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Tue February 16, 2010
Mixed Reaction to University Borrowing Plan
Springfield, IL – Illinois lawmakers could discuss whether to give colleges and universities the power to take out loans to make payroll and cover other costs.
Board of Higher Education Director Judy Erwin says borrowing would ease some of the current cash flow difficulties. But she warns the plan would also mean colleges and universities would have shell out more money to pay interest while having no guarantee the state funding will come through.
"Not only is the state totally negligent in terms of their responsibility, but it is effectively privatizing higher education," says Erwin. "We're very close to that now, as it is, but we're looking at schools that may not be able to keep their doors open to the end of the semester."
On the other hand, Erwin says she understands why some colleges and universities see the need to borrow.
"The Governor's office has given assurances to university presidents that they will receive their money. They're not sure it will be this fiscal year however. So if you're looking at trying to meet payroll in March, April and May - most semesters end in May - there is significant concern some colleges may not be able to meet their payroll in coming months."
Erwin says the Board of Higher Education has remained on the sidelines when it comes to the borrowing proposal because not all schools are in favor.
The University of Illinois remains opposed. Interim President Stanley Ikenberry says the preferred solution is for the state to begin paying what it owes. Ikenberry says there is no guarantee when state money could arrive, which means borrowing could put the schools' credit rating at risk.
Others have raised concerns lawmakers might view borrowing authority as a substitute for state funding. The state owes colleges and universities more than $700 million, but has been unable to pay due to financial problems.
Thanks to Illinois Public Radio