* Bloomberg…
Chicago State University, a 5,200-student institution founded in 1867, is considering drawing up a financial exigency plan, equivalent to college bankruptcy, as soon as next month, according to Tom Wogan, a spokesman. The move would be a first step to keep the school afloat as it hemorrhages cash to cover the loss of state funds. All options are on the table to get through the current semester, including missing payments on $12 million of outstanding tax-exempt bonds, he said.
The school, with a 70 percent black student body, would become the most visible casualty of the stalemate between Republican Governor Bruce Rauner, a former private-equity executive, and legislative Democrats, with leaders from Chicago, over a spending plan for the year that began July 1. While other public universities can draw on endowments or raise funds from alumni as the impasse persists, that’s not the case at Chicago State, whose students count on federal and state grants. […]
Chicago State is among colleges nationwide that are grappling with limits on their ability to raise tuition as the pool of graduating high-school seniors shrinks and students balk at taking costly loans. About two-thirds of its students are from Chicago or the surrounding area. It ranks highest among Illinois colleges in awarding bachelor’s degrees to black students in the physical sciences and health professions, according to its website. About 70 percent of attendees relied on financial aid in 2013. […]
To stay open, the university board would have to declare fiscal exigency next month so it has more flexibility to adjust contracts and potentially bond payments, Wogan said. Louisiana State University contemplated such a step because of proposed budget cuts in 2015, which led it to scrap a municipal-bond deal because of a buyers’ revolt.
“If we can’t make payroll and we can’t do a number of other things, everything about the university’s functions are at risk,” Wogan said. “The biggest short-term concern right now is operation funds to get through the semester and get through the fiscal year.”
*** UPDATE *** From the twitters…
- wordslinger - Thursday, Jan 21, 16 @ 9:54 am:
“Bankruptcy” is the word of the week.
I’m sure Gov. Peter Francis Geraci is pleased. It was his area of expertise in the private sector.
- Anon221 - Thursday, Jan 21, 16 @ 9:58 am:
All part of the “shakedown” plan-
“The move would be a first step to keep the school afloat as it hemorrhages cash to cover the loss of state funds.” Emphasis- LOSS OF STATE FUNDS
*****
Criticize CSU all you may want, but this was a totally unnecessary extra hurdle to place in the path of post secondary student education. Rauner knew ( a little late in the realization though) that with holding K-12 would have brought him a great deal of pain and no gain. Post-secondary… much less painful for him.
- CSU Facts - Thursday, Jan 21, 16 @ 10:01 am:
The administration of Chicago State University frequently plays the historically black college/university card to justify its need for continued support to maintain its existence. This reasoning overlooks the fact that the university, which has been reorganized and renamed many times since 1867, began as a normal school (a teachers’ college) and its student body did not become majority black until about 1980.
The CSU Faculty Voice blog has a lengthy post today about how stakeholders have been trying to sound the alarm about corruption and mismanagement for the past decade or so (the worst episodes have occurred during the past six years) and how Springfield routinely ignored the pleas for reform until now.
It is well worth reading the CSU Faculty Voice today: http://csufacultyvoice.blogspot.com/
- lake county democrat - Thursday, Jan 21, 16 @ 10:02 am:
If you put the students first, then the first question to ask is this:
Are CHicago Public Schools better off shedding hundreds of millions of dollars in debt due to toxic swaps and generous teacher salaries/benefits (including raises given during the Great Recession) or not?
There’s a good case to be made for “not” but it has little to do with Rauner. CPS’ management is abysmal. Karen Lewis’ record of stifling reforms that have real promise - even merely experimenting with them - is just as abysmal.
Again (and again and again): CPU is 1.1 BILLION dollars in debt. Bankruptcy provides a possible way to get some of that money back and put it to work for the students, not the toxic swap partners and not the teachers. It’s the latter that’s complicated because of the risk that too much would be demanded from teachers (I think CTU needs some pushback, but not draconian pushback). There are other negatives too, but this should be debated, not snarked.
- lake county democrat - Thursday, Jan 21, 16 @ 10:03 am:
Meanwhile, I know it’s Kaas, but I think this is where Rauner is going to get some leverage on the budget:
http://www.chicagotribune.com/news/columnists/kass/ct-suburban-bailout-cps-kass-met-0121-20160120-column.html
- Downstate - Thursday, Jan 21, 16 @ 10:07 am:
At the end of the day, a 5% tax rate still doesn’t fix this or most of the state’s financial problems.
Our fiscal issues run much much deeper than that.
- Anon - Thursday, Jan 21, 16 @ 10:08 am:
If the College of Du Page can be pressured to revisit and void its sweetheart termination package with its former college president, shouldn’t Chicago State University to the same with its former president (Watson)? In light of the controversies associated with this individual why does he deserve any severance perks?
- wordslinger - Thursday, Jan 21, 16 @ 10:09 am:
LCD, do you ever address the subject of the thread?
It would require reading it, of course.
What is CPU, by the way?
- Triple fat - Thursday, Jan 21, 16 @ 10:13 am:
I wonder what Private Equity firm will purchase this distressed property? Maybe they could turn into a Charter School campus to make some real money off of the Federal and State Government.
