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Budgetary war-gaming leads to panic

Monday, Nov 24, 2014

* This story is setting off alarm bells across the state bureaucracy

The state’s higher education czar issued a dire budget warning to the presidents of Illinois’ public universities Friday, telling them to be prepared for cuts in state funding of up to 30 percent over the next 18 months.

In an email to the presidents, Illinois Board of Higher Education Executive Director James Applegate said he was issuing the “bad budget news” after meeting with Gov.-elect Bruce Rauner’s budget transition team.

The newly elected Republican businessman takes over for Gov. Pat Quinn 12 days after the 2011 temporary tax increase rolls back from its current 5 percent to 3.75 percent, blasting an estimated $2 billion hole in the state’s current fiscal year budget and dropping revenues in the fiscal year 2016 budget beginning on July 1 by an estimated $4 billion.

“They have asked us to prepare a budget recommendation for FY 16 involving a 20 percent reduction. We may also be asked to create spending reserves of 5 percent or 10 percent out of our existing budget for the remainder of FY15,” Applegate noted in the email obtained by the Lee Enterprises Springfield bureau.

* From Mike Schrimpf on the transition team…

While Governor Quinn signed and is implementing the current, unbalanced budget, Governor-elect Rauner is taking seriously his duty to responsibly manage the broken budget he will inherit and is also beginning preparations for next fiscal year.

The budget that Governor-elect Rauner will ultimately present will not incorporate all of the suggestions he will receive from Agency CFO’s, which is why the transition team is asking for this information to begin developing a range of options, but it is already clear that major structural changes must occur to save Illinois. Our state’s fiscal house is in disrepair and years of patching over the problems have only made things worse. The time is coming for a new foundation.

If you parse that through, it seems apparent that the Rauner folks are just going through their due diligence, gathering info and doing some budgetary war games to see what would happen with various levels of revenue, etc.

In other words, they’re trying to find out exactly where universities (and agencies) are right now and what exactly will happen when the tax hike rolls back, both in this fiscal year and the next. They can then use those numbers to justify higher revenues and/or cuts to other areas. But what they’re finding out is university execs are a highly entitled bunch, especially since Rauner promised to increase their funding during the campaign.

- Posted by Rich Miller        

  1. - Oswego Willy - Monday, Nov 24, 14 @ 10:01 am:

    “But …but… you promised MORE money, Mr. Rauner…”

  2. - anon - Monday, Nov 24, 14 @ 10:06 am:

    Increasing spending for higher ed would become Rauner’s first pledge to be discarded, but surely not the last. This was so predictable before the election when his conflicting promises on taxes and spending did not come within a country mile of adding up.

  3. - Rich Miller - Monday, Nov 24, 14 @ 10:08 am:

    anon, pay attention, please.

  4. - The Captain - Monday, Nov 24, 14 @ 10:24 am:

    I see that they are still running against Pat Quinn.

    You can’t blame the “unbalanced budget” on Quinn, it’s dishonest. He campaigned on extending the income tax increase. It probably cost him the election but his plan was candid and not unbalanced. Rauner campaigned on lowering income taxes and wanted to deal with this budget problem without it. He got what he asked for, he can’t shift the blame to Quinn here.

  5. - Yellow Dog Democrat - Monday, Nov 24, 14 @ 10:33 am:

    === But what they’re finding out is university execs are a highly entitled bunch, especially since Rauner promised to increase their funding during the campaign. ===

    University alumni of the major donor type aren’t exactly salt of the earth either, Rich.

  6. - Wordslinger - Monday, Nov 24, 14 @ 10:38 am:

    The tax increase that all the wise guys said was never going to roll back is rolling back, as per the law.There’s no sure thing that there will be any other revenues to replace it.

  7. - anon - Monday, Nov 24, 14 @ 10:38 am:

    I meant to say that Rauner is apparently poised to discard his pledge to boost higher ed funding. Sorry for the ambiguity.

