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Illinois Higher EducationFY2014 Budget Recommendations

IBHE Board PresentationFebruary 5, 2013

Dr. Alan Phillips

FY 2014 Budget Context(State)

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• 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.

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.

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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.

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FY 2014 Budget Priorities

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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

FY 2014 Budget Recommendation(Step One)

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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.

FY 2014 Budget Recommendation(Step Two)

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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.

FY 2014 Budget Recommendation(Step Three)

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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.

FY 2014 Budget Recommendation(Step Four)

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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.

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.

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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.

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• 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.

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Summary

Questions/Comments?

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