- lake county democrat - Thursday, Jan 21, 16 @ 10:14 am:
Wordslinger:
In my best Rosanne Rosannadana….
I had the “Lawsuit may be filed” window open, call came in, cut/pasted into wrong window. Sincere apologies to you, Rich and anyone else for making people read in wrong thread, get that confused pain in their head. (I type the response in text file because I’ve had issues where the screen invisibly refreshes and what I type in the box remains, so when I press the Say It! button it doesn’t post).
Going forward I’ll do better.
- Anonymous - Thursday, Jan 21, 16 @ 10:16 am:
I am curious as to where Bloomberg gets its enrollment numbers. Did Chicago State suddenly register another 1,500 student since the Rauner press release was issued? A few days ago, CSU had fewer students for the current semester and numerous class cancellations.
- Vote Quimby! - Thursday, Jan 21, 16 @ 10:22 am:
The first domino begins to waggle…
- Anonymous - Thursday, Jan 21, 16 @ 10:28 am:
Thank you both, governor and speaker, for your stubborn refusal to compromise amid your personal squabbles.
- GraduatedCollegeStudent - Thursday, Jan 21, 16 @ 10:36 am:
===Again (and again and again): CPU is 1.1 BILLION dollars in debt. Bankruptcy provides a possible way to get some of that money back and put it to work for the students, not the toxic swap partners and not the teachers. ===
But it won’t be put to work for the students and the sooner the bankruptcy crowd comes clean about where it will actually go (the wallets of charter school operators or other political cronies) the better.
- Jack Stephens - Thursday, Jan 21, 16 @ 10:37 am:
@csu facts:
Ah the ole conservative “play the race card” game.
I heard Sara Paylin’s speech the other day endorsing Don, speaking of White Victimhood. Its terrible!
How DO the Whites survive in this world?
- NixonHead - Thursday, Jan 21, 16 @ 10:44 am:
CSU is at Baa1 bond rating now. Skip a few bond payments and you’re only a few ratings away from “junk bond” status. Skipping the payments will only add to their costs in the long run - they’re almost guaranteeing a financial death spiral.
- Anonymous - Thursday, Jan 21, 16 @ 10:49 am:
Skipping a few bond payments is a rating of C
- NixonHead - Thursday, Jan 21, 16 @ 11:00 am:
@Anonymous - I wouldn’t expect them to skip down that many grades right away. Even if they are lucky to get Ba1 they’d still be considered “sub-prime” by any bond trader.
It’d be interesting to see what the bondholders do when they don’t get the payments.
- crazybleedingheart - Thursday, Jan 21, 16 @ 11:08 am:
==I’m sure Gov. Peter Francis Geraci is pleased.==
Wordslinger — brilliant.
Wonder if Rauner bought the infotapes.gov site
- 360 Degree TurnAround - Thursday, Jan 21, 16 @ 11:10 am:
Maybe grass bowl can fire off another memo attacking black students at CSU. That was helpful.
- Rahm's Parking Meter - Thursday, Jan 21, 16 @ 11:19 am:
Taking hyperbolic statements out of it,
Could the Governor try to force CSU to merge with another school (NIU, Governor’s State) to stay open?
- @MisterJayEm - Thursday, Jan 21, 16 @ 11:19 am:
“throwing money down the toilet”
I’m not saying it’s a dog-whistle — I’m just wondering how a dog-whistle would sound any different.
– MrJM
- Anonymous - Thursday, Jan 21, 16 @ 11:20 am:
If Rauner is the Peter Francis Geraci of governor, then Mike Madigan is the Wimpy (from Popeye) of speakers.
“I’ll gladly pay you tomorrow for a hamburger today”.
Geraci and Wimpy. Only in Illinois would that be a way to run your state.
- wordslinger - Thursday, Jan 21, 16 @ 11:26 am:
–Rick Pearson @rap30
Rauner says Chi State U “throwing money down the toilet” and failing their students. CSU says it may not make future payroll.–
Stirring orator, the governor.
Curiously, in his budget proposal last February, Gov. Rauner recommended throwing more than $27 million down the toilet at CSU.
- Formerly Known As... - Thursday, Jan 21, 16 @ 11:58 am:
==At the end of the day, a 5% tax rate still doesn’t fix this or most of the state’s financial problems.==
Winner, winner chicken dinner. +1
- Formerly Known As... - Thursday, Jan 21, 16 @ 12:09 pm:
@lake county democrat - To err is human.
Most of us understand that, and are very patient with such obvious potential errors by quality commenters such as yourself.
I would bet you noticed your error even before you had your nose rubbed in it.
- VanillaMan - Thursday, Jan 21, 16 @ 12:13 pm:
We’re out of salve, so here - here is a little Morton Salt to run into that wound!
Triage - we’ve determined that we cannot save you, so GOOD LUCK.
Don’t expect governing from this governor!
- ArchPundit - Thursday, Jan 21, 16 @ 12:16 pm:
I’d be all for making CSU a part of another university or other sort of reform to make it more accountable. However, to do that, you have to govern first.
- Anonymous - Thursday, Jan 21, 16 @ 12:23 pm:
Since CSU is top heavy in administrators as compared to other state universities, should layoff notices be issued? The payroll seems to be bloated with friends of the former president.