  8. - walker - Monday, Nov 24, 14 @ 10:45 am:

    Well, that’s probably a standard stake in the ground, communicated to all departments, to start the budgeting planning. They are smarter than to go with some arbitrary across-the-board cuts to avoid more responsible trade-offs.

    Leave it up to the Univ leaders to start the whining.

  9. - Sir Reel - Monday, Nov 24, 14 @ 10:47 am:

    Budgetary War Games is a good description. Since government moves slowly, agencies, universities, etc. need to prepare now for lower revenues. They’ll have half a fiscal year to absorb the cuts. Even with some new revenue I can’t see the last half of FY 15 going well.

  10. - Michelle Flaherty - Monday, Nov 24, 14 @ 10:48 am:

    And so begins “Operation Skyfall” …

  11. - Bourbonrich - Monday, Nov 24, 14 @ 10:50 am:

    Cutting higher education is a form of a cost shift. It will likely result in huge tuition and fee increases. Universities do not have a fall back position of raising property taxes. They are at the mercy of the State.

  12. - Arizona Bob - Monday, Nov 24, 14 @ 10:52 am:

    Having attended, taught and worked on capital programs for Illinois public and community colleges and universities, I can tell you that they’re perhaps the most overstaffed, poorly run and patronage driven state institutions out there.

    We’ve seen what a dishonest and extravagant bunch the leadership of COD is, but I assure you from my experience with other community colleges that they’re just as bad.

    The ridiculous capital work they do at U of I (CU and Chicago)is horrendous. The amount lost on “teaching” hospitals could really use a trimming, as well as many of the useless internally funded grants for “research”. IMO, resources need to be shifted to instruction, which is not very good at Illinois public universities, and limits need to be put on spending on “emeritus” faculty for the politically connected. A serious audit for how universities could most cost effectively meet their core functions would be helpful, but it’s unlikely the fat bureaucracy will ever seriously examine its abuses. Maybe cutting their state funding and letting them work it out is the best way…..

  13. - walker - Monday, Nov 24, 14 @ 11:04 am:

    Maybe the Senate staff on the Rauner budget team can share the alternative budget plan that some key Republican Senators have been claiming to have, but holding secret for three years now.

    Seriously, though, it is good that some folks with skills and experience are working the problem.

  14. - A guy... - Monday, Nov 24, 14 @ 11:05 am:

    He’s doing what Quinn should have done. He’s painting a picture of what this budget will look like when the certainty of the roll back occurs. If there is a need for more revenue (and there is), he’s going to have to make a good faith case as to how much and where. This is the first step.

    And to re-enforce my friend Walk here; many agencies are going through similar calculations and machinations now, but leave it to this group to be the “whine first, do some due diligence later” crowd. No one feels sorry for them compared to others, so the “whine first” strategy is underway. A tree in the forest just fell…

  15. - Demoralized - Monday, Nov 24, 14 @ 11:09 am:

    ==He’s doing what Quinn should have done.==

    Quinn did that. Remember the “Not Recommended” budget @A guy? And remember how he got castigated for “fear mongering?”

    I suspect people will once again be up in arms and say that the cuts that will be presented by agencies (which will be significant and painful) are nothing but fear mongering. Reality stinks sometimes. And the reality of the state budget and what will have to be done to fix it stinks.

  16. - steve schnorf - Monday, Nov 24, 14 @ 11:11 am:

    Actually, I think the Senate Republicans released a pretty thoughtful plan

  17. - VanillaMan - Monday, Nov 24, 14 @ 11:20 am:

    The moment Rauner was nominated was the start of a Democratic panic around Illinois. Quinn’s campaign ran on it. CapFax has been filled with idealists thinking Rauner was one stereotype or another. What reelected Blagojevich and gave Quinn his 2010 victory was over the acute possibility that a Republican governor would blow up the gravy train running on bonds, loans and IOUs.

