Illinois State Universities Behind Other States’ in So Many Ways

From Wirepoints, reprinted with permission:

Illinois’ higher education crippled by skyrocketing pension costs – Wirepoints

September 9, 202110 Facebook Twitter Linkedin Email Print

By: Ted Dabrowski and John Klingner

Illinois has lost more full-time equivalent students over the last decade than any other state in the country, according to a 2020 College Board report (see Appendix). Tuition has doubled in the past 15 years, pushing it to the 4th-highest in the country. And administrative bloat has siphoned money from university classrooms, according to Illinois Senate Democrats. 

State lawmakers and education officials have for a long time blamed Illinois’ higher education woes on a lack of funding, giving the impression that students have fled and tuition has jumped because overall state support for higher education has dried up. 

That’s simply not true. Total state spending on higher education has more than doubled to $5 billion today from $2.5 billion in 2000 – an increase of about 3.4 percent annually and above the average 2.1 percent inflation rate over the same period. The real problem is that the entire increase has been sucked up by skyrocketing retirement costs, putting pressure on many aspects of higher ed.

A Wirepoints analysis of higher ed spending shows that of the new, cumulative state appropriations to higher education over and above base spending in 2000, every dollar has gone to pensions, and then some. 

As the below graphic shows, state spending on operations (funds for universities, colleges, student aid, technical education, and other grants) remained flat or fell over the entire period to make room for the steep increase in retirement spending for higher ed pensions and retiree health insurance.

As a result, more than half of all state university and college appropriations go to retirement costs today, up from just 14 percent in 2000.

Overpromised and overgenerous pensions

In 2015, the growing cost of student tuition and a compensation scandal at the College of DuPage sparked the Illinois Senate Democratic Caucus to launch an investigation into the growing costs of the university system’s administrative bureaucracy. Their Investigative Report on Executive Compensation at Illinois Higher Education Institutions reported that:

“While tuition at Illinois’ public institutions has skyrocketed, so has executive compensation. This report finds that tuition increases have coincided with a dramatic increase in administrative costs, including the size of administrative departments and compensation packages for executives.”

Data from the National Center on Education Statistics further revealed that the administrative and management staff in Illinois higher ed grew by 26.4 percent from 2005-2015, compared to a 2.1 percent increase in instructional staff and a 2.9 percent drop in FTE enrollment.

The Senate Democratic Caucus also found that the expanding bureaucracy in higher ed grew the state’s pension costs. 

“Much of this revenue growth has been used to support an increasingly larger bureaucracy and excessive administrative salaries. This is also evidenced by ever increasing state tax contributions required to cover the pension and health care expenses of this administrative growth.” 

In fact, the total pension benefits promised to university workers (accrued liabilities) grew more than 1,000 percent (7.6 percent annually) from 1987 through 2020 – far faster than the state budget, Illinois’ economy or taxpayer incomes could keep up with. The rapid growth in pension benefits was the subject of Wirepoints’ Special Report: Illinois Pensions – Overpromised & Overgenerous

The core problem with university pensions is the same as the state’s retirement crisis a whole: benefits were overpromised by Illinois lawmakers.

The perks and benefits they’ve given away over the past few decades – high salaries, spiking, early retirement ages, 3 percent cost-of-living adjustments, and more – mean career university workers receive retirement benefits far beyond what most Illinoisans in the private sector can afford.

Take Illinois’ recently retired career university workers – retired after 1/1/2017 with 30-plus years of service. On average, they ended their careers with a final salary of $93,000 and began collecting benefits at age 59. They get an average pension of $71,000 a year and can expect $2.3 million in total benefits over their lifetime.

Top State University Retirement System pensioners can make far more than that – largely due to their six-figure final salaries and early retirements. A majority of the top retirees in the graphic below retired with a $450,000-plus salary and will receive more than $9.5 million in lifetime benefits. 

Some of the retirees below were medical doctors at the public universities, but many other top beneficiaries such as Clarence Bowman and Patricia Granados were university administrators. Bowman, a former president of ISU, retired at 60 with a final average salary of $435,000 and a starting annual pension of $347,000. After several years of a 3 percent compounded COLA, his pension now exceeds $422,000. His COLA increase for just one year is now more than $12,000.

Hiked tuitions

As pension costs have devoured the state’s – taxpayers’ – appropriations toward higher ed, Illinois’ education complex has increasingly shifted the burden onto students through higher tuitions. The Senate Democratic Caucus report noted that as state money was diverted from classrooms to pensions, universities hiked tuition so much that college and university officials had money left over to spend on more administrators and higher salaries:

“While state operating support for public universities has declined by 7% over the last decade, the corresponding increase in tuition and fee revenue has not only offset state budget cuts, but sustained annual public university revenue growth rate in excess of 5%.

In all, the average tuition and fees at several Illinois public universities have more than doubled since 2006, according to the earliest data available from Illinois Board of Higher Education.

Students at Northern Illinois University, for example, paid a tuition of $7,229 a year in 2006. By 2022, tuition will have doubled to $14,691. That increase is three times more than the growth in inflation over the period.

