STATE OF ILLINOIS BOARD OF HIGHER EDUCATION

APPROVED DECEMBER 10, 2019

STATE OF ILLINOIS BOARD OF HIGHER EDUCATION

FISCAL YEAR 2021 HIGHER EDUCATION BUDGET RECOMMENDATIONS OPERATIONS, GRANTS, AND CAPITAL IMPROVEMENTS

PRESENTED BY THE STAFF TO THE ILLINOIS BOARD OF HIGHER EDUCATION

December 2019

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Fiscal Year 2021 Higher Education Budget Recommendations

TABLE OF CONTENTS

Major Highlights for Fiscal Year 2021 Budget Recommendations .........................................12

History and Recommendations Summary Tables .....................................................................15 Table 1: Higher Education Operations and Grants, General Funds ..............................................15 Table 2: Higher Education Operations and Grants, All Funds......................................................16 Table 3: Higher Education Operations and Grants, Other Appropriated Funds............................17

Illinois Higher Education Operations Funding since Fiscal Year 2002...................................18 Public Universities .........................................................................................................................18 Community Colleges......................................................................................................................23 Monetary Award Program..............................................................................................................24 Mandates and Other Pressures........................................................................................................26 Funding a K-16 System ..................................................................................................................26 Pension Funding .............................................................................................................................28

Sector and Agency History and Recommendation Tables........................................................30 Table 4: Universities Operations and Grants, General Funds .......................................................30 Table 5: Fiscal Year 2021 PBF Allocation with 0.5% Performance Funding Set-Aside..............31 Table 6: Community College Operations and Grants, Appropriated Funds .................................32 Table 7: Adult Education and Postsecondary Career and Technical Education ...........................33 Table 8: Illinois Student Assistance Commission .........................................................................34 Table 9: Illinois Mathematics and Science Academy ...................................................................35 Table 10: State Universities Civil Service System........................................................................36 Table 11: Illinois Board of Higher Education Operations.............................................................37 Table 12: Illinois Board of Higher Education Grants/Special Initiatives......................................38 Table 13: State Universities Retirement System ...........................................................................39

Recommendations Summary Narrative by Sector ....................................................................40 Public Universities .........................................................................................................................40 Community Colleges......................................................................................................................42 Adult Education and Postsecondary Career and Technical Education...........................................43 Illinois Student Assistance Commission ........................................................................................43 Illinois Mathematics and Science Academy...................................................................................49 State Universities Civil Service System .........................................................................................50 Illinois Board of Higher Education Grants/Special Initiatives .......................................................50 State Universities Retirement System ............................................................................................58

Capital Improvements .................................................................................................................59 Higher Education Capital, Deferred Maintenance, Renewal Needs ..............................................59 Table 14: Summary of Higher Education Capital Requests and Recommendations ....................63 Table 15: Higher Education Capital Improvement Priority List ...................................................64 Table 16: Fiscal Years 2019 and 2020 Appropriated and Reappropriated Capital Funding.........65 Table 17: Capital Improvement Projects: Institutional Detail......................................................74

Additional Supporting Information............................................................................................89 IBHE Statutory Requirements .......................................................................................................89 Benefits from Investing in Higher Education ................................................................................89

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Impact of the Budget Impasse and the Danger of a New Impasse .................................................90 Appendix A: Performance Funding...........................................................................................93 Appendix B: Glossary of Higher Education Terminology.......................................................97 Appendix C: Historical Illinois Higher Education Budget Data...........................................111 Table C-1: State General Funds Appropriations, 2000-2020 ......................................................112 Table C-2: Public University Undergraduate Tuition and Fees, 2010-2020 ...............................113 Table C-3: Public University Graduate Tuition and Fees, 2011-2020 ........................................116 Table C-4: Public University Professional Tuition and Fees, 2014-2020 ...................................119 Table C-5: FY 2020 Community College Tuition and Fees by District......................................122 Table C-6: Monetary Award Program (MAP) Award Values, 1996-2019 .................................123 Table C-7: Monetary Award Program (MAP) Number of Awards, 1996-2019 .........................124 Appendix D: Public University Deferred Maintenance and Capital Pictures .....................125 Appendix E: Description of Bond Ratings ..............................................................................131

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Item #E-1 December 10, 2019

FISCAL YEAR 2021 HIGHER EDUCATION BUDGET RECOMMENDATIONS FOR OPERATIONS, GRANTS, AND CAPITAL IMPROVEMENTS

Submitted for:

Action.

