University funding overhaul bill advances in House despite U of I opposition

A bill that would overhaul the way Illinois funds its public universities advanced out of a House committee Thursday and could face a vote by the full House soon, despite continued opposition from the state’s flagship institution.

House Bill 1581, titled the “Adequate and Equitable Public University Funding Act,” would establish a needs-based formula for distributing new funding for universities similar to the Evidence-Based Funding mechanism that has been used for K-12 schools since 2018.

It calls for increasing university funding in Illinois by about $135 million each year over the next 15 years. That new funding would be distributed under a formula that sets an adequacy target for each institution and gives priority to those institutions furthest away from their target.

Rep. Carol Ammons, a Democrat from Urbana and the bill’s lead House sponsor, said funding would be subject to legislative appropriations each year, while HB1581 merely establishes a policy under which the new money would be distributed.

“The purpose of this is to establish a funding formula that gives us a baseline that will allow us to build an adequate system for the future,” she told the committee. “This process looks at real consequences, real students, real institutions, some of which are so far from adequacy at 40% to 43% funded from the state.”

The proposal came from a commission lawmakers established in 2021 to develop a new funding system for state universities, some of which were nearly decimated financially by the two-year budget impasse that ran from 2015 to 2017 during former Gov. Bruce Rauner’s administration.

Public universities generally have three main sources of revenue for day-to-day operations: state funding; student tuition and fees, and federal funding. Many also have sizable endowment funds that receive charitable donations from alumni and other philanthropists, but that money usually is restricted to specific purposes.

In Illinois, as in most states, state funding used to make up the largest single source of a university’s total funding, followed by tuition and fees. Federal funds, not including student financial aid such as Pell grants, typically account for only about 10% to 12% of a university’s total revenue.

But as higher education costs have rise since the 1980s, states have not kept pace, forcing universities to rely more heavily on tuition and fees, according to the National Center for Education Statistics.

Jay Gatrell, president of Eastern Illinois University in Charleston, told the committee that trend has had a disproportionate impact on smaller regional universities compared to larger flagship universities.

“The reality is that regional public universities serve a significantly greater proportion of low-income, first-generation and underserved students than our nation’s flagship campuses do,” he said. “For that reason, higher education funding like the K-12 model should account for these disparities.”

According to estimates provided to the committee, if the proposed formula were being used today, EIU would be ranked as one of the neediest universities in the state, with funding currently at only 49% of its adequacy target. Only Western Illinois University in Macomb, at 48% of its adequacy target, would rank lower.

The University of Illinois Urbana-Champaign campus, currently at 89% of its adequacy target, is considered the most adequately funded school under the proposed model and would therefore be last in line for new funding.

Nicholas Jones, executive vice president for the U of I System, said that would be unfair to an institution that serves 53% of all public university students in Illinois.

“Equity and adequacy are shared goals, but the proposed equitable funding legislation does not achieve equity or adequacy,” he said. “Instead, it redistributes resources in ways that underresource the state’s strongest public universities, those that drive Illinois’ workforce development, anchor the research enterprise and empower economic competitiveness.”

The bill passed the House committee that deals with higher education appropriations by a vote of 12-4.