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* Subscribers were told about this idea earlier today, but it turns out that the Sun-Times also has an editorial on the subject…
The state has been cutting appropriations for higher education for years, but it was not until this year that the state stopped regular payments altogether.
Since July 1, the state has made only sporadic payments on no particular schedule. At Southern Illinois University, for example, the state has paid only 23 percent of the appropriated funds. At campuses throughout Illinois, the state is $735 million behind, and as a result — just as they teach in Accounting 101 — the universities don’t have the money to pay their own bills.
The influx of second-semester tuition money in January is keeping the schools going at the moment, but that will work only until about the end of the month. That’s when the universities hit the falling-off point, the time when all the budget tricks have been played, the furloughs and hiring freezes have been announced, and there still isn’t enough money.
It doesn’t seem likely that the Legislature will suddenly find a way to balance the state’s declining revenues with its mounting pile of overdue bills. So the Legislature should approve a measure now before the Senate to allow public universities to keep going by borrowing against the money appropriated by the state but not yet paid. So far, Southern Illinois, Eastern Illinois, Western Illinois and Illinois State universities have asked for the borrowing power, and others may do so before the bill is acted on.
It’s not an ideal solution. The universities will have to pay interest on the loans, an extra cost they don’t need right now. And there’s a worry that once the universities can get money through loans, the state will divert additional dollars away from them to put out fires elsewhere.
* The Question: Should universities be allowed to borrow money based on unpaid state appropriations to help them get through this rough patch? Explain fully, please.
posted by Rich Miller
Tuesday, Feb 9, 10 @ 10:07 am
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The state should be forced to pick up all finance charges. I think in future, given Illinois’ track record, there is a case to be made for privatizing almost all basic services — the universities, child welfare, Medicaid, transportation and so on — and forcing the state government to operate entirely by contract. Then they can be sued for breach. It is simply not right for them to play politics with services people count upon.
Comment by Angry Chicagoan Tuesday, Feb 9, 10 @ 10:15 am
NO! No more borrowing of money - per past action, the Sun Times is on the money stating that the GA will divert funds -
RAISE MY INCOME TAX NOW
Comment by collar observer Tuesday, Feb 9, 10 @ 10:17 am
Yes. Seems reasonable and helps minimize the short term impact to students and faculty. I’d support it.
Comment by Niles Township Tuesday, Feb 9, 10 @ 10:17 am
Easy with the caps lock, bubba.
Comment by Rich Miller Tuesday, Feb 9, 10 @ 10:17 am
Other units of local government issue tax warrants it all the time. Why shouldn’t the uni’s?
Comment by tubbfan Tuesday, Feb 9, 10 @ 10:20 am
It’s a pretty horrible business practice for starters. It seems dependent on a future increase in an income tax, which is currently questionable at best. What guarantee, if any, are the universities offering the creditors? Are the bonds backed by endowments? Do ISU, Southern, WIU et al have large enough endowments to borrow against?
This reminds me of Tax Anticipation Notes issued by county government in between property tax payments. A lot of interest paid for little gain. It’s a gutless way through this mess, but since there appears to be an alarming lack of political courage afflicting Illinois regarding the need for more revenue, this might be a way to keep the universities afloat for a while.
Not a great solution, but it’ll help us kick the can down the road until we’re past the election. Isn’t that a sad view of Illinois government?
Comment by 47th Ward Tuesday, Feb 9, 10 @ 10:25 am
Yes. How else will they make it through the semester? If students already paid this semester for a semester’s worth of education, there is an obligation for the universities to provide that education. If the universities burn through that money by February, how else can they make it to May without borrowing? It is not ideal, but there probably is no other way.
Comment by Prognosis Negative Tuesday, Feb 9, 10 @ 10:28 am
no, if there’s any possible way to avoid it. have they been pushing their alumni and alumnae? i haven’t seen that in the list, or maybe i’ve just missed it. all the time i get appeals from every school i’ve ever been part of except grade school.
Comment by been there Tuesday, Feb 9, 10 @ 10:29 am
I don’t like this “solution” to the problem at all. Letting universities borrow on appropriations just to get them through this “rough patch” seems like it will only institutionalize the state’s delinquency in paying them the way like borrowing from the pension fund to pay year-to-year expenses has been institutionalized with all of Springfield’s “rough patches.”
I am all for paying higher taxes to more adequately fund our state’s universities, especially our flagship public Ivy, as I think along with funding for transportation the funding of our universities is the best possible expense of taxpayer dollars. But until then, can’t you guys dip into some endowments a little bit instead of borrowing money?
