Tuesday, February 09, 2010

Public universities looking to borrow

By Jamey Dunn

Some state universities are turning to a plan that would allow them to borrow to fund their operating budgets. The bill was originally written just for Southern Illinois University, and less than a month ago many other public universities said they were not considering the option. But, after trying to budget around millions of dollars in late payments from the state, other universities are looking to jump on to the legislation.

“The members of the Senate from southern Illinois from both parties are in favor of the bill because it provides Southern Illinois University with a mechanism to avoid the damage that closing its doors would cause,” Alton Democrat Sen.William Haine, the sponsor of the bill, said. He said that the plan would not rely on bonding but would instead allow universities to borrow against the money that the state owes them. He likened it to an “emergency” line of credit. The decision to borrow would be left up to each institution’s board of trustees.

Haine pointed out that community colleges already have the power to borrow to fund their budgets. They have property tax revenue to use as collateral for loans.

Haine said that Western Illinois University, Eastern Illinois University and Northern Illinois University have expressed interest in being included in the legislation. “University of Illinois is not on the bill. They’re not against the bill. They’re just ok where they are,” Haine said.

Dave Steelman, director of governmental relations for Western, said the school is considering seeking borrowing power.

“Joining the bill would be done very very reluctantly. We don’t think we should be at this point in the first place,” he said.

Steelman added that universities are concerned that the bill might be seen as a partial solution to the state’s overstretched checkbook, and it could slow down payments to them even more. “We all have horrible mixed feelings about having the bill out there to begin with…There are some legislators that will say, well [universities] can just go and borrow.” However, Steelman said the schools considering the plan are also trying to keep from closing their doors mid-semester.

Calls made to Eastern and Northern to confirm their interest in the plan were not returned.

Haine says the bill will be amended to include other schools, and he hopes to get it called for a vote this week.

Meanwhile, university leaders called on the state at a Chicago news conference today to develop a payment schedule for doling out money to higher education—and to stick to it.

“No amount of cutting and sacrifice can make up for the absence of hundreds of millions of dollars in state appropriation payments. Without full funding of our appropriations in a timely manner, we will be forced to take even more drastic actions that will diminish the educational opportunities of our students and our service to the people of Illinois,” a news release from Northern Illinois University and the University of Illinois said. The group sent a letter to Gov. Pat Quinn and Comptroller Dan Hynes asking them to commit to a payment schedule.

“The comptroller’s office would love to pay every bill as it arrives at its door. Unfortunately, revenues are lower than the governor and legislature projected and the state is continuing to spend more money than it takes in…We do our best to balance all the needs with the limited resources that are available. We’ve tried to work with the universities to address payment emergencies as we have with those who provide goods and services across this state who are waiting months and months to be reimbursed,” Hynes spokeswoman Carol Knowles said in an email.


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