Setting a Context for Fiscal Year 2009 Budget Development

1. Setting a Context for Fiscal Year 2009 Budget Development Illinois Board of Higher Education October 2007

2. Overview • Trends in higher education funding • Illinois’ fiscal circumstances • Disposition of FY 2008 IBHE priorities • Ongoing budget issues the Board may want to consider in its FY 2009 recommendations

3. Trends in Higher Ed Funding • FY 2008 state support for higher education is 8.7% higher than it was in FY 1993 after accounting for inflation. However . . . • The increase in state funding has been uneven • ISAC and SURS have experienced real gains • Public Universities, community colleges (less adult ed), IBHE grants, and agencies have experienced real losses since fiscal year 2002

4. Trends in Educational and Related Revenues • At public universities, students are contributing a much larger share of educational and related revenues in FY 2008 than they were in FY 1993 • Students contributed 27.3% in FY 1993, 45.3% in FY 2008* • At community colleges, students and property owners are paying a larger share in FY 2008 than they were in FY 1993 • Student contributed 27.5% in FY 1993, 35.0% in FY 2008* • Property taxes contributed 44.2% in FY 1993 and 44.8% in FY 2008* *FY 2008 student and property tax contributions are estimates

5. Recent Trends in State Funding

6. Recent Trends in Capital Funding

7. Illinois in a National Context • Illinois’ experience over the past three years has been similar to its Midwestern neighbors • Illinois’ experience has been worse than the nation over the past one, three, and six years • State funding per public FTE has fallen since FY02, but remains above the national average • Illinois is losing ground in affordability, as are most other states

8. State Revenues *Estimate based on MarchCGFA estimate and FY05 year-end revenues

9. Continuing Challenges • Pension funds • Medicaid • Other Health Programs • K-12 funding • Transportation • Uncertainty caused by energy prices

10. FY 2008 Recap • The Board prioritized the following for FY 2008: • Faculty and staff salaries • Personal Services for Universities • Base operating and equalization for Community Colleges • Affordability through MAP and IIA • Capital renewal • Performance Contracting for Nursing and Teacher Preparation Programs • Data Integration • STEM Diversity Initiatives • Reducing costs of GED testing for students and testing entities

11. Unfinished Priorities • Faculty and staff salary competitiveness • Maintenance and improvement of facilities • Affordability • Access, success, and diversity • Data integration • Baccalaureate completion • Other priorities

12. Salary Competitiveness of Public Universities

13. Deferred Maintenance Dollars in millions

14. Affordability • MAP and Silas Purnell IIA funding is only $14.6 million above FY 2002 levels • MAP formula tuition and fees are at 2004 levels • Average MAP awards as a percentage of undergraduate tuition and fees have declined substantially since FY 2002 • The award suspension date is early (mid August) • Federal Pell grants barely have budged recently – but will be increasing substantially over the next several years • Tuition and fees at public universities have increased at an average of over 10% per year during this period, 7% at community colleges, and 5% at independent institutions

15. Other Challenges • Economic development • Workforce development • Healthcare workers – especially nursing • Other shortage areas • Training and retraining • Research and technology transfer • Preparing teachers and administrators and other P-20 issues • Educating adults in basic skills, ESL, and remediation • Integrating data systems • Maintaining or increasing quality while decreasing costs