Summary:

This item recommends approval of the Fiscal Year 2021 Budget Recommendations for higher education operations, grants, and capital improvements. The Fiscal Year 2021 Budget Recommendation is utilizing last year's basic format providing one comprehensive proposal to the Board.

Action Requested:

That the Illinois Board of Higher Education approve the Fiscal Year 2021 Budget Recommendations for operations, grants, and capital improvements.

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Item #E-1 December 10, 2019

FISCAL YEAR 2021 HIGHER EDUCATION BUDGET RECOMMENDATIONS FOR OPERATIONS, GRANTS, AND CAPITAL IMPROVEMENTS

Major Highlights for Fiscal Year 2021 Budget Recommendations

SUMMARY: The Illinois Board of Higher Education (IBHE) recommends an increase of $193.8 million in higher education operations funding from general funds, which constitutes a 9.5 percent increase. The recommendations also include an additional $142.2 million needed to cover the amounts certified by the State University Retirement System. We also recommend $516.7 million for capital renewal plus $446.7 million for regular capital. Significant increases are needed to help address the damage done by the long decline in state support, which covered 72 percent of university costs in Fiscal Year 2002 but just 32.9 percent in Fiscal Year 2019. Funds are needed to improve affordability, reverse the flow of students out of the state, and build a more competitive Illinois economy. Capital needs also are significant. With almost no funding for capital renewal from Fiscal Year 2004 until Fiscal Year 2020, deferred maintenance has grown to $6.7 billion. As a result, it has not been possible for universities and community colleges to adequately maintain facilities and build new facilities to keep them competitive with institutions in other states and prepare a ready workforce. By comparison, the higher education operations budget for Fiscal Year 2020 included an increase of 8.2 percent. In percentage terms, this was the largest increase in support for higher education since at least Fiscal Year 1990.

? Public Universities, $68.3 million ? Concern about college affordability and the out-migration of the best Illinois students, has led to a desire to hold down tuition and fees at public universities. High tuitions also have prevented many potential students from entering college and driven others to start college outside of Illinois. Due to the steep decline in state support for public universities since Fiscal Year 2002, the proportion of universy costs covered by have become highly dependent on tuition revenue. The average inflation rate over the last three years has been 2.06 percent. It will take a 5.9 percent increase in state appropriations for universities to maintain their buying power without increasing tuition. Universities need additional funding to keep pace with inflation and to attract and educate the students the state needs to fuel the economy of the future. For Fiscal Year 2020 the increase for universities was 5 percent, which was the largest increase in support since Fiscal Year 2002, and only the second time since that year when the increase in state funding exceeded inflation.

? Community Colleges and Adult Education, $15.8 million ? Like public universities, community colleges have experienced a long decline in state support which have resulted in significant increases in tuition and fees. Additional funding is needed to keep pace with inflation and hold down tuition increases. The increase in the Fiscal Year 2020 budget matched the 5 percent provided to public universities.

? Monetary Award Program (MAP), $50 million ? There has been a steep decline in what MAP covers. In Fiscal Year 2002 MAP covered 100 percent of the weighted tuition and fees at public universities and it covered all eligible students. The $50 million added in the Fiscal Year 2020 budget amounted to 12.5 percent increase in MAP funding. This was the largest increase in the history of the program. Unfortunately, due to the long decline in state support, for Fiscal Year 2020 MAP will only cover 33.4 percent of public university weighted tuition and fees and just 46.9 percent of eligible students. Declining MAP coverage has increased the

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ability of out-of-state institutions to attract Illinois students. It also contributes to qualified students deciding to not attend college at all. A significant funding increase is needed to continue rebuilding the program and to help improve educational attainment by reducing achievement gaps by race, ethnicity, and socioeconomic status.

? AIM HIGH, $10 million ? AIM HIGH was created in Fiscal Year 2019 as a merit-based scholarship program, crafted by each university to match its students and mission. The intent is to help reverse the flow of students to colleges and universities outside of Illinois and to help attract qualified Illinois students who are choosing to not go to college at all. Additional funding is needed to cover a third year of students and build momentum to achieve the mission of the program.

