Illinois’s Ambitious Plan for Higher Ed Funding

The State of Illinois is exploring a novel funding model for its 12 four-year public colleges and universities that, if executed as proposed, would distribute state funds more equitably in ways that would particularly benefit regional and minority-serving institutions.

That’s a big “if,” though. While observers in the state and nationally say Illinois’s proposed approach could provide the sort of adequate, equitable and stable funding many experts have long called for, translating the general philosophical agreement into reality will require educating lawmakers to get them onboard with a complex formula and ironing out disputed details such as how to factor in various graduate programs, endowments and the weight tuition revenue should hold.

The complex formula, released in early March by a legislatively created commission of lawmakers, college officials and others, is designed to mimic a growing number of revamped K-12 funding models, most of which were ordered by courts to remediate years of underfunding for schools in less-wealthy areas with less property tax revenue but higher need for student support.

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Parallel issues exist in higher education, where flagship institutions often receive disproportionately more money than their regional and minority-serving peers despite tending to educate students with fewer needs.

Unlike K-12 efforts, however, courts have not mandated changes in higher ed funding. Illinois’s explorations have been voluntarily. Commission members coalesce around the philosophical view that more equitable funding is a good thing, developing a detailed pioneering plan to reshape standards for public college funding.

But they acknowledge that there is much work to do to turn the theoretical concept to reality: State lawmakers have yet to introduce a bill outlining the new model, let alone pass it—a process that could take years.

“The direction that the commission is headed—this focus on adequacy, which is different than I’ve seen in any other state—is a good model for the future for higher education,” said Daniel Mahony, president of the Southern Illinois University System. “It’s just about getting all of those pieces working together in the right way. We still have work to do, but we’re anxious to work with the legislature on figuring out how to do that the best way possible.”

Shifting the ‘Historic Framework’

A chain of events starting in 2016 spurred the desire for a new model in Illinois: a 793-day state-budget impasse, droves of high school graduates leaving the state for cheaper tuition elsewhere, and, most recently, intense protests spotlighting systemic racial inequities.

In 2021, the Illinois Board of Higher Education, the statewide coordinating body, published a strategic plan urging the state to rethink its funding model. Lawmakers established the commission soon after, and its members worked for three years conceptualizing, modeling and refining the proposal before releasing it this month.

The current formula in Illinois relies on a traditional base-adjusted model where each institution receives a fixed percentage of that year’s budget. Similar models exist across the country, but in many cases, Illinois included, there is no documented rhyme or reason for how the percentages were determined. Some states have tied certain funds to performance, but research suggests both models favor flagships and land-grant institutions.

The new formula differs by not only determining how much money an institution will get, but how much it should get. It also lays out a plan for the state to close the gap between the two values over time.

Lisa Freeman, president of Northern Illinois University and a member of the commission, said that for diverse regional institutions like her own, the formula would be “transformative.”

“Going into the process, we were really looking to allocate the state’s resources in a way … that recognizes all students start at different places and require different levels of support for success,” she said. “It’s our job to make sure that we meet them where they are.”

“At its core, [the model] focuses on the importance of closing equity gaps and making sure that our higher education system is sustainable and affordable,” said Ginger Ostro, executive director of the state board. “It helps everyone see what that need is and sets a path to get there over time.”

How the Model Would Work

Functionally, the new model has four core elements.

First, the “adequacy target” determines the optimal amount of funding each institution needs to fully serve its students. It is calculated by considering variables including the number of students, the institution’s mission, and the programs it offers. This stage also includes what are known as “equity adjustments,” or a tiered system of bonuses, to account for the number of students institutions serve from low-income, rural, racial minority or other backgrounds who may require more support.

Then the formula calculates a “resource profile,” or how much money the institutions have access to. This includes tuition revenue, endowments, grants and prior state appropriations.

The difference between these two values is called the “adequacy gap.” According to the report, fully closing that gap for all of the state’s institutions would require a hefty $1.4 billion in additional appropriations over the next 10 to 15 years.

Outside experts note that that’s a hefty price tag, but commission members are cautiously optimistic that state lawmakers are ready to start footing the bill, even if it takes longer than the commission hopes.