    No one is really surprised over our situations, and most of us know that the way things are can’t continue. It’s just that we don’t want the gravy train derailed until we got to our own destinations.

    So Rauner is causing panic among people expecting our train to fly off the tracks. Especially universities. They live in a bubble world of dreams and want to remain untouched by realities. Our professor class knows that the private world couldn’t or wouldn’t keep funding their expensive, and failing colleges without accountability and change.

    Naturally with a new governor the status quo panics. They need to be told by Rauner that the shaking up he will do is organized and orderly. I don’t believe Rauner will suddenly forget how things work in Illinois. Rauner doesn’t want to screw up anything either.

  18. - Norseman - Monday, Nov 24, 14 @ 11:23 am:

    Right now it’s an exercise. This isn’t the first time agencies have been asked to prepare budgets like this. The agencies then throw in the most sacred cows to prevent the cuts from being accepted.

  19. - Wordslinger - Monday, Nov 24, 14 @ 11:24 am:

    Quinn presented a budget plan with the rollback. It’s in big, big books.

    Without new revenues, the rest of the fiscal likely will look just like it.

  20. - Demoralized - Monday, Nov 24, 14 @ 11:25 am:

    ==The agencies then throw in the most sacred cows to prevent the cuts from being accepted.==

    When you are talking numbers like 20% or 30% “sacred cows” are going to be part of the discussion. You don’t cut that amount of money without doing so.

  21. - walker - Monday, Nov 24, 14 @ 11:25 am:

    Steve Schnorf: Then I stand corrected on a Senate GOP budget plan.

    Sorry, was that in the past two years? I recall some general statements, but missed a summary piece.

    Maybe it provides a good start for Rauner.

  22. - Wordslinger - Monday, Nov 24, 14 @ 11:39 am:

    VMan, you didn’t have a good college experience, did you, lol?

    You have noticed the shifting over the years in higher ed funding from tax revenues to tuition, I’m sure.

    As far as “gravy trains” ending, without new revenues, it might be a good idea for anyone dependening on a state paycheck to keep their head down and nose to the grindstone.

    Watch out for The Two Bobs come next year.

  23. - Bill White - Monday, Nov 24, 14 @ 11:45 am:

    Can we expect even more foreign students at Illinois public universities?

    Students who pay the full rack rate without discounts financial aid.

  24. - Oswego Willy - Monday, Nov 24, 14 @ 11:53 am:

    ===Watch out for The Two Bobs come next year.===

    lol, - VanillaMan - will say he’ll be whatever Rauner wants him to be, “just read my comments, I change like the wind”

  25. - SkeptiCal - Monday, Nov 24, 14 @ 12:08 pm:

    I think this kind of reaction will keep playing out as people fear the worst from the new administration. There may indeed be some drastic action that will come next year, but “the sky is falling” reactions will not help with the planning. I hope everyone calms down a bit.

  26. - Arizona Bob - Monday, Nov 24, 14 @ 12:20 pm:

    @Bill White

    =Can we expect even more foreign students at Illinois public universities?=

    Only in schools of engineering, business, science and math, Bill. The Chinese aren’t coming here to ponder the philosophy of Nietsche or the poetry of Emily Dickenson. They’re coming here to acquire knowledge that will make their nations compete better against the US and Illinois, then take it with them. They’re taking the places of Illinois students whose education in those areas would’ve generated tremendous returns on our education dollars, if not in Illinois then certainly in the US.

    The greater good of Illinois and its citzens hasn’t been a priority at our public universities for quite a while now, Bill. Getting money to support the bloated unversity community is.

    Can you remember the last time the U of I bureaucracy made a sacrifice for the good of the state of its people through tuition reduction,spending smarter instead of spending bigger, or instructional quality improvement?

    I’m an alum, and if you can remember that ever happening, you have a better memory than do I.