? Illinois Veterans Grant (IVG) and Illinois National Guard Grants (ING), $23.0 million ? Until Fiscal Year 2010 funding was provided to the Illinois Student Assistance Commission (ISAC) to reimburse public universities and community colleges for waivers of tuition and fees for Illinois Veterans and National Guard members as required by law. Partial funding was provided in Fiscal Years 2011 and 2012 but none since then. This is an unfunded mandate on universities and community. Fewer veterans have been availing themselves of this benefit because of a similar federal program passed in the wake of 9/11. Restoring funding to these programs would help universities and community colleges recover from the steep cuts in state funding and also make it financially advantageous to them to more aggressively recruit veterans, which also will draw in more federal funding.

? Illinois Student Assistance Commission Operations and Outreach, $2 million ? ISAC operations and support programs have long been supported by federal loan management revenues. However, the federal program changed in 2010 and ISAC no longer services new loans. They have continued to service old loans but federal revenues have fallen sharply. ISAC earned $25 million in Fiscal Year 2018 and that is expected to be just $12 million in Fiscal Year 2020. There also is a possibility that the federal government could pull back the remaining loans at any time. State appropriations have increased in each of the last two years. This request will complete the process of replacing falling federal loan serving revenues. The additional funds do not represent any new services. It will assure ISAC can continue to provide their current level of services of assistance to students and families.

? Higher Education Cooperation Act (HECA), $20.0 million ? This request is to resurrect a previously funded program. The purpose of the program is to foster innovation and cooperation. Illinois higher education system, particularly its public universities, were badly damaged by the long decline in state funding. The budget impasse was particularly damaging. The system was not able to keep-up with changes in a highly competitive industry which changes rapidly. This funding would provide grants to help the schools recover and help the state reimagine how it delivers education that is more responsive to students today, particularly the growing portion who are non-traditional; minorities, first generation, Pell eligible, and older students.

? Illinois Board of Higher Education, $2.0 million ? Funding is requested to build back staff capacity that has been diminished over a long period and to better address the agencies consumer protection responsibilities, as well as to improve the state capacity for data analytics (see below). Funds have been requested to return grants which were cut in the Fiscal Year 2018 budget to their Fiscal Year 2015 level. Funding also has been included to support development of a new higher education master plan and a Governor's Conference on the Future

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of Higher Education in Illinois. In addition, the request includes increases to return grant programs to Fiscal Year 2015 levels, if they are still below those levels.

? State Data Capacity Expansion, $1.0 million ? The P-20 Council has noted that while the state collects a great deal of useful data it lacks the capacity to utilize it. The state also does not effectively collect its information in a data commons, which would make it easier for both the state and researchers to utilize. IBHE, ICCB and ISAC are presenting a budget initiative to follow-up on the P-20 Council recommendations. Funding for expanded analytic capacity is included in the ICCB and IBHE budgets. In addition, $500,000 is included to begin the process of building an effective data common, starting with higher education data. This aspect of the initiative is eventually intended to go beyond the higher education system to all aspect of the Institutional Longitudinal Data System (ILDS).

? Illinois Mathematics and Science Academy (IMSA), $1.7 million ? Funding needed to cover cost increases, as well as an increase for student inquiry and research and for the PROMISE program, which helps draw highly qualified students from around the state into STEM studies. Unlike other secondary schools in the state, IMSA has very limited access to other resources. The IMSA budget suffered during the budget impasse but has seen smaller increases than their K-12 counterparts in recent years.

? State Universities Civil Service System (SUCSS), $61,500 ? Funding needing to cover cost increases and to make small steps to overcome the significant cuts made to the agency over the years which make it very difficult for them to fulfill their legal responsibilities. This would just return SUCSS to their Fiscal Year 2015 funding level.

? State Universities Retirement System (SURS) Pension Contributions, $142.2 million ? This increase in appropriation is to match the certified state contribution as required by state law as well as a $191,660 increase in funding as required under the State Employee Group Insurance Act of 1971 to cover community college retiree health insurance costs.

? Capital Renewal Funding, $516.7 million ? There has been almost no state appropriation support for maintenance between Fiscal Year 2004 and Fiscal Year 2019, and very little of the funding released for emergency projects has yet been spent. As a result, deferred maintenance needs have grown to $6.9 billion. Rebuild Illinois includes the most significant support for capital renewal in state history. However, it only amounts to about one percent of facility replacement costs and we should spend two percent to deal with the industry standard 50-year replacement cycle and that does not address the need to address the maintenance backlog. If the state invested one percent more than the two percent principle, it will take 28.8 years to erase the deferred maintenance backlog.

