1. IBHE Presentation 1 Illinois Higher Education FY2014 Budget Recommendations IBHE Board Presentation February 5, 2013 Dr. Alan Phillips

2. FY 2014 Budget Context (State) 2 IBHE Presentation Pension and Medicaid costs are exceeding the rate of State revenue growth. The State is currently experiencing a debt crisis (Current liabilities and the backlog of unpaid bills totals $8.5B). The State is months behind in its payments to colleges and Universities. Adequate financial aid funding for both MAP and Pell continues to be of concern. Based on GOMB guidance, we anticipate additional funding reductions in FY 2014. (GOMB Guidance – 4.62%) We still do not know the extent of any pension cost transfer.

3. FY 2014 Budget Context (Colleges & Universities) State funding for higher education operations has declined steadily over the last 15 years. There has been minimal funding for capital projects, to include renovation, remodeling, maintenance, and repair. Unfunded state mandates and regulatory requirements undermine efficiency and productivity. Illinois’ student financial aid system has been eroded at a time when low-income families have less ability to pay for college. Institutions try to protect instruction, but are often forced to squeeze cost savings out of instruction and student support services. The burden of financing a college education has increasingly fallen on students and families. 3 IBHE Presentation

4. FY 2014 Budget Framework We will continue to use the Step Level approach for the FY 2014 budget recommendations. The FY 2014 budget recommendations will include a performance funding component. The budget recommendations will support the goals of the Public Agenda. Priority of funding is directed toward maintaining core capacity, deferred maintenance, MAP, and funding for grants. 4 IBHE Presentation

5. 5 FY 2014 Budget Priorities IBHE Presentation Increase Educational Attainment (Adult Education, DFI, Performance Funding) Ensure College Affordability ( MAP, IVG, Student Grants) Increase Number of Quality Degrees (Baccalaureate Completion Grants, Career & Tech Ed.) Integrate Educational, Research, and Innovation Assets (Matching Grants, IMSA, Work Study Grants) Multiple Goals: Quality, Affordability, Attainment Deferred Maintenance at Public Universities & CC Base Operating and Equalization Grants, UCLC

6. FY 2014 Budget Recommendation (Step One) 6 IBHE Presentation Step One Flat or Level Budget - $1.98B total -At Public Universities 0.5% of the base ($6.15M) is re-allocated based on the performance funding model. -At Community Colleges, $1.2M is reallocated for legislative initiatives, $360K is distributed based on six performance measures (this amount remains the same at all subsequent Steps). Note: At Step One and all subsequent Steps, the recommendations include the SURS certified amount of $1.5B, an increase of $107.0M (7.6%) over FY 13.

7. FY 2014 Budget Recommendation (Step Two) IBHE Presentation 7 Step Two Step One $49.9M or 2.5% Increase over FY 2013. -Includes $24.6M (2.0%) increase for public universities; $12.3M (1.0%) for performance funding, $ 12.3M (1.0%) for core institutional funding. - $5.9M for Community Colleges, includes a$1.2M reallocation for legislative initiatives; $4.3M for Base Operating Grants; $2.3M for Equalization Grants. -Includes $11.0M for the Monetary Award Program; an additional $50,000 is provided for Dependents Grants to cover increases in tuition; $4.1M for ISAC Administration; $2.3M for Outreach. -Includes FY 12 funds restoration for Cooperative Work Study and u.Select; $250K for GYO; $590K for LDS at this and all subsequent steps.

8. FY 2014 Budget Recommendation (Step Three) IBHE Presentation 8 Step Three Step Two Step One $88.9M or 4.5% Increase over FY 2013 -$49.2M (4.0%); for public universities includes $24.6M (2.0%) for performance funding; $24.6M (2.0%) for core institutional funding. -$11.7M for Community Colleges, includes a $1.2M reallocation for legislative initiatives; $8.1M for Base Operating Grants; $3.8M for Equalization Grants. -$18.4M for the Monetary Award Program. -$100K increase for DFI; $500K for GYO. -Additional funding for UCLC and IMSA meets requested levels.

9. FY 2014 Budget Recommendation (Step Four) IBHE Presentation 9 Step Four Step Three Step Two Step One $168.9M or 8.5% Increase over FY 2013 -$79.6M for public universities (6.5%); $24.6M (2.0%)for performance funding; $24.6M (2.0%) for core institutional funding; $30.4M (2.5%) for deferred maintenance. -$20.9M for Community Colleges, includes a $1.2M reallocation for legislative initiatives; $13.0M for Community College Base Operating Grants; $7.7M for Equalization Grants; $149.7K operational increase. -$52.9M for MAP; $4.1M for ISAC Administration; $6.3M for Outreach. -Additional funding for DFI, Cooperative Work Study, GYO, UCLC, IBHE, IMSA, and SUCSS.

10. FY 2014 Capital Improvements Capital renewal funding provides critical support to protect the state’s capital investment. Improving campus facilities helps schools attract, recruit, and retain students. Support for library projects, and science labs, and other campus facilities address multiple goals of the Illinois Public Agenda. Last Year, the Board approved a new capital project list for FY2013 and indicated support for Illinois Jobs Now! projects. However, there was no Capital Bill in FY2013, and the FY2014 project list is nearly identical to the FY2013 list. To date, nearly $900M in Illinois Jobs Now! higher education capital funds have been released. As of Fall 2012, the deferred maintenance backlog was $3.6 B. IBHE Presentation 10

11. FY 2014 Capital Improvements FY2014 capital recommendations total nearly $1.5 Billion and include: -Support for the Release of Illinois Jobs Now! Projects. -$340M for capital renewal. -$1.2B for capital projects at public universities, IMSA, and community colleges (31 community college projects). -$48M for escalation and emergencies. IBHE Presentation 11

12. The FY 2014 Higher Education Budget Recommendation focuses funding on the goals of the Illinois Public Agenda. The recommendation also allocates a portion of the funding to colleges and universities based on performance in accordance with Public Act 97-320 (HB 1503). The recommendations feature an investment level (or step) approach utilized since FY 2009. The recommendations offer realistic scenarios that are sensitive to the state’s uncertain fiscal environment. IBHE Presentation 12 Summary

13. Questions/Comments? IBHE Presentation 13