  27. - crazybleedingheart - Monday, Nov 24, 14 @ 12:31 pm:

    == Our professor class knows that the private world couldn’t or wouldn’t keep funding their expensive, and failing colleges without accountability and change.==

    Anyone who has ever seriously looked at higher ed’s very real problems agrees that “the professor class” ain’t one.

    Your Republican Party, ladies and gentlemen.

    Science-free, fact-free, egghead-kicking policy brought to you by the Ebola-Hypist, Climate-Change-Denying, Professor-Class-Warmongering GOP of yesterday, tomorrow.

    It’s like taking that wayback machine to the pre-9/11 GWB presidency. Salmonella in school lunchmeat? We don’t need to test for that. Maybe if we hadn’t taken prayer out of the schools, kids would say grace before eating lunch…

  28. - A guy... - Monday, Nov 24, 14 @ 12:50 pm:

    ===Demoralized - Monday, Nov 24, 14 @ 11:09 am:

    ==He’s doing what Quinn should have done.==

    Quinn did that. Remember the “Not Recommended” budget @A guy? And remember how he got castigated for “fear mongering?”====

    Demo, fair enough argument. I’d peddle to you that he sold the idea completely wrong- railing on 1 out of every 6 teachers, taxing garbage collection, blah, blah, etc.

    It was his fault-laden budget he was poo-poohing. He played to the lowest common denominator (which is usually correct thinking in election campaigns). This time there was a heightened awareness and Pat made an elementary argument. It didn’t work and they never figured out that people felt they were being talked down to. No shift in strategy and poof, no one really remembers him making an intelligent argument.

    The other guy simply stated he was going to get experts working on it. He was more trustworthy on this issue. Now he’s doing it. Pat could have. He just didn’t.

  29. - Yellow Dog Democrat - Monday, Nov 24, 14 @ 12:50 pm:

    The Senate Republicans have a budget plan?

    I distinctly remember Radogno endorsing the Rauner blueprint, I don’t recall much else.

    Schnorf, if you have a link to the Senate GOP plan, that would be great.

  30. - Michelle Flaherty - Monday, Nov 24, 14 @ 1:02 pm:

  31. - Wordslinger - Monday, Nov 24, 14 @ 1:10 pm:

    Guy, what are you talking about? Seriously, I don’t understand what you’re saying. It’s just a bunch of buzz with no relationship to anything.

    Quinn presented a rollback budget alternative to the GA. They decided not to take a tough vote before the election, and passed a screwed up budget that Quinn signed.

    There was no campaigning on the budget, at all.

  32. - Illini Guy - Monday, Nov 24, 14 @ 1:33 pm:


  33. - Formerly Known As... - Monday, Nov 24, 14 @ 1:37 pm:

    Sounds like prudent planning for all possible scenarios.

  34. - walker - Monday, Nov 24, 14 @ 1:42 pm:

    Michelle Flaherty: Thanks so much for the link. I am doubly corrected.

  35. - Formerly Known As... - Monday, Nov 24, 14 @ 1:46 pm:

    == It’s just a bunch of buzz with no relationship to anything. ==

    Is that anything like the drooling, profanity-laced comments that were slobbered on multiple threads under your name between about 4-6 pm last Thursday? Was that actually you or someone else posting under your name, wordslinger? Hopefully it was the latter.

  36. - Filmmaker Professor - Monday, Nov 24, 14 @ 2:12 pm:

    Rich, you couldn’t be more right on than when you wrote “university execs are a highly entitled bunch.” I’m not sure there is a more entitled bunch. But keep in mind, that university execs are NOT professors.
    Also, someone commented about emeritus professors. They generally don’t get paid anything; it is mostly an honorary title.

  37. - anon - Monday, Nov 24, 14 @ 2:53 pm:

    == He (Rauner) was more trustworthy on this issue (the budget). ==

    We’ll find out soon enough.