? Regular Capital Funding, $446.7 million ? The Rebuild Illinois program funded a substantial portion of the projects included by IBHE in its Fiscal Year 2020 budget request. This six year program will be the largest program of state support for higher education capital in history. This request for Fiscal Year 2021 includes the projects which were recommended by IBHE in the Fiscal year 2020 request but not funded in the Rebuild Illinois program. However, IBHE's primary capital recommendation is that projects included in Rebuild Illinois be funded and completed. This is particularly important to higher education because many of the projects in the new program were appropriated in the Fiscal Year 2010 Illinois JobsNow! program but the funds were never released.

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(in thousands of dollars)

Resource Requirements Universities Community Colleges Adult Education/Postsecondary Career and Technical Education Illinois Student Assistance Commission Illinois Mathematics and Science Academy State Universities Civil Service System Board of Higher Education IBHE Institutional Grants/Special Initiatives Total Institutional Operations and Grants

State Universities Retirement System CC Health Insurance Fund State Contribution to SURS (General Funds Only)

Table 1

FY2021 RECOMMENDATIONS HIGHER EDUCATION OPERATIONS AND GRANTS

GENERAL FUNDS*

FY2017 Final

Appropriations

FY2018 Final

Appropriations

FY2019 Final

Appropriations

FY2020 Final

Appropriations

FY2021 IBHE Recommendations

Change FY20-21

Dollar

Percent

Change

Change

$ 1,205,164.0 288,888.8 102,602.8 - ** 18,030.7 1,101.2 21,929.3 6,939.4

$ 1,644,656.2

$ 1,083,448.4 259,855.8 51,323.4 412,695.2 18,030.7 1,058.6 2,753.0 7,316.9

$ 1,836,482.0

$ 1,105,076.2 268,276.4 51,363.4 439,705.3 18,391.9 1,082.2 2,805.9 7,316.9

$ 1,894,018.2

$ 1,157,861.0 301,636.2 53,157.1 504,641.2 18,943.9 1,114.7 2,805.9 8,316.9

$ 2,048,476.9

$ 1,505,735.1

4,309.1 1,501,426.0

$ 1,377,118.3

4,133.3 1,372,985.0 @

$ 1,374,500.6

4,390.8 1,370,109.8 @

$ 1,644,123.1

4,431.1 1,639,692.0

$ 1,226,145.3 317,447.2 53,157.1 590,778.6 20,494.0 1,176.2 3,964.6 29,145.7

$ 2,242,308.7

$ 1,786,308.8 4,622.8

1,781,686.0

$ 68,284.3 15,811.0 86,137.4 1,550.1 61.5 1,158.7 20,828.8

$ 193,831.8

$ 142,185.7 191.7

141,994.0

5.9% 5.2% 0.0% 17.1% 8.2% 5.5% 41.3% 250.4% 9.5%

8.6% 4.3% 8.7%

Total

$ 3,150,391.3

$ 3,213,600.3

$ 3,268,518.8

Source of Appropriated Funds General Funds* General Revenue Fund Education Assistance Fund Budget Stabilization Fund Personal Property Tax Replacement Fund Fund for the Advancement of Education

$ 3,527,955.0 2,146,528.3 1,235,076.3 250.0 97,100.0 49,000.4

$ 3,213,600.3 1,516,988.9 1,593,111.4 103,500.0 -

$ 3,268,518.8 1,948,512.8 1,214,436.0 105,570.0 -

* General funds total includes Budget Stabilization Fund, Personal Property Tax Replacement Fund, & the Fund for the Advancement of Education ** ISAC total for FY17 does not include grant programs that were appropriated in FY17 but used to pay FY16 grants @ Amount appropriated is less than the amount certified by SURS which must be paid by state law

$ 3,692,600.0

$ 3,692,600.0 2,305,814.8 1,281,215.2 105,570.0 -

$ 4,028,617.5

$ 4,028,617.5 2,536,172.3 1,380,646.6 111,798.6 -

$ 336,017.5

$ 336,017.5 230,357.5 99,431.4 6,228.6 -

9.1%

9.1% 10.0%

7.8% 0.0% 5.9% 0.0%

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