Friday afternoon Governor Quinn outlined the framework of his plan to resolve the state’s pension funding crisis. Briefly, the Governor’s proposal provides for 100% funding for pension systems by 2042 by making the following changes to the current plan:
In return for the changes above, employee pay increases would continue to be counted in the calculation of their pension, and employees would receive a subsidy for their health care in retirement.
The Governor’s plan also calls for phasing-in the responsibility for paying normal costs of pensions to each employer, including school districts, community colleges and public universities.
So what does the Governor’s plan mean for our faculty and staff at NIU who have never missed a contribution to their pension plan?
While there is no doubt the state’s pension plans are in terrible financial shape, the root cause of this problem is NOT the fault of the state employees. Nor is it the fault of the taxpayers of the state of Illinois. The root cause lies in decades of state underfunding of required pension obligations while redirecting resources to other priorities. To resolve this funding crisis, shared sacrifice is necessary.
We closed the books on another semester two weeks ago, which in theory means that it was a time to catch our breath...but not so this year.
The last few weeks have proven to be exceedingly busy for NIU administration and staff. We have been grappling with the decisions made or left unresolved by the Illinois General Assembly regarding future pension benefits for current employees, annuitant health care benefit changes, a reduction to our operating base budget for FY2012, procurement reform, and a new emphasis on performance-based funding and outcome measures.
I want to take this opportunity to bring you up-to-date on these critical issues.
Based on actions taken Friday, May 13, it appears that the language in HB149 will be the current strategy that lawmakers are looking to in their effort to make changes on existing pension regulations. (For tracking purposes, the actual bill to follow will likely be SB 512, which will adopt language based on the general proposals contained in HB 149.)
This bill would impose significant changes in the way that pensions for state employees are managed and it requires very careful attention. The next few days and weeks are critical for this issue.
NIU recently concluded testimony before the house and senate appropriations committees in Springfield. It is difficult to predict the precise course of this spring’s budget debate. However, based upon feedback received at those hearings, it appears that in Fiscal Year 2012 we will again be asked to do more with less. How much less, it is still too early to predict.
Higher Education is in an era of tremendous change and uncertainty. In terms of student success and fiscal sustainability, the public university model of the 20th century no longer fits.
Nationally, fewer than half of the students who enter college today finish with a degree or credential. Those who do finish take longer, pay more and are saddled with too much debt.
What’s more, in Illinois, the financial model that supported our public universities for generations has eroded dramatically.
View Powerpoint slides > (PDF)
Today Illinois Gov. Pat Quinn outlined his state budget proposal for next fiscal year, signaling his spending priorities for Fiscal Year 2012.
His speech focused mostly on reduced funding levels and emphasized the importance of restructuring the state’s backlog of unpaid bills by borrowing approximately $8.75 billion to pay off most of the outstanding debt owed to hundreds of service providers throughout the state, including NIU.
No Illinois meteorologist can go wrong predicting snow and cold in winter. Sadly, the state’s budget woes have become almost as predictable, and 2011 appears to be no exception.
The cash flow from the State of Illinois to NIU to meet our Fiscal Year 2011 operating budget is a trickle. The MAP grant funding that so many of our students rely on to fund their college educations remains uncertain. The pension plans upon which university and state employees depend for their retirement years are once again under attack. In addition, last month, promised funding for infrastructure improvements was called into question in a stunning Appellate Court decision.