Friday News Roundup: Week of November 28 – December 2

Illinois budget deal averts closures, layoffs, Quinn says

Short on cash, Minnesota school districts will borrow to meet expenses

Alabama’s prepaid college tuition plan to run short of money by 2017

Audit seeks policy on funding for Idaho colleges

Illinois budget deal averts closures, layoffs, Quinn says
Governor Pat Quinn and the Illinois state legislature this week reached and passed an agreement to prevent – at least for the moment – layoffs of nearly 2,000 state employees due to state facility shut-downs. The $273 million plan reallocates money from other areas of the budget to keep the facilities open at least through June 30^th, 2012, the end of the current state fiscal year. About $100 million allocated to education in the state will instead be reserved for the prison, juvenile detention center, and mental health facilities that Governor Quinn had previously targeted for closure. Quinn had argued that the state legislature didn’t allocate sufficient funding to keep the facilities afloat, but ultimately brokered a deal with legislative leaders that was passed on the last day of the legislative session this year. More here…

Short on cash, Minnesota school districts will borrow to meet expenses
When Minnesota legislators passed the state fiscal year 2012-13 budget this summer, they included a provision to delay 40 percent of payments to school districts until the next fiscal year, 10 percentage points more than the amount of funding identified for delayed payments in the previous biennial budget. A new survey conducted by the Association of Metropolitan School Districts found that this delayed funding will force metro-area school districts to borrow money to meet their financial obligations this year. In total, 26 districts responded that they would need to borrow a cumulative $382 million this year to pay the bills and make payroll; those loans will bring with them $3 million in financing costs. The biennial budget did, however, increase per-pupil spending by $50 per student, which will more than offset the financing costs of borrowing, at least for this year. More here…

Alabama’s prepaid college tuition plan to run short of money by 2017
At a meeting of the board of the Alabama Prepaid Affordable College Tuition (PACT) plan this week, a financial expert laid out the program’s challenges. Families pay into PACT, and the state invests the money to help pay students’ tuitions at state universities. The 2008 stock market downturn, though, resulted in losses on those investments even as tuition rose. Parents sued the state to recoup the funding they had paid in and some agreed to a settlement this summer to continue the plan but with payouts held at fall 2010 tuition levels. The parents that did not agree to the settlement have brought the case up for consideration before the Alabama Supreme Court.  In addition to the program’s legal challenges, though, it is on shaky financial grounds. To cover the shortfalls, the legislature infused the program with $548 million in additional funding over the next 13 years, but that may not be enough. Consultant Daniel Sherman said the plan will be short of money from 2017 through 2025 unless the legislature speeds up the payment schedule. The chairman of the board stated that he is already in discussions with legislators to accelerate the payments and keep the program solvent. More here…

Audit seeks policy on funding for Idaho colleges
A long-held dispute among Idaho’s four-year universities centers around the gap in state funding at different schools. The University of Idaho receives about $3,500 in state funding per full-time student, whereas the Idaho State and Boise State Universities each receive less than $2,500 per student. Total state funding for higher education has declined throughout the recession by about $75 million while student tuition and fees have risen by another $49 million, further squeezing families’ financial obligations. The per-student funding gap has only widened since a political compromise reached in 2006 attempted to equalize the funding across universities, in part because the legislature has not maintained the payment schedule agreed to in the plan. Now, state auditors are asking the Idaho State Board of Education to establish a policy on financial equity standards before they evaluate the per-student funding discrepancies; until such a standard exists, they said, funding inequities cannot be easily monitored and assessed. More here…