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August 13, 2002


SPRINGFIELD - An iffy state fiscal environment and heavy demands on projected new revenues combine to create a difficult budget outlook as the Illinois Board of Higher Education (IBHE) begins preparing a fiscal 2004 higher education spending plan. That's the conclusion of a report Board members will review at a meeting next week in Springfield.

The Board also will act on a resolution to launch a major study of college affordability in Illinois, its first in-depth examination of the cost of going to college since 1994. The Board will meet at 9 a.m., Tuesday, August 20, at the Lincoln Land Community College Capital City Center, 130 West Mason Avenue in Springfield.

"Higher education will face enormous challenges during these trying economic times," Daniel J. LaVista, Executive Director of the Board, said. "We at the Board of Higher Education and within the higher education community will strive to be creative in focusing on those needs and endeavors that will enable us to make progress on key state goals even in a difficult financial climate."

The preliminary report on fiscal 2004 budget issues notes that general funds appropriations for fiscal 2003 were $147.1 million, or 5.5 percent, less than appropriations for FY02, the result of a $1.6 billion shortfall in state revenues. General funds appropriations totaled $2.5 billion for this fiscal year. Statutory requirements for funding pensions continues to take a big bite out of dollars available for other purposes: When allocations to the State Universities Retirement System (SURS) are considered, FY03 funding for higher education operations and grants is down $167.9 million, or nearly 7 percent, from fiscal 2002.

This year's appropriations, when adjusted for inflation, are just $32 million higher than fiscal 1990, when the temporary income tax was approved. In inflation-adjusted dollars, state funding of public universities has fallen $171 million - nearly 11 percent - since FY1990. Support for community colleges in FY03 is slightly above 1990 levels when funding for adult education, which was added to the community college portfolio in 2002, is considered. Without the adult ed money, the state's 48 community colleges also are below 1990 funding levels this year, down by $24.5 million, or 7 percent.

The report notes that there will be numerous demands on what limited new dollars will be available through revenue growth in FY04:

  • Retirement. Annual returns on investments have declined two straight years and SURS ratio of assets to liabilities dropped to 61.4 percent in FY02 from 72.1 percent in FY01. Mandated pension funding for FY04 could be as high as $65 million.

  • Monetary Award Program (MAP). Funding of the state's need-based student scholarship program dropped $38 million, or 10.3 percent, in FY03, resulting in elimination of grants to 12,000 of Illinois' neediest students. Approximately 7,000 students face loss of their MAP grant in their fifth year of eligibility, just as they approach the end of their undergrad studies. No funds are available to cover increases in tuition and fees, raise the maximum award, or accommodate increases in the number of eligible students. No student will receive an award that fully covers this year's tuition and fees. Meanwhile, students and their families will face increases in tuition and fees averaging 12 percent at public universities, 6.6 percent at community colleges, and 5.5 percent at independent colleges and universities.

  • Faculty Salaries. Progress in making Illinois faculty salaries more competitive with peers nationwide was sidetracked by this year's budget cuts. The salary initiative, in which increased state support was supplemented with internal university reallocations, won support of the Governor and General Assembly in fiscal years 2000-2002, and is expected to show FY02 gains in salary competitiveness when a new report on faculty compensation is completed later this year.

  • Policy Initiatives. Several Illinois Board of Higher Education programs and endeavors aimed at meeting important state goals - including access and diversity, student persistence and degree completion, non-tenure-track faculty, college readiness - were put on hold this fiscal year. Although some progress was made in addressing teacher quality and supply issues, more attention is needed.

  • Adult Education. Community colleges, local school districts, and community-based organizations offer adult education services to 110,000 students annually. The state increased funding of these services by $9 million when the community college system took responsibility for the program in FY01. The FY03 appropriation of $34.2 million eliminated nearly half the new dollars invested in adult ed in FY02.

  • Illinois Mathematics and Science Academy (IMSA). The academy, which educates many of the state's top students and provides instructional models for math and science teachers throughout Illinois, experienced budget cuts of $3.1 million, or 18.6 percent this year.

  • Restoring Eliminated Programs. Funding was zeroed out for the Arthur F. Quern Information Technology Scholarship, initiated in 2001 to help alleviate the severe shortage of IT professionals in Illinois. Nearly 1,200 students received grants last year to assist them in pursuing IT degrees. In addition, funds for two key programs under the Higher Education Cooperation Act grants and several community college grant programs, including one serving students with special physical or learning needs, were eliminated this fiscal year.

The Board will review the budget report as its staff begins considering funding requests from colleges and universities and state education agencies for fiscal 2004.

At their meeting next week, Board members also will decide whether to commence a new study of college affordability. A report presented to the Board in June noted that undergraduate tuition and fee rates have outpaced inflation in all higher education sectors in Illinois between 1992 and 2002. In addition, the report stated that more Illinois undergrads have loans than ever before, and the average loan burden also has exceeded inflation.

A report on the Board's August 20 agenda presents updated information reflecting fiscal 2003 tuition and state budget decisions, and concludes there is a growing "affordability gap" for lower income students that threatens "to diminish both the breadth of access to, and choice among, higher education opportunities for all Illinois students."

The recommended study would research three broad components of affordability: 1) demand for higher education services (student access, choice, and success); 2) the cost of providing services and the price charged to students; and 3) management decisions and external demands that influence the cost of a college degree, including such forces as government regulations and accrediting body requirements.

The staff recommendation urges creation of a Board Committee on Affordability, co-chaired by members of the IBHE and the Illinois Student Assistance Commission. The committee would present its initial findings and preliminary recommendations in June 2003.

Board members also will be briefed on a study of faculty diversity, the product of an executive order issued by Governor George Ryan requesting IBHE and the higher education community to examine ways that campus faculty can be made more diverse.

A major study of access and diversity last year concluded that the college experience is educationally enriched by a diverse student body, defined broadly to include students of various cultures, racial and ethnic groups, gender diversity, and students with disabilities. The faculty diversity study will examine state grant programs aimed at increasing the number of minorities who undertake graduate study. It also will explore the existing pools of available minority faculty and how those pools can be enlarged; campus hiring processes and faculty retention efforts; and how diversity-friendly the campus climate is at colleges and universities.


Don Sevener



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