Amendment to university loan bill passes through Illinois Senate
Rosie Githinji
Issue date: 3/2/10 Section: News
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Chair for the University Planning and Budget Council John Navin said the bill would be a short-term measure to help manage cash flow. The Southern Illinois University Board of Trustees would have the ability to borrow the money that the SIU system needs.
"We could borrow short-term to make payroll on the 30th [of March]," Navin said.
Senate Bill 642 amendment one states the Southern Illinois University Board of Trustees would have the ability to borrow money without having to ask permission from the state of Illinois.
Budget appropriations for the whole year came out to $236 million, according to Navin. So far the state has paid the university $66 million and still owes $127 million. There is still $43 million the university can spend in the next four months according to original state appropriations.
"We can borrow up to 75 percent of the money owed," Navin said. "If the institution can borrow these funds that would be more predictable."
The budget was passed on what the university was supposed to get from the state of Illinois. It is not totally separate from the cash flow problem the university is dealing with right now, according to Navin.
"A cash flow problem is matching revenue and expenditures with timing, [and] a budget problem is mating revenue and expenditures for the whole year," Navin said. "If we don't get the money that they have promised us ever, then we have a budget problem."
The approval from the Senate does not mean the universities are allowed to borrow money yet. It does mean the SIU system is one step closer to being able to borrow money to help with any cash flow problems currently faced because the state has not paid all the money it promised, according to Dave Gross, Southern Illinois University executive assistant for Government Affairs.
The bill is before the Senate and after the Senate the bill will go to the House. If it is not amended it will go to the governor to be signed, according to Gross. If the bill is amended then it will have to go through the process again.
"Right now universities can borrow money for capital improvements," Gross said. "When it comes to operating expenses, we do not have that power."
The Illinois Board of Education may be giving $100 million to public universities in stimulus money. If that happens, the March payroll will be in good shape, according to Gross.
"Ideally we should have 75 percent of the money owed since we are 75 percent through the year," Gross said. "Stimulus funds and borrowing will get us through the spring."
Viewing Comments 1 - 2 of 2
Nolan Sharkey
posted 3/02/10 @ 11:28 AM CST
Hey Rosie, I could be wrong, but in the 10th paragraph we don't call the portion of the legislative branch the House, but instead it is called the General Assembly. (Continued…)
Joey
posted 3/03/10 @ 1:13 PM CST
This can be a dangerous move. If the university borrows money, eventually the lender would want to be paid back (with interest, most likely). If the state continues to fall behind and miss payments, then when it comes time to make payments, the university may not have the money to pay them back, forcing them to take money out of other funds, thus just deferring the problem instead of solving it. (Continued…)
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