Guest View: Federal tax reform bill will harm college students

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Illinois college students and their families need a high-quality, affordable education now more than ever. Our private colleges and universities have worked hard to provide that quality education at an affordable — and increasingly competitive — price in recent years. But that progress faces a serious threat from Washington.

As the state has made historic funding cuts in the last decade, private campuses across Illinois have invested in students by controlling costs in many ways, seeking alternative ways to generate revenues to provide the high-quality education students need, and streamlining programs to provide more value for students’ investment.

These actions are in response to the needs of the students and families we serve. And in part, these actions address the call from lawmakers to slow down the increasing cost of higher education while still providing access to a college or university that best fits an individual student’s needs.

Now Congress, through its recently unveiled tax reform bill proposal, threatens to throw up additional roadblocks that threaten the financial stability of private nonprofit colleges and universities and their ability to serve students.

One ominous proposal would place a tax on private college endowments. The earnings from endowments, along with private fundraising and other institutional revenues, have long provided scholarships to students as well as base funding for academic programs. Cutting this revenue will decrease funding for needy students and increase the costs to offer programs. In Illinois alone, private colleges and universities annually contribute more than $1 billion in institutional aid, enabling tens of thousands of students to achieve a college degree. Taxing endowments makes little sense if our goal is to increase college participation.

Another part of the proposal would eliminate employer-provided education assistance, which provides much-needed assistance to working students by incentivizing employers to provide tuition assistance benefits. Most recipients of this benefit are non-traditional students trying to improve their skills and workplace mobility. Colleges, businesses and labor organizations all support this important benefit that allows employers to invest in their workforce, while allowing employees the ability to advance their education and experience.

If also enacted, the elimination of tax-exempt bonds for private colleges and universities could significantly raise the cost of capital projects, at a time when the need for infrastructure improvements and safety upgrades (many mandated by government) are greatly needed. This type of bond financing for nonprofits, which meets significant post-issuance disclosure and compliance requirements, is a proven tool with a decades-long record of success for providing vital public services and creating jobs. Low-cost access to capital helps keep private colleges and universities strong, enabling us to keep expenditures low so we can focus on the work we do for the public good and the students and families that we serve.

And there are other provisions that benefit students and institutions that are the target of new taxation. One of these include removing the student loan interest deduction, incredibly important as students start their careers and begin repaying student loans. Another is taxing employee tuition and dependent benefits, which help retain talented staff and would hurt the lowest-paid college employees the most.

A top goal of tax reform should be to support college students and the institutions they attend, not hurt them. Illinois private colleges and universities have a long commitment to providing educational services for the common good. As students succeed, so does our economy and state. Targeting private colleges and universities in this bill could have severe long term consequences, and further deters our national and state goals of having 60 percent of our adults holding some college credential by 2025. Congress should seek ways to encourage the American dream, not shatter it.

David W. Tretter is president of the Federation of Independent Illinois Colleges and Universities

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November 16, 2017 at 08:18PM

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Guest View: Federal tax reform bill will harm college students

GOP tax plan would hit Illinois private colleges and students hard

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Illinois college students need a high-quality, affordable education now more than ever. Our private colleges and universities have worked hard to provide that quality education at an affordable – and increasingly competitive – price in recent years.

But that progress faces a serious threat from Washington.

OPINION

Even as Illinois has made historic funding cuts in the last decade, private campuses across our state have invested in students by controlling costs in many ways, seeking alternative ways to generate revenues to provide the high-quality education students need, and streamlining programs to provide more value for students’ investment.

These actions are in response to the needs of the students and families we serve. And in part, these actions address the call from lawmakers to slow down the increasing cost of higher education while still providing access to a college or university that best fits an individual student’s needs.

Now Congress, through a tax reform bill that has just been unveiled, threatens to throw up additional roadblocks to the financial stability of private nonprofit colleges and universities and their ability to serve students.

One ominous proposal would place a tax on private college endowments. The earnings from endowments, along with private fundraising and other institutional revenues, have long provided scholarships to students as well as base funding for academic programs. Cutting this revenue will decrease funding for needy students and increase the costs to offer programs.

In Illinois alone, private colleges and universities annually contribute more than $1 billion in institutional aid, enabling tens of thousands of students to achieve a college degree. Taxing endowments makes little sense if our goal is to increase college participation.

Another part of the proposal would eliminate Employer-Provided Education Assistance, which provides much-needed assistance to working students by incentivizing employers to provide tuition assistance benefits. Most recipients of this benefit are non-traditional students trying to improve their skills and workplace mobility. Colleges, businesses and labor organizations all support this important benefit that allows employers to invest in their workforce, while allowing employees the ability to advance their education and experience.

If also enacted, the elimination of tax-exempt bonds for private colleges and universities could significantly raise the cost of capital projects, at a time when the need for infrastructure improvements and safety upgrades (many mandated by government) are greatly needed. This type of bond financing for not-for-profits is a proven tool with a decades-long record of success for providing vital public services and creating jobs.

Low-cost access to capital helps keep private colleges and universities strong, enabling us to keep expenditures low so we can focus on the work we do for the public good and the students and families that we serve.

