Illinois Higher Education Funding Will Go To Pensions, Not Students

Illinois is increasing higher education spending by 12 percent this year, but that money won't benefit in-state students. Illinois State University reports that the additional funding will be funneled directly into a pension program for state university employees.

The State Universities Retirement System (SURS) owes $17.2 billion in benefits beyond the assets it has on hand, according to the Illinois Statehouse News. Addressing this deficit will bring Illinois' higher education spending from $3.2 billion in 2011 to $3.6 billion this fiscal year; at the same time, the amount of money reaching college classrooms decreased by 0.76 percent from last year to this year, from $1.62 billion to $1.6 billion.

The SURS deficit represents a small portion of the state's unfunded pension liability, estimated at around $85 billion, though a 2009 study by Northwestern University's Kellogg School of Management estimated actual costs could be as high as $219.1 billion.

Illinois House Speaker Michael Madigan touched on the pension funding problem during a public appearance at Elmhurst College Tuesday, blaming excessive spending by both parties and praising the new budget passed last year as part of the solution, the Chicago News Cooperative reports.

"We've got huge budget problems in this state," Madigan said, according to the CNC. "Why? Well, there was overspending in the past and many people engaged in the overspending. It wasn't just one or two people."

The additional funding diverted to pension costs would surely have been welcomed on the classroom level by state universities, who have complained of growing expenses outpacing their funding sources. The University of Illinois announced last week that they would raise tuition costs for incoming freshmen next year, the second such hike in less than a year that will leave new students with a price tag nearly 12 percent higher than in 2009.

Comments

[stopnlisten]

01:03 PM on 01/29/2012

So Arne of Illinois... how's the job working out? I'm a liberal and I'm not impressed. Didn't fix NCLB, just provided a waiver with strings. President Obama, you need to find another guy. Soon.

[kevinkelly262]

12:08 PM on 01/29/2012

Here's the list of the top 100 public pension payouts in Illinois -- most of these are in the Illinois college system.

http://www.wifr.com/news/headlines/Top_100_Illinois_Govt_Pensions_125165229.html

It's funny when you see college students protesting tuition increases, thinking it's greedy corporations, the super-rich, etc causing the problem. Someone suggests cutting out some of the bloated administrative bureaucracy, or maybe modifying a bankrupting pension system, and it's an "attack on education."

[Pharmakon Socrates]

04:30 PM on 01/29/2012

I did a google of the #1 recipient on the list and it turns out he is a doctor and the department head of Surgical Oncology. Hello, this is not a minimum wage position. I would like to ask you, what do you think he would be getting if he was working at the University of Chicago hospital? The UIC hospital is a world class medical institution, and you have to pay people if you want it to continue to be that. Duh!

On down the list, you see "MD" and "surgery" when you google the top people. Folks, you are going to have to be smarter when you discuss this.

[kevinkelly262]

09:13 PM on 01/29/2012

Obviously those top spots are not minimum wage positions. But even if you disregard the somewhat anomalous $300k+ pensions, the fact remains that SURS is $17B in the hole. Are you asserting that pension liabilities aren't a significant financial problem for the IL University system?

When SURS has to make payouts but doesn't have the necessary assets in the fund to make the cash payouts and/or keep the system funded to statutory minimum levels, where does the difference come from? Tuition increases, tax increases, cuts to current educational expenditures, or some combination thereof. Should parents and students be HAPPY that tuition went up 12% in one year (and 66% between 2004-2010)?

Here's a good analysis of the Illinois university system's budgetary problems vis-a-vis SURS.

http://illinoispolicy.org/uploads/files/PensionsVsSchools%20HigherEd%201-4.pdf

[4eva]

10:28 AM on 01/29/2012

The Cartel
education + politics = $
http://www.thecartelmovie.com/cgi-local/content.cgi?g=27

[Drew Palmer]

03:44 AM on 01/29/2012

Once again, why would a state continue to prop up a pension system it clearly cannot afford? I obviously do not know the details of U of I's pension system, but I can bet its a hell of a lot cushier than those in the private sector, especially these days.

[Pharmakon Socrates]

04:23 PM on 01/29/2012

Yes, I agree with you. You do not know the details of the UofI's pension system. I do. I also know that in comparison to other higher education in Illinois, it is not as generous as IIT or the University of Chicago. If you look at what the state pays over the salary of its participants, it is about 3 or 4 points over what they would pay for FICA and Medicare, if they had to pay that. That is not generous and not out of line with what a professional job in the private sector would pay. It is way less than IIT and at the very minimum, comparable with the University of Chicago.

Get the facts!

[kevinkelly262]

09:34 PM on 01/29/2012

So PS, enlighten us. If a professor was retiring this year, with a salary of $150k for the last five years, with 27 years at the school, what would his year-one annual pension benefit be under the U of I, IIT, and U of C retirement systems? Also, for a professor earning $150k in annual salary, what would that teacher's yearly pension contribution be under the U of I, IIT, and U of C systems?

[Geoprof]

07:17 PM on 01/27/2012

Unfortunately, most of the money coming from the 12% increase in funding will go toward increases in health insurance costs and more administrative positions. The situation regarding administrators is so bad at many public universities that there are now more administrators than teaching faculty.

[Pharmakon Socrates]

01:22 PM on 01/27/2012

It is a mistake to call the SURS pensioners unions. It include workers who were not in the union. Secretaries, budget directors, IT staff.

You can try to leverage hatred of unions to discuss this issue, but it won't work.

What happen to the principle that a contract is a contract? If Illinois wants to default, then let a bankruptcy judge divee out Illinois' assets to the pension holders.

[Fanny Cole]

08:39 AM on 01/27/2012

tr00ls working for a penny need not concern themselves with college

[Daralyn Bliss]

08:13 PM on 01/26/2012

The state of IL has put off paying into pension funds that were legally agreed upon, for decades. Not paying into pension funds basically goes against employment contracts made with teachers. Educators do not have social security, and they rely on pension funds and insurance after retirement.
How would you feel if your employer promised contributions to your 401k, and 20 years into your employment, your employer said, "Sorry. I know I said I would make contributions, but I just could never budget for it."

[stopnlisten]

01:01 PM on 01/29/2012

No Social Security for educators? Sounds like early retirement. Different animal.

[Romano54]

07:05 PM on 01/26/2012

..gives me that warm n fuzzy feeling inside.

[citizenlegisators]

04:14 PM on 01/26/2012

AAAAAAAAAAAAAAGGGGGGGGGGGHHHHHHHHHHHHHHHHHHHHHHHH

hey Wisconsinites,,,,,, are you paying attention to the cesspool of carnage that the Democrats and Public sector unionistas have wreaked on Illinois

[Mailman]

06:16 PM on 01/26/2012

Of course they aren't that why Illinois is heading down that sewer of government waste and abuse.

[guest1111]

11:14 PM on 01/26/2012

Democrats are trying to help the republicans are trying to destroy. If we get a republican as a president all you older folks and younger folks will not have any ssi or medicare. Please the Democrats are the good helpful ones. We are in an economic crisis because of the republicans namingly George W. Bush. Vote democratic-intelligence Vote republican-idiot or rich business people.

Plus why are you even bickering about Wisconsin when the article is about Illinois?