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 "These SURS appropriations do not go to individual institutions or
agencies and are not available to be used for educational purposes,"
according to the footnote in a study released Monday by Illinois
State University.
SURS, which is responsible for the pensions of the state's
university employees, is facing an unfunded liability -- how much it
owes in benefits compared with how much assets it has on hand -- of
$17.2 billion, according to its 2011 annual report.
Illinois has a total stated unfunded pension liability of $85
billion, but a 2009 study by the Northwestern University Kellogg
School of Management puts the figure at as high as $219.1 billion.
The study didn't specify how much it estimates SURS' portion to be.
The "rapidly increasing appropriations" have pushed Illinois' higher
education spending from $3.2 billion in fiscal 2011 to $3.6 billion
this fiscal year, according the annual Grapevine study of state
support for higher education put out by the Center for the Study of
Education Policy at ISU.
The dramatic increase in the amount of money being given to SURS,
and the other state pension systems, seeks to make up for decades of
chronic underfunding by governors and legislators, and shrinking
returns on investments because of the stagnant economy.
Funding that made it to the college or university classroom
decreased this year compared with last year by 0.76 percent, from
$1.62 billion to $1.6 billion, according to the Illinois Board of
Higher Education, or IBHE, which oversees the state's higher
education system. Those figures reflect money going directly to
education, such as operating expenses, and don't include capital
spending.
The amount of taxpayer money making it to the universities for daily
operations has been on a downward slide for a decade, said Alan
Philips, deputy director of the IBHE.
"In more recent years, it has been largely a result of the state's
fiscal challenges. The state just doesn't have a lot of money,"
Philips said. "It's probably not very likely we're going to see
increases in state funding for education, and we'll be lucky if
(higher) education funding is held flat."
Since fiscal 2007, the total amount of higher education funding,
including pensions, in Illinois has increased by 25 percent, from
$2.8 billion to $3.6 billion. During that same time, state tax
dollars going to SURS have increased from $255 million to $750
million.
That figure is set to double next fiscal year, hitting $1.4 billion
to meet the requirements of a 1994 law setting a pension payment
schedule for the state.
When higher education spending figures are reduced by removing the
costs of SURS, spending on higher education has increased by 9.4
percent since 2007, or at about the rate of inflation.
Students have been asked to shoulder much of the rising cost of
classrooms while at the same time Illinois diverted money to the
ailing SURS.
Beth Spencer, a spokeswoman for SURS, said the increasing state
payments to the pension system are the result of decisions made by
past lawmakers and governors.
"The state has systematically over decades failed to fully pay the
annual required contribution," Spencer said.
Students in 2011 paid 30 percent more for a year of college at a
university than those in 2007, as the cost rose from $13,496 to
$18,189.
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Philips said increasing tuition and student fees have become an ugly
reality for universities dealing with less state money and the end
of federal stimulus funding.
"With the cost of educating increasing, with the requirement to
serve more students increasing, with the state funding decreasing,
there's not many places that you make up the difference," he said.
That's what's happened at University of Illinois, the state's
flagship university.
The U of I's board of trustees voted last week to increase tuition
for new, in-state students this fall at its Urbana-Champaign campus
by 4.8 percent, from $11,104 to $11,636 for a year. This comes less
than a year after the board approved a 6.9 percent tuition increase
at the main campus.
"Tuition increases have been declining over the last three years,"
University of Illinois President Michael Hogan said at a board
meeting last week, according to the Chicago Tribune. As for future
tuition increases, "much depends on the future of state funding,"
Hogan said. Gov. Pat Quinn's three-year budget projection holds education
funding flat through fiscal 2015, though the Legislature must
approve those figures each year.
Quinn and legislators are looking to cut the ballooning spending on
public pensions, including SURS.
Quinn said earlier this month that one possible solution would be
shifting the cost of the pensions. He highlighted shifting costs of
elementary school teachers' pensions to their local districts, a
move that also could be applied to the collegiate retirement system.
Cost shifting could push student tuition even higher.
To cover the extra burden of cost shifting, "tuition would be one
source," said Randy Kanges, a spokesman for the U of I. "We would
have to reallocate (funds and resources); there would be some hard
priority decisions."
Illinois House Republican Leader Tom Cross, R-Oswego, and House
Speaker Michael Madigan, D-Chicago, plan to have public employees
either pay more to keep their current retirement packages or pay
less and switch to a 401(k)-style system.
James Palmer, editor of the Grapevine study, said spending on higher
education is tied directly to the economy.
"It's taking us longer to recover from the Great Recession that hit
us a couple of years ago. If the past is prologue, funding for
higher education will increase when the economy heats up," Palmer
said.
[Illinois
Statehouse News; By ANDREW THOMASON]
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