Illinois Budget Gridlock Eases for Higher Education

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CHICAGO – Illinois' cash-starved higher education institutions will soon get some relief after state lawmakers passed a $600 million funding bill to get them through the summer despite the lack of a state budget.

Gov. Bruce Rauner backed the plan and is expected to sign it.

"By passing this bipartisan agreement, lawmakers in both chambers put aside political differences to provide emergency assistance for higher education, ensuring universities and community colleges remain open and low-income students can pay for school," Rauner's spokeswoman Catherine Kelly said in a statement.

"We are hopeful the General Assembly will build on this bipartisan momentum in the weeks ahead as we negotiate a balanced budget with reform for Fiscal Years 2016 and 2017," she added.

Whether the brief break in the gridlock over the budget -- approaching 10 months overdue -- can be parlayed into a larger agreement remains unclear. Passage didn't come easily on the higher education bill and House Speaker Michael Madigan took a harsh tone with the governor in a statement issued after the vote.

"I am hopeful the governor sees the funding in this higher education package not as a solution, but as emergency assistance to those most in need. Time will tell if Gov. Rauner has further intentions of destroying our state institutions and human service providers, or if he will begin working with us to craft a full-year budget that is not contingent on passage of his demands that will destroy the middle class," the Chicago Democrat said.

Talk of an emergency allocation built over the week amid growing alarms raised by universities over mounting fiscal woes that are impacting student recruitment and pose a threat to some schools' accreditation.

The hardest hit – Chicago State University – will close early, this month, without the funds needed to keep up payroll. Some schools were demanding that students cover their state Monetary Award Program grants that were also frozen without a budget appropriation.

The strain – along with the threat of potential future cuts in funding levels – have driven rating deterioration among some colleges with the possibility of future erosion looming as the budget gridlock progresses.

Lawmakers had reached a tentative agreement Thursday but it fell apart late in the day after some Democrats pressed to include human services funding in the package ahead of a one-week break in the session.

While 90% of state government funding continues due to ongoing appropriations and court decrees and consent agreements, higher education and social services go unpaid. Democrats also worried over the level of funding, saying it amounted to a deep cut in aid levels.

Lawmakers put aside their concerns and returned Friday to cast their votes. The House was the first to take up the legislation. It passed 106-2. It then headed to the Senate where it won unanimous support in a 55-0 vote.

The appropriation provides $350 million for four-year universities and $75 million for two-year junior colleges. While the funding is less than half of what Democrats had proposed in their version of the fiscal 2016 budget, Chicago State will see less of a cut. The remaining appropriation would fund MAP grants for lower-income students.

Democrats and Republicans in recent months have bickered over how to get funding to higher education. A kindergarten-through-12th grade appropriation was agreed on early in the budget impasse.

Democrats recently passed a $4 billion package that also covered social service payments but Republicans oppose any bill that simply relies on the state's depleted general fund. Democrats have opposed Republican bills that relied on uncertain revenue streams like pension reforms or gave the governor additional budget balancing powers.

The bill approved Friday draws from a surplus in a special education related account known as the Education Assistance Fund. The state is currently running a $7.2 billion bill backlog.

The state has 39 community colleges and nine public universities. S&P put five of the state's public four-year universities on CreditWatch last month and has sounded alarms over the impasse's potential impact on community colleges.

Moody's Investors Service last month put the ratings of 19 Illinois community colleges and their $855 million of debt under review for a possible downgrade. Moody's has recently confirmed some while downgrading others. Moody's also downgraded three four-year universities in February. All eight it rates carry a negative outlook.

The funding is included in an amendment to Senate Bill 2059.

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