Colleges and universities across Illinois are starting to reveal how the COVID-19 shutdown is affecting them financially, with many predicting a tough road for years to come.
Funding increases for public higher education under Gov. JB Prtizker could dry up in the budget year that begins July 1 as state revenue drops and costs for health care and unemployment rise. Meanwhile, the state’s large competitive private universities are also reporting budget shortfalls, despite calls from students to tap into their multibillion dollar endowments.
The federal government’s recent coronavirus stimulus package is welcome, but not enough for many colleges to cover major immediate losses due to housing and dining hall refunds.
As many colleges grapple with how to return to in-person classes this fall, university leaders are balancing public safety with the need to balance their budgets. Here’s where universities are as they review their budgets and plan for next year.
Public universities still recovering from the state budget impasse are at risk
Most public universities have yet to fully recover from the state budget impasse that ended in 2017. Experts said they’re worried that universities that saw deep cuts and threats of closure during the impasse will once again be threatened, like Eastern Illinois, Western Illinois and Chicago State University.
“They are the regional comprehensive institutions, they are the workhorses of the state,” said Jennifer Delaney, professor of higher education at the University of Illinois Urbana-Champaign and a member of the Illinois Board of Higher Education. “They are incredibly important institutions in terms of future health and future workforce development of the state, and they will be the hardest hit.”
Other state universities are in better shape but still struggling. Despite recent enrollment gains at the University of Illinois Urbana-Champaign and the University of Illinois at Chicago, system leaders expect to lose $158 million in revenue by June.
Pritzker has proposed additional funding for higher education in his budget, but much of it is contingent on the graduated income tax passing in the fall. It’s unclear how the COVID-19 pandemic affects that vote. The deadline for state lawmakers to pass this year’s budget is May 31.
Private universities are starting to make cuts
Northwestern University is the latest private university in the Chicago area to announce a deficit. The Evanston school says it has a $90 million budget hole, which officials are tackling by cutting pay among senior staff and deans, staff furloughs and suspending retirement contributions for employees.
Northwestern is also increasing how much it’s taking from its endowment, though officials insist much of the endowment is restricted and unavailable. Universities with multibillion dollar endowments are being criticized for not tapping more deeply into these funds.
Meanwhile, Loyola University Chicago is projecting a $50 million shortfall. At the University of Chicago, school leaders project a $220 million shortfall. UChicago has announced a hiring and salary freeze so far. DePaul University is estimating an $80 million drop in revenue.
Higher education experts predict the pandemic could especially hurt smaller private universities, many of which were already on shaky financial footing. Some could close or merge if there are fewer students attending college. This risk may be why smaller universities are starting to announce plans to resume in-person classes in the fall. Most larger private universities and public universities have yet to announce plans.
Students will need more aid. Can schools afford it?
Students with family members facing unemployment as a result of the pandemic will undoubtedly need additional federal and state money to pay for college. But it’s not clear the money will be there.
The state under Pritzker last year invested an additional $50 million toward Illinois’ Monetary Award Program, which provides need-based grants for students at in-state schools. But the increase still does not cover every student who qualifies and does not cover full tuition for many universities. Given the state’s financial struggles now, it’s unclear if increasing the investment in MAP will continue in the budget year that begins July 1, though there is a lot of support for the program.
Meanwhile, colleges are already competing against each other for college-aged students, a group shrinking nationally.
“Regional comprehensives [institutions] aren’t necessarily positioned to draw in large international or out-of-state students, so everyone’s institution’s market share limits what they are able to do in terms of developing new revenues,” Delaney said.
Some schools are trying to offer additional benefits to lure possible students, including lowering the tuition bill. U of I has already waived tuition increases set for next fall, while City Colleges of Chicago tabled most of their proposed tuition increases.
School officials are hoping these moves will both improve their bottom line as well as help students who may be struggling financially because of the pandemic.
Community college inequities could widen
Community colleges could also see funding declines, too. They largely rely on local property taxes but are also dependent on state money, which is at risk of declining this year.
Typically, Illinois provides block grants to community colleges in poorer areas to balance out inequities within the state. If that funding is reduced, experts say we may not see community colleges close, but there could be disparities between colleges in areas with stable tax bases and those in poorer areas.
City Colleges of Chicago was already projecting a $17 million deficit before the pandemic, which they wanted to fill with tuition increases. Leaders there have decided not to increase tuition, but it’s unclear how they will fill those gaps. They would not provide specifics when asked.
In a typical recession, it’s common to see college enrollment increase as people are laid off and return to retrain or build new skills, especially at community colleges where tuition is lower. But experts said public health concerns make it difficult to know if a typical enrollment surge is likely. If enrollment goes up just as the state slashes funding for higher education, it could create problems for schools who lack the money or staffing to handle an influx of new students.