University of Illinois officials and the Illinois Board of Higher Education praised Gov. Rod Blagojevich's budget on Wednesday and planned to praise it again at a House committee hearing this morning, but state lawmakers were somewhat less enthusiastic.
The state universities struck a deal with the governor's office in which he offered a 1.4 percent increase in state support and they agreed to endorse his controversial proposals to borrow $3.2 billion for construction projects and sell off at least part of the state's student loan portfolio.
"I would have to tell you that is the worst-negotiated deal I have ever seen," state Sen. Steve Rauschenberger, R-Elgin, said at a budget hearing following the governor's address.
But UI President B. Joseph White said he disagreed.
"I think it is a good deal for the university," White said. "I wouldn't have signed a letter in support of his program otherwise. More would be better, but after four years of budget cuts and flat operating budgets and no capital, this is the first light at the end of the tunnel we've seen and I want to seize it and that's what we've done."
Under the governor's budget proposal for the year beginning July 1, the UI would get an additional $10.4 million, and Eastern Illinois University would get about $674,000 more.
State Rep. Chapin Rose, R-Mahomet, said he was glad to see more money going to the universities, but noted that 1.4 percent hardly makes up for the last few years. When adjusted for inflation, state support to those schools would still be nearly 25 percent lower in fiscal year 2007 than it was in fiscal year 2002, Rose said.
"We could have made (the increase) more but then we'd be spending money we don't have," said state Sen. Donne Trotter, chief budget negotiator for the Senate Democrats. "This is a laudable first step."
The governor's budget also included nearly $8 million more for need-based Monetary Award Program grants, extra money for community colleges and new scholarships for nursing students and future forensic scientists. He wants to sell all or part of the state's secondary student loan portfolio to fund a $90 million tuition tax credit program for college freshmen and sophomores who maintain at least a B average.
Universities agreed to back the idea after assurances that the loan terms and repayment incentives would not change, the Illinois Student Assistance Commission's outreach, training and counseling services would not be harmed, and the purchaser would offer jobs to ISAC employees who would no longer be needed by the state.
The House higher education committee on Wednesday unanimously approved HB 4221 to preserve students' loan terms and incentives as a condition of any sale, but the bill's sponsor, state Rep. Naomi Jakobsson, D-Urbana, said she still had serious concerns about the governor's proposal.
"I have heard from many of my constituents who happen to be students that they are opposed to this idea," she said. "This is a vital asset and we need to give serious consideration before selling it for a one-time cash infusion."
Rose and state Rep. Bill Black, R-Danville, expressed similar reservations.
Illinois Student Assistance Commission chairman Don McNeil said the secondary student loan market is hot right now, and it made sense to sell all or some of the state's $3.5 billion loan portfolio at a premium if there are other ways to pay for the commission's operations.
In addition to concerns about the student loan portfolio sale, some lawmakers from both parties questioned the lack of any income-eligibility cap for the tuition tax credit program, which currently would apply to even a millionaire, as long as he or she maintained a B average.
Judy Erwin, executive director of the Illinois Board of Higher Education, said the program would help a growing number of middle-income students with good grades who need help paying for college but do not qualify for need-based MAP grants. The state had a merit scholarship program, but it was eliminated in last year's budget.