1. Illinois Board
of Higher Education

2. IBHE Budget Context Panel Discussion Kevin Schoeben,
IBHE Deputy Director,
Fiscal Affairs and Budgeting
Panel Discussion
Moderator:
Dr. James Applegate,
IBHE Executive Director
June 21, 2016
Illinois State University

3. Higher Education Fiscal Notables
Incremental budgeting and fiscal planning impacts
Pension payments and HE operations
Cost shift pressures, state funding and tuition
Goal: 60 x 2025, required growth off-pace
MAP challenges
Capital projects and planning impacts
Call for “Foundation level” of funding
Dr. Applegate wanted me to provide a brief review, which may be helpful to some of the newer members who weren’t here in Dec when IBHE developed our Board recommendations. While our attention is obviously focused on the current budget impasse, it is important to identify some budget factors leading up to this time.
-Since 2000, incremental budgeting has severely hampered both short-term and long- term fiscal planning and management
-Pension ramp up payments have drawn away available state funding for all of HE operations. Of the $1.6 billion of FY 16 pension payments to SURS, only $432 million, or 26% is for current normal costs.
-Diminishing state funding with loss of $1.1 billion in lost purchasing power (inflation adjusted) since 2000 contributed to increased reliance on local revenue sources at public universities and colleges. We saw the shift of state funding give way to tuition revenues for the first time in Fy 09.
-Illinois’ goal of 60 x 2025 is threatened: 2014 was the first time Illinois dropped below the projected degree growth trend line needed
-MAP helps less of percentage of students with less support for college costs
-Lack of state capital program adversely impacts recruitment of students/faculty, facility and program management, and college affordability
- All of this lead to our recommendation for Foundation Level of Funding – Stop the slide and bring state funding to stable level. For both 2- year and 4-year institutions.

4. Higher Education Fiscal Notables
Return on Investment (ROI) for public universities and colleges
$10 billion direct spending
112,000 jobs
$28 billion total economic activity
461,000 enrolled students
-Higher education provides $10 billion in direct spending at state, regional, and local levels, employing 112,000 and providing an estimated $28 billion in total economic activity
-Public 2-year and 4-year public institutions currently educate 461,000 enrolled students

5. FY 2016 Budget Fiscal and Budgetary Planning Uncertainty = Reality
Successful planning virtually impossible
Strategic approaches should guide planning
Operational Impacts includes: Layoffs, furloughs, program reductions, vendor payment delays, basics O&M delays, etc.
Unfortunately, not just for HE, but for all of state gov’t, Uncertainty is the reality in which we live in, operate in.
- Widely varying funding proposals made successful fiscal planning and management virtually impossible
-Continued uncertainty forces “worst case” rather than strategic approaches to reductions and its impact to long-term stability. President Glassman testified that the actions made go beyond measures of efficiency.
Strategic approaches should guide short-term and long-term planning. Forced immediate decisions are being made without a solid planning objectives and goals.
-Layoffs, furloughs, program reductions, vendor payment delays, basics O&M delays, etc.

6. FY 2016 Budget Institutional Concerns
Academic program stability, growth, quality & accreditation
Student and faculty recruitment & retention, long-term implications
Financial stability demonstration to credit rating and accrediting agencies
- Academic stability of programs, growth that allows for new tech and advances, quality and accreditation concerns
-Student and faculty flight concerns, long-term implications
-Lowered credit ratings due to lower liquidity and unexpected loss of state support
-Accrediting agency’s (HLC) unprecedented fiscal watch of all Illinois higher education institutions

7. FY 2016 Budget Appropriation/ Budget Status
$600 million enacted ~ Public universities (31%) with CSU (60%), community colleges (27%) and MAP awards (50%)
$601.5 million “stop-gap” (GOMB) for all higher education operations, public universities and colleges, capitol reappropriations but no additional MAP dollars. FY16 funding “bridges” into FY 17, allows for prior year costs
-$600 million enacted in April provides one-third operational funding for 8 of 9 university systems with CSU receiving 60%, 27% community colleges, and $170 million or 50 % of the need that is just for MAP awards for the FY 2015 fall semester
-Govs office on Management and Budget Proposed $601.5 million “stop-gap” FY 16 and “bridge” funding into FY17 for all higher education operations, but no additional MAP dollars.
- Under this proposal, three institutions (EIU,WIU & CSU) who faced significant financial hardships with numerous current year layoffs, were provided $42 million in additional funds for FY 16 so that they can continue operations throughout the summer and into the fall semester.
It is important to note that at the time when this stop gap measure was proposed in May, that it was portrayed as measure just to keep operations going, with an understanding that more funding would be sought.
- Capital Reappopriations included.

8. FY 2017 Budget
FY 17 Outlook
Continued cash management concern with depleted accounts with no payment carryover
State Comptroller backlog ~$10B +
Predictable state funding essential for fiscal planning for a full academic year (truth-in tuition modeling)
Capital needs are mounting ~ $3.9 billion
-The stop gap proposal does allow for payment of prior year costs which will be vital if an appropriation isn’t enacted until after the start of the next fiscal year, July 1.
-Colleges will start July with depleted reserves and no payment carry over to aid cash flow as in FY16
-State treasury cash flow ~$10B + backlog
-Predictable state funding is essential for fiscal planning for a full academic year (truth-in tuition modeling)
-Capital needs are mounting, $3.9 billion

9. IBHE Executive Director
IBHE Panel Discussion
Moderator:
Dr. James Applegate,
IBHE Executive Director

10. IBHE Panel Discussion
Dr. Randy Dunn, President, Southern Illinois University System
Rob Widmer, President, Heartland Community College
Duane Bonifer, Executive Director for Marketing and Communications, Monmouth College
Eric Zarnikow, Executive Director, Illinois Student Assistance Commission
Brad Cole, Executive Director, Illinois Municipal League

11. Areas of Focus Institutional Impacts
Operational and capital planning challenges
Access, recruitment and retention of students and faculty
Lost opportunities, especially for students’ program of study
Research & innovation initiatives
Outreach mission
Community & Regional Impacts
Economic and Workforce stability
Role of IBHE