Comment by Hisgirlfriday Tuesday, Feb 9, 10 @ 10:31 am
Yes, we should — for a one year “rough patch”, as Rich calls it.
Legislation akin to the Tax Anticipation Note Act (50 ILCS 420) can be enacted for the state universities. But I’d pointedly sunset such a provision after one year. The borrowing madness must stop.
Comment by Scott Summers Tuesday, Feb 9, 10 @ 10:31 am
How is this situation any different than the credit line borrowing currently being done by social services all across the state? Some of the larger programs in Chicago are hitting over $100,000 per year in interest just to have enough money to cover payroll. There are large numbers of much smaller local agencies who are already gone through reserves and are maxing out their credit lines with their local banks due simply to very late payments. The universities are getting to that same point now. Borrowing money is great as long as it can be paid back in a reasonable time, but interest costs simply adds to the total cost. As some social service agencies are finding out, banks are becoming hesitant to make loans when repayment is questionable. The universities (and probably in a short period the local community colleges and school districts) will face the same issue only on a much larger scale.
Unfortunately all this will be ignored until some larger groups start to crash or some really bad, avoidable situations will hit the papers. In the meantime the politicians jockey for position.
Comment by zatoichi Tuesday, Feb 9, 10 @ 10:31 am
Yes, the Universities must be able to do whatever they need to do to continue to provide the education the students have already paid for. I also agree that the state should pick up the finance charges. The story at Macomb is that WIU has just enough money to make it to March and then they will have to start cutting smaller classes, offer no classes on Friday but extend class times for those classes on Monday and Wednesday,( nevermind that this will be a terrible scheduling issue to students who have other things going on at the times the classes will be extended) and make other cost saving cuts. So the students of the Universities get robbed of the full education they and their parents paid for. Why? Because the inept, childish, self-centered, governor and the GA are more interested in perpetuing their own gravy train than caring what is happening to REAL people all across this state. There are a lot more names I would like to see removed before you even started talking about SLC.
Comment by Irish Tuesday, Feb 9, 10 @ 10:32 am
No….raise taxes, please.
Illinois is a very low tax state, after all.
Comment by Johnny USA Tuesday, Feb 9, 10 @ 10:33 am
When it comes to state services, it would seem that the responsibility to provide adequate cash flow should be borne by the State. The State needs to actually provide the funds, not just to promise to provide them. And if the State needs to borrow to do so, well, there it is. And if the State can’t afford the promised funding levels and won’t borrow, then they must be straightforward with the public and transparently reduce budgeted funding levels.
Maybe State fiscal management is what needs to be outsourced.
Comment by Keep Smiling Tuesday, Feb 9, 10 @ 10:35 am
No. The legislature should have to take tough votes, decide what’s good and what’s not and move on.
Comment by shore Tuesday, Feb 9, 10 @ 10:42 am
This is all a product of the Legislature passing and the Governor signing a budget they all knew was out-of-balance at the time. Every legislator from either party that voted for this budget should be run out of office. This mess is absolutely inexcusable. What the heck do we pay them for anyway?!
Comment by Amuzing Myself Tuesday, Feb 9, 10 @ 10:45 am
Shore, I have never, in my following of politics of about 10 years, seen the legislature take tough votes. The state government is their own personal patronage system that they will ride to its death.
Comment by Heartless Libertarian Tuesday, Feb 9, 10 @ 10:46 am
Sounds like kicking multiple cans down multiple paths versus one can down one road.
Where is the governor and the legislature? Passing a budget to cover half a year didn’t even get us through half the year.
The university students, faculties and staffs need to converge on Springfield with massive protests.
Comment by vole Tuesday, Feb 9, 10 @ 10:46 am
Torn on this one. On one hand a state school (or 5) shutting down would kind of force some laser like focus on the states budget problem. Also if they can do this it is more likely the leg will just let this happen again and again.
Also since this would be a loan based on the U’s getting the money owed by the state (that the state is behind paying on) who would load them this money without charging a high interest rate.
With all of the debt the state has and with the clown show down in Springfield would you buy these bonds?
On the other hand, shutting down state schools is a bad idea….
Comment by OneMan Tuesday, Feb 9, 10 @ 10:49 am
If you were a lender, why would you buy those bonds?
Universities are in this mess because the state won’t pay them. The state can’t be forced to pay them. The deficit problem is only getting worse.