After nearly two decades of funding cuts, the state’s legislature has turned the tide in the last four years, and Governor J.B. Pritzker’s budget proposal for fiscal year 2025 would continue that trend, increasing public university funding by another $24.6 million.

Timothy L. Killeen is president of the University of Illinois System, whose three institutions includes the one least likely to benefit from the model’s equity adjustments (the flagship Urbana-Champaign campus). Nonetheless, he said he is “fully onboard” with the new model.

“We’ve got a state that we’re serving, we’ve got issues and sets of obstacles for underserved communities that we need to grapple with. We call that the land-grant mission and we want to fulfill that in every way we can,” he said. “That includes seeing our sister institutions fare well into the future. So we will advocate for them, and we will advocate for ourselves.”

Details to Iron Out

Now, it’s up to lawmakers to introduce, lobby for and pass a bill codifying the new model into law.

While the commission’s 87-page report explains much of the model in great detail, some components are still up for debate. Undecided elements include how to factor in the high-cost graduate programs that not every institution has, such as medical schools, and how to account for different-sized endowments.

But Killeen is confident that while accounting for these differences requires “fairly complex financial modeling,” it can be done.

“We’ll do that, and we’ll do it in a good-faith partnership with other colleagues,” he said. “I don’t view it as a zero-sum game right now. It’s an enterprise.”

There are also party lines at play. Although some Illinois Republicans were represented on the commission and therefore contributed to development of recommendations for the new funding model, some higher ed experts wonder if recent GOP critiques of diversity, equity and inclusion efforts at both the state and federal level will dampen GOP support. (Note: This paragraph was corrected from an earlier version to make clear sentence that no Illinois Republicans supported the establishment of the commission.)

But State Senator Michael Halpin, a Democrat who sat on the commission, said he anticipates broad support for the new model. If anything, he says, it will be individual perspectives on the nitty-gritty details, not party affiliation, that creates differing views.

“Anytime you’re talking about funding, there are going to be programs that come out ahead, and some that come up behind … There will be some concern about that,” he said. “But we’ve got a good bipartisan group of legislators that are trying to address college issues in good faith. And that core group of legislators has, for the most part, risen above the increasing politicization of higher education.”

Another commission member, Republican Representative Dan Swanson, said he wants to see the formalized bill before deciding whether to support it. “I believe there’s still more clarification we need before we can make a final way ahead with this type of funding model,” he said.

No One Shot Fixes Everything

Outside experts also expressed some concerns with how the model currently stands.

Robert Kelchen, head of the educational leadership and policy studies department at the University of Tennessee at Knoxville, noted that while guidance has been given that the new model should apply only to newly allocated dollars, or appropriations that go above current allocations, it has not been decided what percentage of new funds the formula should apply to and what should remain under a traditional model.

“This is where politics really come into everything. Because they have to figure out what the size of that guardrail is,” Kelchen said. “The institution that has the smallest adequacy gap by far is the flagship, and they probably also have the strongest lobbying in the state. So they would try to push that guardrail high, which would effectively not change the way the allocations have been historically done.”

Jennifer Ann Delaney, a former professor at Illinois Urbana-Champaign who is now an education professor at the University of California, Berkeley, sees the model’s complexity as a concern. At Illinois, Delaney was often involved in discussions surrounding the new model, and even for her, understanding the final report was challenging.

“As someone who has spent nearly 20 years studying state budgets, I’m not sure I can explain how equitable student share works. And I think that’s telling,” she said. “It’s hard to know, in something so complex, how to predict what likely outcomes are and it’s worrisome.”

“I totally buy the argument that universities could be better funded, but I can’t quite tell how it’s going to function within this formula,” she added.

Predictions of how long it will take to push a new model across the finish line varied. Some said it could take multiple years, others expressed cautious optimism that it could take shape before the end of 2024. But most believe prior experience in passing an updated K-12 model will help expedite the process.

Regardless, the consensus is that this proposal represents an important landmark.

“We are under no illusion that this one formula, this shot in the arm, will fix everything that we need to get our institutions to a place of equity. But we do know that it’s an important step forward,” said Christian Perry, director of policy and advocacy at the Partnership for College Completion, an Illinois-based equity group. “The reality is like any funding formula, there’s going to have to be a great deal of oversight, and a great deal of collaboration. But we will come back to the table to tweak and refine it so that we achieve the best outcomes.”