• Public colleges have received no state funding this year
  • Universities face liquidity crunch as college decisions due

As a May 1 deadline looms for high school seniors deciding where to attend college, students are thinking twice about universities in Illinois, where the worst budget crisis in state history has halted funding for higher education.

Public colleges haven’t received state aid for the year that started July 1 as Republican Governor Bruce Rauner and Democratic lawmakers fight over a spending plan. The strain has spurred colleges to furlough staff and cancel projects. State scholarships for low-income students haven’t been paid. High school counselors and some state schools say they’re hearing that more students are looking to private, community colleges or out-of-state options, because of the funding uncertainty.

“You’re having an upswing in students that just are not going to those schools” that are struggling financially like Chicago State University and Northeastern Illinois, said Amanda Andros, a counselor at Lane Technical College Prep, Chicago’s largest high school. “They’re not sure if the university is going to stay open.”

Pensions, bonds and state employees are getting paid during the impasse, but higher education funds are stuck at zero, leaving public universities and poor students who rely on state aid among the hardest hit by the budget standoff. As more students look elsewhere, Illinois risks a long-term loss of residents, further pressuring the economy of the state that ranked 49 out of 50 in terms of population gains in the last three years.

This week, the Democrat-led legislature approved $3.9 billion of spending that includes funding higher education and scholarships for low-income students, but Rauner will veto the measure, according to his office. Richard Goldberg, his deputy chief of staff, criticized the lack of revenue behind the bill, calling it “filled with empty promises.” Republicans have pitched ways to pay for higher education like changing the procurement process to free up funds or giving Rauner authority to make other budget cuts.

As the state’s leaders bicker, at least one university is running out of time. If Chicago State University doesn’t receive funding by the end of April, it will exhaust normal operating dollars. Without aid, most of the more than 900 layoff notices it sent out in February will be executed on April 30, said Tom Wogan, a school spokesman.

“What we are hearing from recruiters is that high school counselors are increasingly telling students to avoid Illinois public universities,” Wogan said. “That’s a product of this budget crisis causing a loss of faith in the market for prospective college students.”

The uncertainty isn’t comforting for holders of university debt. Moody’s Investors Service cut the ratings of three universities in February, dropping Eastern Illinois to junk.

“If there’s a perception that the educational system is deteriorating, then I think that will have an impact on potential new employment and on migrants’ decision to move to Illinois,” said Alan Schankel, a managing director at Janney Montgomery Scott in Philadelphia. “It’s a real problem.”

The state is losing students, said Sherri McLaughlin, a counselor in Jacksonville, Illinois. She’s seeing more students going out of state or opting for junior colleges. McLaughlin, who’s been a counselor for 17 years, said she’s even advising students differently in terms of what to ask schools.

“Instead of saying ‘how many kids go to school here?’ and ‘what’s your graduation rate? -- now you’re looking at asking the school -- ‘where is your financial stability?’" McLaughlin said. “There’s more difficult decisions being made now when you’re choosing a school than they had to just a year ago.”

Randy Dunn, president of the Southern Illinois University System, said its Carbondale campus is hearing from admitted students who aren’t ready to commit. SIU has more than 6,000 students who receive need-based state aid. The school covered those grants this year but can’t commit to backstopping them for the coming year, he said.

Illinois’s higher education competitors are taking advantage of the state’s fiscal floundering. Advertisements and solicitations from universities trying to get into the Illinois market are popping up, Dunn said.

“Some of our more savvy regional competitors see blood in the water, and there is clearly a concerted effort to then try to pick off some of those students in this uncertain environment,” said Dunn.

The budget increase isn’t affecting universities equally. The state’s flagship institution, the University of Illinois, has seen a record number of applications for the year that starts in August. President Tim Killeen is projecting at or close to record enrollment. The school’s three campuses serve more than 80,000 students and have “very good liquidity,” according to Moody’s.

Private schools aren’t immune. Last month, the Illinois Institute of Technology sent a letter to students asking them to reimburse the school for covering the need-based state aid that Illinois should have paid. Students have the option of a 12-month loan through the university. If they don’t pay, they can’t register for classes.

The budget standoff has created a crisis of confidence in Illinois education, said Matt Bierman, budget director and vice president of administrative services at Western Illinois University. As more students go out of state, fewer return, he said.

“We turn out police officers and nurses and teachers and business entrepreneurs,” said Bierman. The state’s leaders need to “realize they’re causing long-term damage, not just to higher education, but to the entire workforce in the state.”

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