Why would you take these universities up on the offer and rate the bonds any better than slightly above junk?
Comment by John Bambenek Tuesday, Feb 9, 10 @ 10:54 am
Yes. Bridge loans is not a foreign concept.
Comment by David Ormsby Tuesday, Feb 9, 10 @ 10:56 am
No. The universities are not units of Local gov’t. If they were they would have to pass a referendum to sell bonds. Who will pay the bonds back when the state continues to stiff the unis? Should DHS start selling bonds? Should IDOC? IDOT?
It is time to let a few of them close and then see what the GA and the public have to say about the last three decades of legislative malfeasance.
Comment by Bill Tuesday, Feb 9, 10 @ 10:57 am
Should universities be allowed to borrow money based on unpaid state appropriations to help them get through this rough patch? Explain fully, please.
No. The market has changed. State universities are overpriced. Tuition has to drop. Have you ever checked the value of a college degree this year? The Market is shifting.
Take this budget situation and face reality. State universities are going to get less funding. As a result, they will need to start cutting. Had they kept their eyes and ears open, and have listened to the supposed experts on their own staffs, they would have been able to start changing before this recession started shutting Illinois down.
Just how smart are these universities?
If they borrow, they will be unable to pay it back. The Market has permanently changed away from them. If they borrow, we will be stuck with the bills, coming and going. Tuition will continue to go up to support the massive unrealistic university structure, and our taxes will go up at the same time to pay for it.
No. Cut.
Comment by VanillaMan Tuesday, Feb 9, 10 @ 10:57 am
Just one more opportunity for the Governor and GA to placate and put off a real solution to the real problem. These gimmicks have to stop and now.
Comment by Crystal Clear Tuesday, Feb 9, 10 @ 10:58 am
Once money is borrowed in government the “rough patch” never ends and almost always escalates. This “more debt” idea is relly just more short term thinking–postpone the pain–cover up the problem. Taxpayers in Illinois will not like this one bit and the legislature should not vote to allow any such borrowing.
Tax dollars regularly disappear into the ether of the state’s coffers and average citizens have been wondering where it all went. State Universities (and libraries) are places that average people can actually see their dollars go to good use, take pride in, and know that they may receive some personal benefit. To hear that tax dollars are NOT reaching these key institutions as promised, and that they may need to borrow money just to stay open exposes one more disconnect and break of trust between the citizens and the state government. Which bills were paid at the expense of our universities? Who made the decisions? Was it the right trade-off, or was it a political trade-off?
It will be painful but this all needs to hit the fan before the next election. Fewer services, better fiscal accountability, and/or more taxes. Take your pick. But more leverage and more borrowing will not right the ship.
Comment by Responsa Tuesday, Feb 9, 10 @ 11:00 am
this was raised similarly by “47th Ward” earlier this morning. Could state universities borrow against their endowments? Since endowments are big piles of money with no obligations against them, I’d think universities might be able to get favorable interest rates?
If universities are able to get better interest rates than the state, then “Yes” to the question. If not, then “No, the state should borrow more to keep up with its bills” would be my answer.
Comment by Robert Tuesday, Feb 9, 10 @ 11:03 am
===Since endowments are big piles of money with no obligations against them===
That isn’t exactly the case Robert, the endowments typically generate operating revenue from earned interest to pay for things like faculty salaries and student scholarships. The endowments are typically held in investment vehicles and real estate, so it isn’t like there is a bucket of cash there.
And VM, maybe you haven’t noticed, but Illinois economy is based on information. We need more college graduates, not fewer, if we hope to compete economically in the 21st century. First rate public universities are a key element in attracting new businesses and new investment.
Your suggestion to kill the goose that lays the golden egg is bass ackwards.
Comment by 47th Ward Tuesday, Feb 9, 10 @ 11:11 am
Ummm gang before you start spending their endouments or borrowing against them keep in mind outside the U of I these schools do not have huge endouments.
Comment by oneman Tuesday, Feb 9, 10 @ 11:18 am
The schools saw this problem coming last year and have had their budget and bean counters burning the midnight oil to find a resolution to this. However, there simply is not one short of these loans (since revenue has not been raised and does not look to be on the horizon anytime soon). While the interest rates and other financing costs are going to be a burden to the state, the schools and the taxpayers; this option does seem to be the lesser of two evils.
