By CELESTE QUINN

According to James M. Furman, executive director of the Illinois Board of Higher Education, the budget for fiscal 1981 will not be greatly affected by federal cuts. Next year, however, these cuts and inflation may cause reductions in the higher ed budget, especially in research areas.

When Gov. James R. Thompson briefed reporters on his proposed fiscal year 1981 budget, he said, "This budget is not written in granite, not even in the sand, but perhaps in the troughs of the waves." The economic picture does look uncertain: the predicted recession almost certainly will affect state revenues as much as cuts in federal spending. Higher education could be one of the casualties of all this economic uncertainty. With fewer students to shore up an inflation-ravaged budget, the state support level per student continues to rise. What higher education must do is explain the paradox of needing more dollars per student while educating fewer students.

Despite the darkening financial picture, the executive director of the Illinois Board of Higher Education (IBHE), James M. Furman, is confident that the higher education budget for fiscal 1981 is secure, and he plans to stand by the budget recommendation the IBHE made to the governor and the legislature in January. Furman said, "We're not reworking the budget for fiscal year 1981, and I don't think that's going to be required."

Furman believes the real crunch will hit the following year. Besides any federalcuts, Furman said the real question at the state level is whether the governor and the legislature will reduce state revenues through tax relief. If the state should be "hobbled by a devastating cutback in revenues," Furman said the IBHE would play a responsible role in finding a solution to reducing spending.

The IBHE recommended in January that $1.2 billion be spent for higher education in fiscal 1981 with $1 billion to come from the Illinois General Revenue Fund (the GRF contains about 70 percent of all state revenues). The total IBHE request represents a 15.4 percent increase over fiscal 1980 projected expenditures. The increase in dollars to be appropriated is 11.3 percent, and the increase in support from the GRF is 11.6 percent over projected fiscal 1980 expenditures. The four biggest line items in the higher ed budget are $763.1 million for public universities; $143.9 million for community colleges; $113.4 million for the Illinois State Scholarship Commission, and $76.4 million for retirement.

But shortly after the board sent its request to the governor, Thompson asked the IBHE to cut $20.5 million, or about 2 percent, in General Revenue Fund spending. As requested, the IBHE allocated resources according to the governor's budget plan. The largest cuts came in fringe benefits for employees, funds for the retirement system and scholarship money. Even after Thompson's cuts, the fiscal 1981 budget allows for state support per student to increase from $2,150 to $2,350.

The board initially recommended $763.1 million for the state's 10 public universities. This is an increase of $91.9 million or 13.2 percent over the current projected expenditures. Much of this increase is for funding an average 9 percent increase for salaries and fringe benefits for faculty and staff. The board requested an increase of $41.3 million for an 8 percent increase in salaries and $5.4 million for a 1 percent increase in fringe benefits. The board says inflation has eroded the purchasing power of salaries paid to faculty and staff, and believes the compensation increase is needed to "attract and retain high quality faculty and staff" to insure the quality of higher education in the state. Right now Illinois lags behind other states in compensation to university employees, and there is even some disparity between salaries paid to higher education employees and those paid to other state employees.

Related to salaries, but not included in the line item for universities, are pension contributions by the state. For fiscal 1981 the IBHE recommends spending $68.5 million, a 14.1 percent increase in contributions to the State Universities Retirement System (SURS). The increase, according to the board, would help stabilize the unfunded liabilities of SURS and would improve benefits paid out from the pension system.

IBHE supports a 7 percent increase for most other goods and services, bringing the total for nonpersonnel items to $13.8 million. And the board recommends a total of $9.2 million for fire protection, physical plant maintenance for both new and old buildings, and equipment replacement. The IBHE cited inflation as the main reason for an increase in the budget to pay for equipment, utilities and library materials. Energy cost increases for the individual universities have ranged from 13 to 18 percent, and the board has assumed no increase in energy consumption. In fact, to help reduce energy usage, the board wants building maintenance improved and some energy conservation projects initiated.

Academic programs cut

The budget requests from individual universities for academic programs were cut in half by the IBHE. The universities had asked for $13.9 million to fund academic programs, but the board is recommending only $6.3 million. The board says this is enough to allow some improvement in existing programs and the start-up of a few new ones. The majority of these dollars would support programs in health fields.