  38. - Demoralized - Monday, Nov 24, 14 @ 2:57 pm:

    ==He was more trustworthy on this issue.==

    I don’t agree with that statement. I didn’t have any real basis to trust Rauner on the budget. He didn’t say much about it and when he did he showed a complete lack of understanding. I’m pleased by the fact that he has turned to Tim Nuding to be involved with the transition as it relates to the budget. At least Rauner will have somebody with immense knowledge of the budget advising him and his senior advisors. Rauner surprised me on that front. I’ll give him that. Hopefully he’ll continue.

  39. - HistProf - Monday, Nov 24, 14 @ 3:05 pm:

    Many of you who assume that liberal arts professors are the problem would be surprised by a number of things.

    First and foremost, you would be surprised by how little we make. If any faculty are overpaid in American academia, it has to be the business faculty. If the Wall Street Journal’s study on Texas A & M can be generalized, and I believe it can, then liberal arts professors are the one’s keeping the lights on. (The state does not pay for state universities.) In this tuition-driven system, the business faculty live on the welfare provided by the liberal arts faculty while the business students are subsidized by all of the other students. That’s right: the tuition paid by a literature major subsidizes the frat-brat marketing majors. Strange but true. Business faculty start at around 120K just under three times what a liberal arts faculty member starts at.

    Interested readers should also be aware that the state of Illinois now covers just 17% of the operating budget of, for instance, Illinois State University. We no longer even have public universities. In point of fact, they are all private. Nevertheless, state funding cuts, even from that meager 17% could result in devastating tuition hikes. And yes, Chinese students may be the students who can afford to pay. That is a result NOT of pampered and overstuffed university faculty and staff. It is a result of the “business oriented” desire never to pay taxes to support public institutions of any kind. You don’t get what you refuse to pay for.

    As for Chinese students needing the economically oriented training, I beg to differ. They can get that at home. What they come here for is to perfect their language and cultural abilities, which includes learning to be creative as well as to communicate in the language of world business and science, American English. Again, it will be the liberal arts faculty who make it rain, NOT the “business” faculty.

    I know this cuts against the grain of some serious anti-intellectual biases out there in American culture, but these are the realities we face. So face up to it. If you will not pay taxes, you will have to compete with Chinese students whose parents can afford our tuition! And if you find an open university, find a liberal arts professor and thank her!

  40. - anon - Monday, Nov 24, 14 @ 3:11 pm:

    The state is only picking up 17% of the public university cost today. The state proportion was far higher decades ago when some of the those who want to cut funding even more went to public universities.

  41. - Madison - Monday, Nov 24, 14 @ 3:19 pm:

    As LBJ would say”somebody’s ox is gonna be gored here”
    Plenty of sacred cows.All over Illinois government. Little has been cut thus far by the Quinn people. We will get to see the who the really skilled ranchers are in the legislature pretty soon.

  42. - Arthur Andersen - Monday, Nov 24, 14 @ 4:07 pm:

    HistProf, thanks for your comment. Most of the commenters here understand that 1) higher ed funding isn’t the primary driver of the State budget deficit and 2) Arizona Bob is a knucklehead who probably didn’t make the Bronze Tablet.

  43. - VanillaMan - Monday, Nov 24, 14 @ 4:35 pm:

    Crazybleedingheart, you sound panicked and believe insulting non existent stereotypes is the answer.

    It isn’t. Universities are important, just like other vital state functions. They will need to prioritize and cut funding unscientific programs and move on. We can’t have everything. There will be cuts. I won’t make any recommendations.

    I am not your stereotype. Everyone here is a balanced individual with a heart. Please go beyond some shallow argument which dehumanizes anyone.

    And wordslinger, you are often wrong, and today is no exception.

  44. - A guy... - Monday, Nov 24, 14 @ 5:35 pm:

    Demo, I know “you” don’t agree that Rauner was more credible on the Budget. The voters were. In large numbers. Enough to win. He said he’d get experts and you agree that Nuding is an expert. He’s won you over on at least that. That’s progress my friend.