Honestly the impact of shutting down campuses or canceling classes at this point in the semester is not an option. The impact it would have on every single student, especially seniors and grad students will be felt for years to come. And what implications such a move would have with FAFSA, DOE, etc… I know not. But such a move would destroy the schools retention rates, devastate academic credentials and rankings and drive Illinois students to out-of-state schools.
As an alum of U of I and SIU, it really pains me to see our system in such dire straits. It is a sad state of affairs our leaders and officials have put our higher ed system in. We will continue to feel the costs of this time for years to come. In my opinion this fiasco will result in our schools loosing some of our greatest minds and students.
Hopefully voters in this state will refuse to accept subpar leadership and subpar performance. We fire underperforming employees; shouldn’t we do the same to our elected officials?
Comment by Saluki09 Tuesday, Feb 9, 10 @ 11:19 am
Crystal Clear, I could not agree more! And there is no reason why Lou Lang or Barbara Flynn Curie should be sending out “warning” signals that there aren’t enough dem House votes to support Quinn’s tax increase. The dems have a majority, and they need to stop worrying about the repubs and what they may do or say.
Why has quinn “resigned” himself to the fact that he may not get the tax increase in the first quarter? that is the optimal time for him to get it, besides didn’t he and the other dems say that they would do AFTER the primary? I’m not anything hearing from the social service providers, but they need to be on madigan and his house dems and quinn to get it all done in the first quarter and quit bellyaching about republicans.
no stopgap budget for fy11!
Comment by Will County Woman Tuesday, Feb 9, 10 @ 11:30 am
There should be no unsecured borrowing by the State Universities.
Borrowing against endowment funds might be appropriate, provided there is provision made for reducing endowed expenditures (endowed professorial chairs, research grants, scholarships, etc.)to allow for loan repayment.
There are also massive assets held by most state universities that may be able to be used as collateral for low cost loans.
Less face it. The state is going to be a deadbeat for the foreseeable future because of the way it’s driving businesses and high end earners out of the state. Lower income, lower income tax receipts, even with a rate increase that would accelerate the income decline.
Most importantly, we need to seriously re-evaluate the missions of our state universities.
As a graduate of the University of Illinois (Urbans) I was shocked to find that only 21% of the university’s $400 million+ budget was spent on instruction per the most recent budget.
I’ve done consulting for our state university capital programs, and I’ve found that the CDB and many of the downstate campuses are real cesspools of patronage and mismanagement.
I’ve worked with operations managers from the other B10 universities, and they usually ask, “Why do you people in Illinois let them get away with it?”
Tough to answer.
I see a brand new, atrociously expensive Alumni Association building in Urbana,as well as two full floors of prime space at the first two floors of a new building on Wacker Drive, and wonder how the university and association can justify this kind of expense while students have to drop out because they can’t afford the tuition and fees.
The Trustees are just political hacks appointed by the governor, so they have more allegiance to the politicians and patronage than to the students and alumni.
I wish we could use this as an opportunity to clean up the wasteful patronage-driven mess in our state universities, but there’s no way our college bureaucrats will let that happen.
I wish at least ONE leader in this state would have the strength, courage and common sense drive to reform higher ed in this state, but there’s just about as much chance of that as Rich voting for a Republican in the general election!
Comment by PalosParkBob Tuesday, Feb 9, 10 @ 11:30 am
oneman, that’s what I was wondering - I admit I have no clue how big their endowments are relative to their yearly operating costs - do you know? If they are small, then I’d say it is unlikely that they’d get better interest rates than the state.
Comment by Robert Tuesday, Feb 9, 10 @ 11:30 am
No. I agree that cuts need to be made. As a voter, I much rather see public/mental health agencies taken care of.
Comment by Fan of Cap Fax Tuesday, Feb 9, 10 @ 11:30 am
===besides didn’t he and the other dems say that they would do AFTER the primary? ===
After the primary could be next year. Or in 20 years. Just sayin…
Comment by Rich Miller Tuesday, Feb 9, 10 @ 11:35 am
I’m fairly certain one of the conditions of receiving federal stimulus money was that states could not reduce their allocations to higher education. I guess not paying doesn’t count as reducing?
Comment by Duckguy Tuesday, Feb 9, 10 @ 11:35 am
The use of endowment revenues for general operating expenses is not usually possible. A typical endowment’s use is generally restricted to a specific purpose by the donor. there is usually a small percentage of general use endowments, but most are not. Foundations are usually separate entities as well, so borrowing by the university pledging foundation endowments may not be possible.
