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Springfield, IL – Western Illinois University and the state's other public universities can now borrow money to stay afloat while waiting for state government to pay its bills.
Governor Pat Quinn signed legislation giving universities the authority to borrow against the money the state has promised them.
"This legislation will give our public universities an important fiscal tool to manage through this unprecedented economic crisis," said Quinn. "We are committed to doing everything we can in Illinois to make sure our students receive the highest-quality education possible."
The new law takes effect immediately. Southern Illinois University President Glenn Poshard calls it a stop gap measure.
"It is in a sense what we have to have get over the hump here. If we could find some reason to believe that our FY10 monies might get to us even by the end of October that would take a lot of pressure off of us," said Poshard.
To borrow money under the new law, a university's board of trustees must pass a resolution that outlines:
*The need to borrow money;
*The maximum amount to be borrowed;
*And the maximum amount of interest to be paid.
The legislation caps the interest a university can pay at 9% and requires that the borrowing take place within 90 days. All borrowing must be repaid within one year or less.
Additionally, all borrowing must be approved by the Comptroller. The universities must produce a detailed account of how the borrowed funds are being used within 15 days of the borrowing.
The fiscal year ends in less than a month, and universities say the state has paid them only half of the money promised for the year. State government still owes them about $700 million.
Thanks to the Illinois Associated Press and Illinois Public Radio