In a meeting today with the Executives' Club of Chicago, Governor Pat Quinn shared new data showing that higher education in Illinois is likely to receive more significant funding reductions in the coming years if comprehensive pension reform is not enacted. According to an analysis conducted by the Governor's Office of Management and Budget (OMB), approximately 26,000 students may not have the needed resources to go to college in five years due to projected reductions to MAP grant funding.
The governor discussed the need for pension reform today with business leaders and CEOs who often stress their need for a stable business climate and a strong, well-trained workforce. Governor Quinn is urging legislators to restore fiscal stability to Illinois and pass comprehensive pension reform during special session on August 17.
"A strong higher education system drives economic development and is essential to moving Illinois forward," Governor Quinn said. "We must rise to the occasion, act responsibly and get the job done on pension reform for the people of Illinois."
If comprehensive pension reform is not enacted, funding for state universities, community colleges and college scholarships for needy students with merit could be reduced by more than $280 million by FY 2018. Higher education has seen steady reductions in recent years as fast-rising pension costs continue to squeeze out critical services.
Pension reform that includes a gradual normal cost realignment will alleviate funding pressure for state universities and community colleges, who have also written in support of a phased-in cost realignment. According to the data, universities and community colleges will face reductions that greatly exceed any normal cost expenses they would gradually assume under the governor's pension reform plan.
For example, under the governor's plan, state universities and community colleges are projected to assume $21.3 million in new normal pension costs in FY 2014. If comprehensive pension reform with a normal cost realignment is not enacted, the analysis shows that state universities and community colleges could see more than $60 million in reductions in FY 2014.
Currently, Illinois' pension system faces $83 billion in unfunded liability -- the worst in the nation. This deficit is expected to grow to more than $92 billion by the end of FY 2013 unless major reforms are enacted. Governor Quinn has proposed a comprehensive pension reform plan that will eliminate the unfunded liability over the next 30 years.
State universities and community colleges help shape the future of Illinois by fostering innovation and economic growth. Illinois' higher education institutions provide students with more opportunities and prepare them for the workforce, to ensure that businesses have access to strong workforce talent.
The analysis is attached. For more information on the need for pension reform and to contact your legislator, please visit SaveOurState.Illinois.gov.