    Help out Slinger would you? Apparently he’s in a Barber shop with a clipper gone bad. Get him some hot lather. He’s arguing with your point with me by proxy.

  45. - Wordslinger - Monday, Nov 24, 14 @ 5:45 pm:

    A Guy, the campaign was about the budget? When did you make that up?

    Rauner’’s few budget statements were roundly ridiculed from anyone who can count past 10 without taking off their shoes. The host here called them lies. I’m sure you wear loafers for quick calculations.

    And it’s not about “experts,” it’s about choices. The revenues and claims on them are there for all to see.

    What is your expectations of “experts?” A way to raise spending and cut revenues at the same time? Because those were the promises.

  46. - ZC - Monday, Nov 24, 14 @ 6:05 pm:

    Rauner’s budget campaign pledges, at their worst, were a mishmash of gobbledygook and blatant self contradictions.

    Still, he’s far from the last politician to run on that platform. Even some of the greats ran fundamentally dishonest campaigns. Didn’t stop them from governing when they got elected.

    I didn’t vote for Rauner because of it , but now that he’s here for a while, I’ll agree with the spirit of Rich’s initial remarks and let’s just wait and see what he actually winds up proposing.

  47. - walker - Monday, Nov 24, 14 @ 6:47 pm:

    A guy: For you to say that Rauner was “found more credible on the budget” “by the voters” is laughable. As many have pointed out, including Jim Edgar today, Rauner won partly by avoiding talking specifics about the budget.

    Does one get more credibility with voters by not talking about something?

    Rauner won with this tactic. No need to pretend otherwise. He won, time to move forward out of campaign mode.

  48. - Demoralized - Monday, Nov 24, 14 @ 8:10 pm:

    @A guy

    I’m not sure I’d agree that the voters found him more credible on the budget. I think they found that he was not Pat Quinn and that was enough for them. I don’t think a lot of voters drilled too much farther down than that to make their decision.

    And, by the way, a lot of those “experts” Rauner will be relying on already work for the state. They are those CFOs that Rauner’s crew met with. He’d be wise to use them (which I’m sure he will).

  49. - Former Merit Comp Slave - Monday, Nov 24, 14 @ 11:01 pm:

    I worked with budgets in one state agency and one university for almost 30 years. I always remember whenever there was a new governor or new director we were instructed to prepare budget plans with X% reductions. Said possible reductions were announced with resulting ramifications, then the public and the unions went nuts. I will say while most of the time it was all just an exercise, in the last 5 to 10 years cuts started becoming very real. I can see this “dire budget” scenario as a means to extend tax hike or raise it in the future

  50. - steve schnorf - Tuesday, Nov 25, 14 @ 1:29 am:

    dog, it was about three years ago, had some puffery in it but also had some good ideas. I don’t have a link

  51. - steve schnorf - Tuesday, Nov 25, 14 @ 1:42 am:

    Hey, dog, i was wrong. I found it.

    I remember at the time thinking there were maybe $2.5-3B in real achievable savings in the plan.

  52. - crazybleedingheart - Tuesday, Nov 25, 14 @ 10:17 am:

    ==I am not your stereotype. Everyone here is a balanced individual with a heart. Please go beyond some shallow argument which dehumanizes anyone.==

    I’m sure your mama’s proud of you and your friends think you’re a stand-up guy.

    Feeling any better now?

    People who rail on about “the professor class” divorced from a single actual fact about higher ed, or any humility at all over the fact that there will soon BE no “professor class”…yet costs will continue to rise, due to the For-Profit Model Bureaucrat Class running higher ed, swapping academic temps in and out like cogs, modeling their business after the kind of for-profit diploma mill borderline-scam institutions GTCR invested in…?

    Well, anyway, the people who murmur bitterly about that professor class don’t get to cry TOO hard about stereotypes.

Sorry, comments for this post are now closed.

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