All that has pushed Illinois’ in-state tuition for public 4-year institutions to the fourth-highest level in the country, according to the College Board. At $14,420, Illinois only trails Vermont, New Hampshire and Pennsylvania. All of Illinois’ neighbors have far lower tuition and fees, with Indiana, Iowa, Missouri and Wisconsin charging less than $10,000 per student.

One interesting note regarding the Senate Democratic Caucus report is that it strongly criticized the state of higher education before Bruce Rauner became governor. Gov. Rauner became the punching bag for the problems in higher ed after his 2016-2017 budget impasses, but the Dem’s report shows clearly that the majority of the problems in higher ed preceded him. Rauner deserves blame for his many governance failures, which we documented here, but not for the crisis in higher education.

Fix the pensions, stop the bleed

The Illinois Board of Higher Education has responded to the state’s loss of students by calling for hundreds of millions in more funding for grants, subsidies and an even greater focus on “equity.” 

They’re treating the symptoms rather than the disease. As long as Illinois lawmakers continue to ignore major pension reform – which we outline here – expect Illinois’ youth to continue to leave Illinois’ borders in search for an affordable, quality education.

Appendix

The College Board reported last year that Illinois’ full-time equivalent student enrollment dropped more over the last decade than in any other state in the country. Illinois lost 17 percent of its FTE in 2018 compared to 2008. 


Comments

Illinois State Universities Behind Other States’ in So Many Ways — 8 Comments

  1. This mess was started back in the 70’s by Madigan and the crooks in Springfield. After the big steal we witnessed in 2020 people are waking up how the DC and individual state cabals have been cheating all of these years to anoint their chosen person for the position. Yes even in red states. There couldn’t possibly be over 80m people in this country that voted for the turnip brain in the oval office.

    We have to fix the underlying problem that caused this pension problem and only then will we get leadership that will solve this problem. Until then Springfield and County Gov’t will just continue to steal your hard earned money.

    So the highest earner in the system is Leslie Heffez weighing in with an average salary of 763,000/yr. What do you think her portfolio looks like right now, without the pension, even if she did put kids through college. How many homes does she own? Regardless of how much these people make they should not be getting 75% of their avg final 4 years as the basis for their beginning 75% payout which grows at 3% per year until death. Everyone above 100k per year should start at 100k per year regardless of their final 4 years. My very rough math with Leslie leaving at 55 and starting at 100k growing at 3% per year if she lived until 80 she would make a little under 4m and if she lived to 90 a little over 6m.

    I think life expectancies are around 80 so let’s go with that number. My approach would save the state 16m from just one employee. Imagine if we could do that for every government person taking in a pension.

    I am going to come full circle now. In order to fix the problem we would need to open up the constitution of the state of IL. Until we fix our elections and perform full forensic audits and canvassing after each election and get the crooks out of Springfield, I can not and will not support giving these crooks any opportunity to slip more socialist communist language into an open constitution for the state. We only open it up every 20 years. Hopefully with what is about to come out thanks to 2020 maybe, just maybe the IL swamp will have also met it’s maker. Keep your fingers crossed.

  2. You’ve got to pay a premium price to have your kids indoctrinated
    by the overpaid Leftists in Illinois.

  3. At this point the only way your going to get these moochers to sign off on these windfalls.

    Is to send Uncle Vito the Olive Oil Magnate to make them an offer.

  4. Ridiculous. No government retiree who worked in Illinois should be getting more than $100K per year pension. People in private sector who retire are lucky to even have a pension and if they do nowhere near the stratospheric amounts that government retirees get.

    Illinois is one of the very worst States in the US re unfunded pension fund.

    The Illinois Constitution needs revision to remove all COLAs AND to put a cap of $100K yearly on all pensions until at least 2040.

  5. What started out as a first responder benefit slowly morphed into a boondoggle for EVERY Government employee and sent the state into a tail spin that they will not recover from, not even Boeing can help them now.

  6. All they have to do is stop pensions for all future employees starting January 1st and start a 3% 401k match like what some of what corporate America does. In about 60 years after the pensioners die, this state will finally be close to even. NO MORE GOVERNMENT PENSIONS, first responders only, Cops, Fire and Jailers. Then lower the benefits to the spouse when the pensioner dies like what Corporate does. There is no reason a spouse should get 100% of the benefit after the employee dies, especially if the spouse is also receiving one of that there Golden parachutes because we all know a lot of cops marry cops and fire to fire and so on.

  7. So bred winner, you want to open up the constitution to the crooks to throw in more ways to steal your money?

    We have to get the crooks out before we open up the constitution. Any sane person knows this.

    Your rant about capping pensions at 100k without a COLA is ridiculous. I will get SS soon and will get COLAs.

    And Stormy, the spouse only get’s 50%, not 100% upon death.

    Also what you proposed is already in place in schools and universities.

    It’s a tiered system now and has been for several years.

    Tier 3 which all new teachers go into now only get 401k’s.

    They are underpaid though.

    I worked when pensions were phased out.

    Funny, that didn’t give people pay increases to offset the pension benefits they took from us.

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