1. Setting a Context for Fiscal Year 2009 Budget Development Illinois Board of Higher Education October 2007

2. Overview Trends in higher education funding Trends in higher education funding Illinois’ fiscal circumstances Illinois’ fiscal circumstances Disposition of FY 2008 IBHE priorities Disposition of FY 2008 IBHE priorities Ongoing budget issues the Board may want to consider in its FY 2009 recommendations Ongoing budget issues the Board may want to consider in its FY 2009 recommendations

3. Trends in Higher Ed Funding FY 2008 state support for higher education is 8.7% higher than it was in FY 1993 after accounting for inflation. However... FY 2008 state support for higher education is 8.7% higher than it was in FY 1993 after accounting for inflation. However... The increase in state funding has been uneven The increase in state funding has been uneven ISAC and SURS have experienced real gains ISAC and SURS have experienced real gains Public Universities, community colleges (less adult ed), IBHE grants, and agencies have experienced real losses since fiscal year 2002 Public Universities, community colleges (less adult ed), IBHE grants, and agencies have experienced real losses since fiscal year 2002

4. Trends in Educational and Related Revenues At public universities, students are contributing a much larger share of educational and related revenues in FY 2008 than they were in FY 1993 At public universities, students are contributing a much larger share of educational and related revenues in FY 2008 than they were in FY 1993 Students contributed 27.3% in FY 1993, 45.3% in FY 2008* Students contributed 27.3% in FY 1993, 45.3% in FY 2008* At community colleges, students and property owners are paying a larger share in FY 2008 than they were in FY 1993 At community colleges, students and property owners are paying a larger share in FY 2008 than they were in FY 1993 Student contributed 27.5% in FY 1993, 35.0% in FY 2008* Student contributed 27.5% in FY 1993, 35.0% in FY 2008* Property taxes contributed 44.2% in FY 1993 and 44.8% in FY 2008* Property taxes contributed 44.2% in FY 1993 and 44.8% in FY 2008* *FY 2008 student and property tax contributions are estimates

5. Recent Trends in State Funding FY07 to FY08 FY02 to FY08 Public U’s $23.5M-$145.8M CC’s (less adult ed) $3.9M-$23.7M ISAC MAP/IIA $0.0M$14.6M ISAC All (inc. MAP+) -$33.0M$5.4M Grants-$9.7M-$63.0M SURS (inc. State Pension Fund) $89.3M$86.9M Total (inc. all other) $73.9M-$130.8M

6. Recent Trends in Capital Funding FYRequest IBHE Rec Approp 2003$1,084.0M$446.7M$338.3M 2004$1,214.0M$341.8M$111.7M 2005$1,380.0M$341.6M- 2006$1,573.3M$349.9M$130.0M 2007$1,630.5M$481.5M$2.0M 2008$1,782.4M$607.7M$1.1B?

7. Illinois in a National Context Illinois’ experience over the past three years has been similar to its Midwestern neighbors Illinois’ experience over the past three years has been similar to its Midwestern neighbors Illinois’ experience has been worse than the nation over the past one, three, and six years Illinois’ experience has been worse than the nation over the past one, three, and six years State funding per public FTE has fallen since FY02, but remains above the national average State funding per public FTE has fallen since FY02, but remains above the national average Illinois is losing ground in affordability, as are most other states Illinois is losing ground in affordability, as are most other states

8. State Revenues *Estimate based on MarchCGFA estimate and FY05 year-end revenues

9. Continuing Challenges Pension funds Pension funds Medicaid Medicaid Other Health Programs Other Health Programs K-12 funding K-12 funding Transportation Transportation Uncertainty caused by energy prices Uncertainty caused by energy prices

10. FY 2008 Recap The Board prioritized the following for FY 2008: The Board prioritized the following for FY 2008: Faculty and staff salaries Faculty and staff salaries Personal Services for Universities Personal Services for Universities Base operating and equalization for Community Colleges Base operating and equalization for Community Colleges Affordability through MAP and IIA Affordability through MAP and IIA Capital renewal Capital renewal Performance Contracting for Nursing and Teacher Preparation Programs Performance Contracting for Nursing and Teacher Preparation Programs Data Integration Data Integration STEM Diversity Initiatives STEM Diversity Initiatives Reducing costs of GED testing for students and testing entities Reducing costs of GED testing for students and testing entities

11. Unfinished Priorities Faculty and staff salary competitiveness Faculty and staff salary competitiveness Maintenance and improvement of facilities Maintenance and improvement of facilities Affordability Affordability Access, success, and diversity Access, success, and diversity Data integration Data integration Baccalaureate completion Baccalaureate completion Other priorities Other priorities

12. Salary Competitiveness of Public Universities

13. Deferred Maintenance Dollars in millions

14. Affordability MAP and Silas Purnell IIA funding is only $14.6 million above FY 2002 levels MAP and Silas Purnell IIA funding is only $14.6 million above FY 2002 levels MAP formula tuition and fees are at 2004 levels MAP formula tuition and fees are at 2004 levels Average MAP awards as a percentage of undergraduate tuition and fees have declined substantially since FY 2002 Average MAP awards as a percentage of undergraduate tuition and fees have declined substantially since FY 2002 The award suspension date is early (mid August) The award suspension date is early (mid August) Federal Pell grants barely have budged recently – but will be increasing substantially over the next several years Federal Pell grants barely have budged recently – but will be increasing substantially over the next several years Tuition and fees at public universities have increased at an average of over 10% per year during this period, 7% at community colleges, and 5% at independent institutions Tuition and fees at public universities have increased at an average of over 10% per year during this period, 7% at community colleges, and 5% at independent institutions

15. Other Challenges Economic development Economic development Workforce development Workforce development Healthcare workers – especially nursing Healthcare workers – especially nursing Other shortage areas Other shortage areas Training and retraining Training and retraining Research and technology transfer Research and technology transfer Preparing teachers and administrators and other P-20 issues Preparing teachers and administrators and other P-20 issues Educating adults in basic skills, ESL, and remediation Educating adults in basic skills, ESL, and remediation Integrating data systems Integrating data systems Maintaining or increasing quality while decreasing costs Maintaining or increasing quality while decreasing costs