Comment by SIUPROF Tuesday, Feb 9, 10 @ 11:35 am
SIU wants to Borrow! They just hired an Assistant for something, that pays $400,000 a year. They where talking about laying off staff at the time. Lets cut from the TOP and see how much we can save.
Comment by BOB Tuesday, Feb 9, 10 @ 11:38 am
No — the appeal of this idea is understandable, but history shows this will just result in the legislature pushing off the problem for another day.
Blue ribbon bipartisan commission should make recommendations for cutting programs/raising taxes to provide some political cover, legislature commits to up/down vote, legislature grumpily says they don’t like it but alternative is worse, budget crisis solved.
Next?
Comment by lake county democrat Tuesday, Feb 9, 10 @ 11:39 am
SIUPROF is correct. Foundations are separate entities outside the control of the Administration of the Universities. Further, each donation or contribution to the foundations are generally limited to specific purposes and the use of that money for another purpose would violate the terms of said agreement. The Foundations and “non-general” endowments cannot be raided for operating funds. And even if they could its not a good idea. Anyone that remembers the term “pension raiding” knows why. Additionally, excluding the U of I all other schools endowments are insufficient to bridge the gap many of them have.
Comment by Saluki09 Tuesday, Feb 9, 10 @ 11:44 am
Borrowing money to pay for general operating expenses in a bad idea. Using promised state funding as collateral is risky. I say no borrowing.
Comment by dupage dan Tuesday, Feb 9, 10 @ 11:48 am
I am against borrowing but also against tax increases. The Universities in Illinois depend upon money from the State, much as the public schools depend upon property tax support. Property taxes were capped during my time on the local board of education and we learned to live within our means because we HAD to do so.
The same should be true of the Universities, but to not just pay anything is irresponsible on the part of the State.
Also, does anyone beleive that a lender is likely to fork over money in the form of a loan, with the guarantee of payment based upon a promise that when the State of Illinois pays us, we will repay the loan?
Comment by LisleMike Tuesday, Feb 9, 10 @ 11:51 am
For a list of several Universities you can go here
http://www.nacubo.org/documents/research/NES2008PublicTable-AllInstitutionsByFY08MarketValue.pdf
It shows Southern at 80 million, ISU at about 78 million, Eastern at 47 million. NIU at 31 million (not on the above list see the story here) http://www.dailyherald.com/story/?id=292511
Comment by OneMan Tuesday, Feb 9, 10 @ 11:51 am
A couple points-
Endowments are also regulated in part by the Federal Tax Code. I don’t know, but would seriously question the ability of a university endowment to either loan funds to the institution or to pledge assets as collateral for a bond issue. The same Federal tax constraints would apply to a Foundation. These are issues separate and distinct from the good points made above by SIUPROF in re: restricted gifts and donors’ directions.
As far as issuing short-term debt, I’m not opposed. Most of the major universities are experienced bond issuers with established relationships in the legal, underwriting etc. communities. They issue bonds primarily to fund capital projects paid by student fees; everything from dormitories to fitness centers. I would agree that there should be a sunset date and would further suggest both a university-specific and total issuance cap. I would also leave GOMB completely out of the process, for reasons which may be obvious but are o/t.
Comment by Arthur Andersen Tuesday, Feb 9, 10 @ 11:52 am
No to borrowing - it may be time for massive furloughs. Quinn should call a Special Session(s) to resolve the problem(s). Probably that would be a 2 or 3 year increase in the Income Tax. Quinn must show some leadership Now and the mushrooms and “leaders” some statesmanship. Many of us are growing quite weary of this rudderless ship floundering towards the rocks and ruination. Get to work or resign and make room for some who will answer the call for results!
Comment by A Citizen Tuesday, Feb 9, 10 @ 11:55 am
Yes, borrow this year to get through the immediate crisis, have the State back the loan and pay the interest and then reform the whole system top to bottom over the next two years.
The key is real meaningful reform.
The question is who willing to do any meaningful reform? The Dems don’t seem to have the will to do much of anything other than maintain their majority. As Lincoln once said to McClellan: “If you don’t want to use the army, I should like to borrow it for a short while.”
Comment by Full Sack Tuesday, Feb 9, 10 @ 11:58 am
Speaking as someone who is just about to complete an advanced degree in the Illinois system, I think some observations are in order.
In the job market, the U of I campuses at least are viewed as attractive if a little underrated. But the current crisis is jeopardizing that, judging from what I hear in person, see on blog posts, read in the Chronicle etc. Part of the problem is that the Illinois system doesn’t really have the power that, say, Minnesota or Michigan invests in its university president and board of Regents to effectively flip the bird at the state legislature and do it their own way.