The state's budget for community colleges is 12.4 percent of the total higher education budget. For fiscal 1981 the IBHE is recommending $143.9 million, an increase of $14.6 million, or 11.3 percent. Because of a cut in the state funding base for the East St. Louis community college, about $500,000 can be shifted to allow a $15.1 million or 12.3 percent increase

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in state grants to all community colleges. The board is also recommending an 8 percent salary increase, a 15.5 percent increase for utility costs and a 7 percent increase for other nonpersonnel expenditures. In addition, an increase of $300,000 is being asked for new programs and a $500,000 increase is requested for maintenance costs.

Community college finance is a veritable maze of rates, funds and formulas (see Illinois Issues, July 1978). The state contributes more than 50 percent of the support through its grants. Second are the local districts which generate about 30 percent of the funding through taxes. The other sources of revenue are tuition and federal government — almost 20 percent. Part of the state share goes to alleviate the burden to poorer districts where it is more difficult to meet instructional costs because of an indequate local tax rate or tax base. This year the IBHE proposes $21.5 million in equalization grants to these districts, an increase of 25 percent.

Besides providing support to 51 community colleges and 10 public universities, Illinois also supplies some funding to private colleges and universities through direct grants and student aid. In its January budget, the IBHE recommends $11 million, an increase of $1.2 million in institutional grant assistance, which is based on the number of Illinois residents enrolled in undergraduate programs. The board also recommends $87.6 million in support for students enrolled in private colleges and universities. This student aid includes grants and scholarships awarded through the institutions as well as health education grants, and awards from the Illinois State Scholarship Commission.

The Illinois State Scholarship Commission (ISSC) is the third largest line item in the $1.2 billion higher ed budget proposal and represents 10 percent of the total fiscal 1981 recommendation. Should lawmakers accept the IBHE plan, the ISSC will come out a big winner. The higher education board is backing an 18 percent increase in state appropriated funds for the ISSC. The recommendation for fiscal 1981 is $113.4 million ($90.8 million to come from the General Revenue Fund, the rest from federal funds).

Approximately 84,000 students will receive assistance in fiscal 1981 if the budget proposal is approved. The maximum annual award would be hiked from $1,800 to $2,000 at a cost of $5.6 million. In fiscal 1979, over 114,000 students received an award.

The ISSC budget also includes $2 million in funds to begin a scholarship program based on a student's academic achievement in high school. This program was signed into law last year but due to funding limitations was not implemented. Gov. Thompson is an avid supporter of the program which would provide 2,000 scholarships of $1,000 each to Illinois residents who enroll in colleges and universities in the state.

The ISSC also administers the Illinois Guaranteed Loan Program (IGLP) and the Illinois Designated Account Purchase Program (IDAP). The loan program almost doubled from fiscal 1979 to 1980. The jump is understandable since virtually all students are now eligible for the loans which have very low interest rates provided for by federal subsidies. The loans are attractive to students and are good risks now for lenders since the IDAP allows delinquent loans to be purchased with federal money as early as 30 days after default. Over $18 million is expected from the federal government in support of the loan program.

While the IBHE stands behind its original budget proposal of $1.2 billion, the governor does not

In other areas of the higher education budget, the IBHE has allocated $2.5 million for its own use (a 4.3 percent increase); $1.5 million to fund the Higher Education Cooperation Act (a 5.9 percent decrease); $17.7 million for Health Education Grants (a 4.3 percent increase); and $33.7 million for payments to the Illinois Building Authority (no change). The cut in funding for the Education Cooperation Act will affect such programs as library resource sharing and grants to educational television. The increase for Health Education Grants will go to private institutions with education programs in health areas. The amount requested for the Illinois Building Authority is for annual "rent" payments for facilities financed by revenue bonds issued by the IBA (since 1972 capital financing has been through the sale of general obligation bonds by the Capital Development Board).

As for capital improvements recommended for fiscal 1981, the board is asking for $97.7 million, including $54.7 million for projects which were not approved last year. Of the almost $100 million proposed, universities would receive $56 million; community colleges would get $15.5 million; and a substantial amount — $26.1 million — is recommended for fuel conversion and energy conservation projects. The largest single fuel conversion project is the conversion of boilers to use coal at the Abbott Power Plant at the University of Illinois at Urbana-Champaign. The largest consumer of energy at all state facilities, the Abbott plant originally burned coal, but was converted to burn oil or natural gas. Three of the six boilers will be reconverted to coal.

