting numbers. When heads were counted in early October, the state’s 12 universities together had 204,469 graduate and undergraduate students on their rolls, a one-year increase of 1.4 percent and their highest combined total ever.

With a bumper crop of students, the state’s community colleges set even more enrollment milestones. Their fall count spiked 6.4 percent compared with last year, to a total of 280,025 students, more than in 27 years. Not only were more students attending, they were taking heavier course loads. So that gain in raw numbers translated into a 9.5 percent increase to a sum of 223,353 full-time equivalents, more than in any year in records dating back to 1965.

While 19 of the 48 colleges enrolled at least ten percent more individual students compared with the prior year, 25 posted double-digit growth in full-time equivalents. By either measure, the increases ranged up to around 30 percent.

John S. Erwin, president of two-year Illinois Central College in East Peoria, and of the Illinois Council of Community College Presidents, believes the poor economy and “the spiraling costs of university education” are creating a trend that will last “into the near future,” possibly forcing some community colleges to cap their enrollments for lack of space.

Lake Land College, a community college in the central Illinois town of Mattoon, was fortunate in having added 51,000 square feet of classrooms just in time for 7,945 students, or 4,853 in full-time equivalents, enrollment bulges of 11.8 and 12.6 percent, respectively, compared to last year. “We’ve been trending slightly upward for the last several years, but we’ve never seen anything like this, from a percent standpoint or a sheer numbers standpoint, in the history of the college,” President Scott Lensink said.

 
John Peters, president of Northern Illinois University, says that Illinois public higher education could “fall off a cliff.”
 
To cope, the college enlarged class sizes, hired more part-time faculty, increased the workloads of full-time faculty, and spent an estimated $500,000 to add 6,000 volumes to the collection of textbooks it rents to students.

Lensink attributed the enrollment swell to workers displaced by layoffs and plant closings, new high school graduates with no good job options, and the college’s low tuition and fees of $2,500 a year. Given their cost advantage, he said, the future bodes well for Lake Land and all of the state’s community colleges “from an enrollment standpoint.”

From a financial standpoint, the future does not bode well for Illinois public higher education. One reason is that, in order to keep funding up to seeming par with last year, the General Assembly this year used up all $94 million in federal higher education stimulus money the state had coming. That’s $94 million that won’t be available for the universities and community colleges next year.

What’s more, the General Assembly balanced this year’s budget, in part, by delaying payments and, as was the case with the second-semester MAP funds, borrowing money that will eventually have to be repaid. But repaid with what? A monthly index of the Illinois economy, calculated by J. Fred Giertz, a professor of economics at the University of Illinois, hit its lowest point since the 1980s in the fall, as state revenue continued to lag. He faulted the “state government” for years of “lack of discipline” in its failure to either cut spending or raise taxes.

Some cast the disgraced governor as spendthrift in chief, mostly responsible for the mess. “You have to lay the blame on Blagojevich, who didn’t face up to it over a series of years,” Peters said. “There were issues that were systemic in the budget that needed to be dealt with, and they weren’t dealt with.”

Maloney echoed that sentiment, terming the state’s financial situation “disastrous,” and attributing it to “a combination of the (Blagojevich) administration overspending, the economy, all kinds of things.”

Quinn came into office presenting himself as the fiscally responsible anti-Blago-jevich and, for a remedy, advocated an increase in the state’s relatively low, flat personal income tax rate of three percent. The Senate during the regular session approved a hike to five percent, but the House balked. Quinn, now running for a full term as governor, has pledged to press the matter again next session.

“Everybody knows that they have to raise the income tax,” said Holtschneider. He was hopeful that after filing closed in November for next year’s statewide elections, legislators with obviously safe seats would be disposed to vote favorably.

Maloney, skeptical that the General Assembly has “an appetite for a tax increase,” said the state needs what he euphemistically described as “new revenue.”

David Tretter, president of the Federation of Independent Illinois Colleges and Universities, spoke in the same terms. “We do think it’s important that the state find some new revenue, in part for need-based student aid, which we think is a main driver for our whole system (of higher education), public and private.”

Peters predicted Illinois public higher education could “fall off a cliff, unless the state finds a way to enhance its revenue and decides that higher education is a priority.”

Maloney doubted that, after ignoring it for several years, lawmakers would have a drastic change of heart toward higher education. “I think their attitude is that the colleges and universities can always raise tuition,” he said.

Judy Erwin, executive director of the Illinois Board of Higher Education, cautioned against dwelling solely on money, pointing out that in the 1990s, when Illinois and other states had it, their college graduation and retention rates did not go up. “Money is really important, but it isn’t the only determinant in the success of a higher education system in a state,” she said.


Susan C. Thomson is a former higher education reporter for the St. Louis Post-Dispatch.

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National CrossTalk December 2009

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