As for institutional competitiveness I get the sense that Illinois is starting to fall behind peers. I’m not in the least bit worried about most leading private universities. Nor about certain state universities with a stronger commitment from their governments. Nor about state universities like Michigan that are to all intents and purposes already private. But state universities that have to play nice with recalcitrant legislatures are in a real bind. Illinois, and I would add the Iowa and Missouri systems as well, are vulnerable right now; struggling to remain competitive for new hires, struggling to remain competitive for new graduate students, sticking undergrads with skyrocketing tuition. If that’s what we want for our state university system, it doesn’t say much for our state. But if you go by the adage that money talks, that indeed is what we want. Higher ed budgets started losing market share within the state budget in the early Edgar years, and now add up to less than half the share of the state budget compared to what they did then.
We’re at a point in higher ed funding now where we need to seriously ask two questions. 1. Do we privatize? 2. Do we do what it takes to maintain world class institutions. Those two questions aren’t necessarily incompatible as the University of Michigan effectively demonstrates, but they do make rather a mockery of the cliches being trotted out by politicians of both parties. If we go the Michigan route, it would be particularly bad to borrow from the Kirk Dillard School of Higher Education Management and run the whole place on adjuncts and slave-wage administrators. The students wouldn’t revolt — they’d just leave. If we go the route of restoring state subsidies, people need to understand just how much things have been cut, and positively demand lower student tuition and more student/customer-friendly administrative and faculty service.
Comment by Angry Chicagoan Tuesday, Feb 9, 10 @ 12:00 pm
Duckguy you are correct. The federal stimulus bill required states to maintain spending levels. I assume that the budget document is good enough for the feds, even though it doesn’t come with the actual dollars.
To the QOTD: Not a good idea, but yes they should be allowed because the alternative is shutting their doors in the middle of the semester. The GA isn’t going to provide the revenue to pay the bills - what else can they do?
This is an emergency wrapped inside of a crisis.
The problem with this is that it will allow Speaker Madigan and the House Dems to say “see, you are meeting payroll - crisis averted”. Which is unfortunate.
Comment by siriusly Tuesday, Feb 9, 10 @ 12:03 pm
A Citizen — the massive furlough route will mean that people don’t graduate and students either have existing job offers rescinded due to failure to meet requirements, or are unable to compete on the job market without diplomas. Once again, it goes back to playing politics with services people depend on.
Comment by Angry Chicagoan Tuesday, Feb 9, 10 @ 12:09 pm
Seems the contractors who continue to build the Saluki Way [or Waste] have no problem getting their checks. Considering the City of Carbondale kicked in 20 million,while our services are being cut,and SIU continues funding the project,while cutting jobs,providing the tools to borrow even more money to squander doesn’t sound reasonable.If any entity needs to borrow,or further borrow,it should be the State Gov’t ,that’s done little to cut programs other than those affecting social services. That would at least keep the fiscal focus on the GA who might seriously review all state disbursements instead of just continuing the “we’ve always done it this way” attitude
Comment by nick Tuesday, Feb 9, 10 @ 12:15 pm
Yes. The same reasoning applies here as with the borrowig the feds are doing to stimulate the economy. During a major economic downturn, short-term measures like borrowing are the best of a number of bad choices, even if we are uncertain of the outcome.
The economy will recover to some extent eventually and tax receipts will rise, including those that can be dedicated to public universities. But the kids who are in school now should not have to pay a disproportionate price in disruption of their educations simply because the country is going through a rough patch economically.
Comment by cassandra Tuesday, Feb 9, 10 @ 12:16 pm
While we’re throwing in all kinds of demos for the new lite gov pick to hit, how about someone who went to a state school.
I wonder if maybe just maybe our beloved universities would be a lot less neglected if at least one stakeholder in the state budget could be someone who wasn’t a product of Loyola, Northwestern or Notre Dame*.
*and cared about more than just Chicago State
Comment by Hisgirlfriday Tuesday, Feb 9, 10 @ 12:26 pm
And VM, maybe you haven’t noticed, but Illinois economy is based on information. We need more college graduates, not fewer, if we hope to compete economically in the 21st century. First rate public universities are a key element in attracting new businesses and new investment.
I don’t disagree with your general premise. But doing it the old fashioned way by shoveling tons of money at state universities is no longer possible. They have to reflect the new realities of the century too.