IBHE v. governor

While the IBHE stands behind its original budget proposal of $1.2 billion, the governor does not. He had the board shear $20.5 million in General Revenue Funds from its proposal. Most of the cuts are in fringe benefits, retirement funding and scholarship money. If forced to, the IBHE could do without the increase in survivors' and disabilities benefits. That knocks $7.8 million off the board's request. Another $2.5 million would be pared from the state contribution to the employees' pension fund. But the average 8 percent increase in salaries would be maintained. Another $4.7 million would be trimmed from the Illinois State Scholarship Commission. The maximum award would still go up, but to $1,900 instead of $2,000 — a savings of $2,7 million. The other $2 million to be saved would come from a change in policy which would limit the amount of aid a student could receive. The change would make certain that students do not receive more financial aid than they need.

The rest of the difference between the IBHE proposal and the governor's request includes cuts in a variety of items. In the public universities line item, the recommended cut is $2.9 million ($1.1 million from program

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support and $.9 million from building maintenance). The other large cut would slow the growth in state support to community colleges by reducing the tax rate equalization grant program by $1.1 million.

Included in both the governor's and the IBHE budget recommendations are funds to be raised by boosting tuition by $48 a year for undergraduate and graduate students and by about 8 percent for students in medicine, dentistry and veterinary medicine. The tuition hike would mean an additional $7.5 million in new revenue. Although Gov. Thompson's budget included these new monies, he said he did so only "to keep my options open." Thompson has said he would wait to see if the four university governing boards and the legislature would approve the increase before giving it his okay. All the governing boards have approved the increases. Evidently he will sign the bill if the General Assembly appropriates the amount expected from the tuition hike.

Opposition to the tuition increase is coming from the Illinois Student Association (ISA). Beth Curtiss, chairperson of the ISA and a student at Southern Illinois University at Edwardsville, said, "We want to let the General Assembly and the governor know that students are opposed to this tuition increase, and we intend to show our opposition by registering and voting."

Income from tuition and fees paid by students and certain investment income comprise the University Income Fund. In fiscal 1981, approximately $114 million in revenue (including tuition hike income) is anticipated in the University Income Fund, which is the second largest source of slate appropriated funds. Higher education is supported primarily through the state General Revenue Fund.

Federal funds

The largest "other" source of funding comes from rhe federal government. The IBHE expects the General Assembly to appropriate over $23 million federal funds for higher education in the coming fiscal year. Almost all of it — $22.5 million — goes for student aid ($18 million of which supports the Illinois Guaranteed Loan Program).

But this is not the only contribution the federal government makes to higher education in Illinois. During fiscal 1980, the 10 state public universities expected to receive $123.9 million in federal grants and contracts. These monies are not appropriated by the General Assembly and are not included in the state budget. However, they are five times greater than the federal dollars appropriated by the state and equal 10 percent of the fiscal 1981 operating budget recommended by the IBHE.

These nonappropriated funds are grants and contracts which come from a wide variety of federal sources, go directly to Illinois universities and are used primarily for research. Unlike other agencies, however, Illinois universities are not required to submit applications for federal aid to the Bureau of the Budget for approval. Although these federal research grants are public funds and subject to state audit, the auditor general and the university accounting offices are not always aware of all incoming federal grants. Consequently, the state has a hard time keeping track of these funds.

In the battle to balance the nation's budget, funding for higher education could conceivably be cut. IBHE Executive Director Furman is certain that "when cuts are made at the federal level, we're going to see reductions across a whole plethora of programs in higher education involving research . . . but I don't think there's any one obvious area of reduction like there is in revenue sharing."

To complicate matters, President Carter's move to tighten credit could also effect higher education in terms of low-interest student loans administered by the Illinois State Scholarship Commission. If lenders are required to keep a certain percentage of dollars in outstanding loans in reserve, student loans might be harder to come by. There is also talk of tightening up the eligibility for such loans and raising the interest rates which are subsidized by the feds.

According to Ralph Godzicki, an assistant executive director of the ISSC, a significant change in the Guaranteed Loan Program could mean some students would find it difficult to stay in college while others would not be able to attend higher priced private colleges. Fewer low-interest student loans could also mean a drop in enrollments at a time when enrollments are already declining because of the drop in the college-age population.

Higher education has managed to hold its own in recent years, despite the drop in enrollments. As a result, the support level per student has risen. The IBHE is now working to improve the quality of education — something which James Furman says was not always possible in the 1950's and 1960's. A major concern in those boom years was accommodating the surge in enrollments. But as Congress works to reduce spending and Illinois lawmakers consider tax relief in an election year, higher education could find itself in choppy waters.

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