Illinois Now Alone in Having No Budget: Nonprofits Struggle with State’s Frozen State

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March 30, 2016; CNBC

And then there was one. Illinois is now the only state continuing to operate its government without its required budget, making it ground zero for the national debate between Republicans and Democrats over the role of government and fiscal policy and providing us with an ongoing case study of how “small government” will affect the schools, social service agencies, and public services that are woven into the fabric of our communities.

The frozen state of the State has been particularly challenging for the state’s colleges and universities, both public and private. As spring semesters draw to a close and the admission process for next year’s class is at its height, the current and future harm are both becoming clear. For the state’s public university and college systems, the lack of a budget has meant no state funding at all in the current fiscal year.

After nine months of inaction by the state’s political leaders, we have learned much about the strength and resilience of the organizations that have been forced to operate without the funds they expected from the state. The numbers tell a story of the commitment Illinois had been making to its institutions of higher education. The state’s flagship University of Illinois system was expecting as much as $660 million in direct state funding, or about 12 percent of their total annual revenue. Another large institution, Southern Illinois University, was expecting a state allocation of $220 million, or about a quarter of its operating budget. At some of the state’s smaller institutions, the holding back of state funds poses an even larger challenge. For example, direct state funding represents more than 30 percent of Chicago State University’s $100 million operating budget.

The state’s scholarship program, the Monetary Assistance Program (MAP), which particularly supports low-income students, was expected to provide over $300 million to Illinois students this school year. While this is direct aid given to students to be applied against their tuition, schools recognize that replacing these funds is beyond the financial ability of many of their students and have taken on at least some of the burden of filling the gap. This burden falls on both public and private colleges and universities that desire to serve a range of students, rich and poor.

The larger institutions, those with a sizeable endowment and a large, wealthy alumni network, have had resources to cushion the blow. They have been able to limit the need to cut deeply into their programs by drawing down or borrowing from their reserves. Smaller schools without this foundation to rest upon have found it necessary to take more drastic action to get through the year. Chicago State University will end its school year early and expects to lay off hundreds of employees out of a total head count of less than 1,000 at the end of April. Eastern Illinois University recently informed its community that it would “need to lay off 177 civil service employees and have administrative and professional employees take a specified number of unpaid days off in March, April, May, and June.”

If this year has not been easy, next year may well be much worse. There is a real possibility that that there will not be a budget for FY 2017. Universities and colleges now need to plan for how they will operate without any state funding for a second year. As Southern Illinois University President Randy Dunn said recently to Inside Higher Ed:

We’re seeing this incremental dismantling of our universities piece by piece, as people get laid off and things get shut down. Over time you turn around and you wonder what happened to your university. Piece by piece it just disappeared on you. I worry that we started down that path.

And it will be the smaller institutions, those who have had already needed to drain limited resources, that may be forced to choose between severe reductions in the scope of their program in order to balance their budgets almost totally on tuitions or closing down totally.

Low income students, those most dependent on MAP grants, will feel the hurt as fewer schools will be able to let that part of their expected tuition income slide waiting for Illinois to have a budget and fund the program. The uncertainty and turmoil that this situation drops into each campus also pushes students to consider other options, including transferring to schools in other states.

The harm being done to higher education is mirrored in the state’s social service and education sectors. Those not protected by court orders or special funding agreements have been using their reserves, borrowing funds, and cutting expenses in order keep doing the work the State of Illinois has asked them to do. While few have closed, the total human impact has been significant. If the standoff does go into a second year, the fallout will be much greater, as their resources have already been heavily committed getting through the current year.

Will the political leaders of Illinois recognize that enough harm has been done already and look for a way to resolve their standoff? Unfortunately, it’s not looking that way right now.—Martin Levine

  • bluegal

    It’s NOT the Capital’s failure. It’s the Governor. We did not have this problem before Governor Hedgefund. He’s lost his Supreme Court effort to decimate unions and now it’s time to restore taxes to 2008 levels and fund our University system. The taxpayers now owe $900K in LATE FEES because of this mess. Our state income tax should at least match Alabama’s for crying out loud. Thinking it’s a bridge too far to pay 5% is pathetic greed. Please drop the false “balance” to these kind of articles. Both Sides Don’t hold state funding hostage to hurt working people.