We would get better universities if government stopped trying to operate universities. Living off the public dole doesn’t make them competative in the market.
If we consider the historic purpose of universities, they have outlived their original purpose. We can better assist college students directly than to spend billions on maintaining these monstrously oversized dinosaurs.
Time to start showing them the future, because it appears that state universities are unable to do so.
Comment by VanillaMan Tuesday, Feb 9, 10 @ 12:43 pm
While some of the solutions are good. How many are going to be reality in a month and a half? That is what has to be asked. Do we really see the GA increasing revenue in the next two months? I doubt it. I don’t think they are even going to talk about it until after the November election.
(I really think that MJM secretly is hoping that the Repubs win in the Fall. Then when the tax increase comes, which it has to, he can blame it on them and have Lisa run in four years on the platform that the Repubs raised taxes.)
So that leaves us with the following reality. Do we allow the Universities to partially shut down, and affect the lives of every child that is in the midst of their career education at these schools? Or do we allow them to borrow? That is the reality. Anything that is not a concrete solution that will happen in the next two months is just speculation.
Comment by Irish Tuesday, Feb 9, 10 @ 12:45 pm
No to more borrowing.
The state does not have the money now, nor is it slated to be there in the future.
We keep dodging the impact of the budget hole with smoke and mirriors borrower.
The time has come to start letting systems collapse. Send all the college kids home; they can call Brady and discuss his no new tax plan. Same for everyone else that is out of money.
So many people do not see a problem, it is time to stop shielding them from the ugly truth. Start letting things collapse and perhaps then the legislature and the public will be mor einclined to fix the problem.
These short term loans with NO MONEY comming in, in the future to pay them are just games and bad ways to go.
The universities money is not oing to come in, its not there in the first place. SO borrowing with a promise to use non-existant funds to pay off the debt is a bad plan.
Comment by Ghost Tuesday, Feb 9, 10 @ 12:49 pm
Thanks VM,
For the record, a quick perusal of the state’s operating support since 2002 will show a steady decline in the amount of funding for higher ed. In other words, we stopped “shoveling” money to ISU, SIU, NIU, U of I, UIC, EIU, WIU etc more than 8 years ago.
As a consequence, these universities are more “private” today than a decade ago. The result? Massive tuition increases (publics raised tuition far higher and faster than privates since 2002 — you could look this up if you’re interested).
Higher tuition = less access and fewer graduates. On the other hand, almost every study of college as an investment says those with a degree will earn far more money during their careers than those without a degree. Since IL is heavily dependent on its income tax, don’t you think that support for public universities pays for itself?
Yes, the “Academy” as it’s known, is pretty archaic in terms of tenure and shared governance and what not, but since the mid-16th century, it is still an idea that works well for society. Until we come up with a better system, Illinois should strive to make its public university system the best it can be. As others have noted, Michigan is leading us on this. That’s a problem for our regional economy.
Comment by 47th Ward Tuesday, Feb 9, 10 @ 12:53 pm
Right now college age kids are planning their classes for the next semester. They have to get their next semester schedules set and approved so they can then begin their FAFSA applications and other plans for their school funding. How do they do that if they do not know what classes are going to be offered because of possible cuts? This has the possibility of setting every student back at least a semester in their studies. So what do they do? Go out and get a job until this is solved? I don’t think so, not in this economy. Waste a semester’s tuition taking filler classes? Who can afford to do that? This is a problem that can’t wait.
Comment by Irish Tuesday, Feb 9, 10 @ 12:54 pm
This slow excruciatingly painful financial death the state is going through must stop one way or the other. Borrowing just prolongs the agony. Let the Guv and GA resolve the mess or let the programs go broke and cease to exist. Just put the mess out of its misery finally. Enough is enough - the charade must end.
Comment by A Citizen Tuesday, Feb 9, 10 @ 12:57 pm
“Should universities be allowed to borrow money based on unpaid state appropriations to help them get through this rough patch?”
That question presumes that this is a short-term problem with a clear solution in the future. That isn’t the case. This isn’t a rough patch, it is a symptom of a structural deficit that won’t go away by borrowing more money.
It is this short-term fix mentality that has gotten us into this budget mess. The more we push hard decisions off into the future, the more pain we will go through when we finally have no choice but to address them.
To me, this issue illustrates Quinn’s inability to lead. Instead of telling these agencies to learn to live with less, he keeps promising money that he doesn’t have. He needs to be honest with them and tell them what they can reasonably expect based on current revenues. That way they can start making the difficult choices necessary to live within their means. If that causes a drastic reduction in services, he may actually get some support for his tax increases.
