CARBONDALE — A key cost-saving measure in Gov. Bruce Rauner’s budget proposal is a plan to shift pensions and health insurance expenses from the state budget to universities, community colleges and school districts.
Southern Illinois University System President Randy Dunn said administrators in higher education have been hearing discussion about such a shift for years, so the announcement didn’t come as a shock.
SPRINGFIELD — Republican Gov. Bruce Rauner said Wednesday he could balance the Illinois budget and cut taxes by $1 billion provided the Democr…
What is surprising, Dunn said, is the rapidity of the proposed transition. Rauner wants to shift pensions off the state budget by 25 percent this year, rising to 100 percent in four years. That schedule would give the university system little time to work out revenue streams to support those additional costs.
“You’d hear different proposals — one maybe 10 years, one maybe 20 years — but at no point did you really hear informed discussion taking place about making that kind of change over a four-year period, and that’s what the governor has put forward here,” Dunn said.
In addition to pensions, Rauner also plans to hand group health care expenses over to state universities, but the timeline for that cost shift isn’t totally clear, according to Dunn.
The state currently pays $146 million in group health costs to the SIU System. If Rauner intends to ramp up both pension and health care billing at the same rate, SIU will have to pay a total of $188 million after those four years are up — more than the system’s entire state appropriation for a given year.
Although the governor has provided discretionary replacement funds to offset those additional costs for fiscal year 2019, there’s no indication or guarantee that the state would reimburse the university beyond the first year.
Critics of the proposed shift say it will result in property tax hikes as local school districts try to make up for the shortfall.
“For the nine public universities and systems, we don’t have the ability to levy a tax, and in fact what you would likely see happen is tuition and fees somehow having to absorb part of that and potentially looking at some sort of increased share with employees. We just don’t have anywhere else to go to get that done,” Dunn said.
When the governor’s recommended budget gets shaped in the General Assembly, Dunn hopes to see more cost sharing with the state, an extension of the transition period and some additional guarantee of the offset.
“I would not be one who would say any discussion of a cost share has to be off the table … but without the time to think that through, it just gets to be a very difficult proposition to figure out how you build it into a budget, particularly coming off two years of being strangled in terms of state appropriations overall and having to figure out how to keep ourselves afloat during that time,” Dunn said.
Dunn said the state pension system is already so bare-bones that it’s no longer a selling point that attracts new talent.
“I’m not saying that there wasn’t a need for pension benefit reform, but we’re in a position now where with the reforms that have taken place over the past five years or so that, under the state pension system, the benefits are getting so lean that they barely qualify to equating to Social Security, and it’s causing us a problem, and all universities a problem, when it comes to the ability to recruit new faculty and professional staff,” Dunn said.
As for what Dunn considers to be good news for SIU in the recommended FY19 budget, appropriations for universities generally remain level with last year: the SIU System would receive $181.1 million in state funds, a $1 million decrease from FY18.
MAP grants would also be funded at the same level as FY18.
The governor also plans to allocate $31.2 million to Illinois Veterans and National Guard Grants, which have not seen any state funding since 2010.
“We’ve been doing that on our own, carrying that for the state, so the governor to recognize that has been well appreciated, I know, by all of us at SIU and probably all the universities,” Dunn said.