Comment by Pelon Tuesday, Feb 9, 10 @ 1:01 pm
Yes. You build a budget based upon expected revenues, and the universities built theirs upon the priomise of state funds. If the state cannot make good on its promise, it should give universities the means by which they can make payroll and continue to provide services.
Next year, however, the state needs to be more realistic with its promised funding for higher education, and the universities need to build their budgets (and make cuts) based upon those numbers.
Comment by Fan of the Game Tuesday, Feb 9, 10 @ 1:03 pm
This pernicious pattern of borrowing is similar to the permissive parenting of an out of control child. It is way past time for a stern No and a realistic approach to governing. I believe the perceptual threshold has been crossed and the really dreadful financial reality is apparent to most citizens. No to borrowing and yes to real serious governing - not by the few “Tops” but by all of our elected officials.
Comment by A Citizen Tuesday, Feb 9, 10 @ 1:18 pm
Borrowing to get yourself out of debt NEVER works. The waste and inefficencies in high education is amazing- I speak first hand. They do not need to cut classes- the operating costs are not about keeping the lights on- they need to move to larger classes, alternative delivery methods and re evaluate salaries for services provided. Every small business has had to become more efficient and utilize their resources better. Why shouldn’t public instituions- govt and schools. The state is rapidly running towards bankruptcy and spending today , tomorrow’s dollar will merely speed that desent.
Comment by Inish Tuesday, Feb 9, 10 @ 1:19 pm
Yes, short term (
Comment by Louis Howe Tuesday, Feb 9, 10 @ 1:22 pm
- Louis Howe -
…Yes, short term ( … - Sorta like the Pension Obligations, huh? Government can no longer be trusted with the responsibilities that go along with borrowing - For education, pensions, gov’t operations etc.
Comment by A Citizen Tuesday, Feb 9, 10 @ 1:27 pm
As a consequence, these universities are more “private” today than a decade ago. The result? Massive tuition increases…
That’s hilarious! You think that tuition increases are due to our cutbacks? That may be their excuse, but they chose to raise tuition instead of making the cutbacks within these institutions. Their inability to see into the future they claim they educate the masses to fit into, show their political acumen, not their hold on reality.
Comment by VanillaMan Tuesday, Feb 9, 10 @ 2:03 pm
Why should universities be any different from all of the small business and nonprofits that do business with the state and need to borrow because the state is months behind reimbursing them. My question is how can we the people of Illinois force our elected officials to do their job NOW and not wait until after the November elections?
Comment by Red Bird fan Tuesday, Feb 9, 10 @ 2:18 pm
==Why should universities be any different from all of the small business and nonprofits that do business with the state . . .==
Because public universities are in fact state agencies, albeit privileged ones in terms of governance, as another poster above noted, if public universities can borrow, so should other state agencies be able to on their own.
Comment by Captain Flume Tuesday, Feb 9, 10 @ 2:25 pm
Every business in America uses lines of credit to keep their doors open and their employees paid. The U of I has the statutory authority to borrow hundreds of millions of dollars to build buildings but not to pay their employees? Give me a break. This is a tool that each university needs to deal with this crisis. Besides, borrowing is the American way!
Comment by Illini Nation Tuesday, Feb 9, 10 @ 2:54 pm
Excellent observation, FS. Love that Lincoln analogy.
Comment by Amuzing Myself Tuesday, Feb 9, 10 @ 3:24 pm
Cash flow borrowing usually makes sense, as long as it is well thought out. The problem is, cash flow isn’t really the problem, it’s just a very apparent symptom. And somehow we’ve deluded ourselves into thinking that as long as we can keep finding and affording band-aids we can just ignore the fact that our arms and legs are falling off and we are hemorrhaging right and left.
There are some things we probably should at least look at doing with higher education. I’m not willing to bring them up right now because of how unpleasant they would be, but maybe you all can guess.
Comment by steve schnorf Tuesday, Feb 9, 10 @ 4:02 pm
Sure, for Illinois schools now, whatever. My son was admitted to U of I Engineering and at Purdue (with enough of a merit scholarship to make it close to U of I). Man, am I glad he’s at Purdue.
Don’t CCD’s have any pride in anything, even their most prestigious public university? SLC was their perfect candidate.
Comment by Park Tuesday, Feb 9, 10 @ 7:04 pm