And there are other provisions that benefit students and institutions that are the target of new taxation. The proposed tax reform bill, for example, would remove the student loan interest deduction, though this is incredibly important as students start their careers and begin repaying student loans. The bill also would tax employee tuition and dependent benefits, which help retain talented staff and would hurt the lowest-paid college employees the most.

A top goal of tax reform should be to support college students and the institutions they attend, not hurt them.

Illinois private colleges and universities have long been committed to providing educational services for the common good. As students succeed, so does our economy and state. Targeting private colleges and universities in this bill could have severe long term consequences, and further deters our national and state goals of having 60 percent of our adults holding some college credential by 2025.

Congress should seek ways to encourage the American dream, not shatter it.

David W. Tretter is president of the Federation of Independent Illinois Colleges and Universities.

Send letters to: letters@suntimes.com.

 

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November 14, 2017 at 11:51AM

GOP tax plan would hit Illinois private colleges and students hard

Point/Counterpoint: Tuition rates

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On Oct. 19, the Board of Trustees approved a domestic rate structure that will make out-of-state tuition equal to in-state starting fall 2018.

Reduced tuition will not save enrollment

Maddi Smith 

To combat low enrollment, NIU matched the out-of-state tuition rate to the in-state tuition, hoping to draw more out-of-state students to the university. While it’s smart NIU’s thinking creatively about the drastic 5 percent drop in enrollment since 2016, targeting out-out-state students isn’t the most effective solution. The domestic rate structure was approved Oct. 19 by the Board of Trustees.

For the fall 2017 and spring 2018 semesters, the “Select Midwest States” out-of-state tuition for full-time students, 12 credit hours or more, was $13,251, $6,635 per semester. Students that do not come from these select states, or who are international students pay, an out-of-state tuition rate of $9,465 per semester, $18,931 for the year, according to NIU’s Office of the Bursar’s undergraduate tuition and fees page.

However starting next year, NIU will match out-of-state tuition to in-state, allowing all students to pay the same amount regardless of residency. For 2017, the in-state tuition rate for full time students was $9,465.60 per year, under half the cost of out-of-state tuition.

Despite the 3 percent increase in freshman enrollment and 2 percent increase in the College of Law, NIU’s total numbers dropped from 19,015 students last fall to 18,042 students in 2017, a decrease of 5.12 percent. Total enrollment is comprised of 13,454 undergraduate students, 4,319 graduate students and 269 law students, according to an Oct. 26 Northern Star article.

Illinois is comprised of 11 public universities spread throughout, which all directly compete with NIU for enrollment. NIU’s tuition rate is near the top of the list in terms of price point compared to other Illinois public universities.

Under 5 percent of total undergraduate students are from out-of-state, meaning that the majority of students are from Illinois, according to the National Center for Education Statistics. Because of this, it’s plausible that readjusting the in-state tuition to better compete with other state universities would entice more Illinois students to attend NIU.

Since most of NIU’s students are from Illinois, it makes more sense to change the recruitment demographic. Rather than focusing on out-of-state students, who are a minority on campus, the university should reach-out to in-state students by offering more inexpensive and competitive pricing on tuition, let alone housing and other fees. By widening the demographic, NIU has a greater chance of actually recruiting students and won’t have to compete with universities in other states, since 72 percent of students attend universities in their home states, according to a 2014 Going Away to College study by Niche Ink.

It doesn’t make sense for NIU to focus its recruitment efforts on such a small population when there are actions they can take to combat the enrollment deficit in more effective ways. While getting rid of the out-of-state tuition price will probably have a small impact on enrollment, the changes to enrollment won’t be drastic, seeing as only 28 percent of students venture out-of-state for college, according to the information provided by Niche Ink.


Equalizing tuition was commendable move

Maddie Steen

NIU enrollment may have a good chance of a future increase since out-of-state students will receive the same tuition rate as in-state students.

“We want students nationwide to experience our unique brand of hands-on, engaged learning, and we believe elimination of this cost barrier will help us attract more students from across the country,” acting President Lisa Freeman said in an Oct. 19 press release.

Considering under 5 percent of NIU’s students currently pay out-of-state tuition, that number is not enough to even have a difference in tuition price; if only 4 percent of students are paying more, we might as well make it fair to them. Making tuition equal to all is undoubtedly righteous.

There are 42,000 out-of-state students that were already interested in attending NIU before the tuition price drop, according to Fall 2017 Out-of-State Prospects data provided by Sol Jensen Enrollment Management, Marketing and Communications vice president.

With tuition being equal for all, the chance of these 42,000 prospect students coming to NIU becomes greater than them attending a college that does not offer a comparable out-of-state tuition rate. The administration seems to want to become attractive to out-of-state students and it has accomplished that, but it should not forget between 2000 and 2014, 64 percent of freshman students left Illinois to attend college, according to the Illinois Board of Higher Education.

While changing the price for out-of-state students could benefit enrollment, Illinois is slowly dying which leads me to believe that we should also be focusing on in-state students if we want to save ourselves. If NIU would have thought to offer in-state students a lower tuition as incentive to stay in Illinois and help our economy while still charging a modest premium for those out-of-state, enrollment could have increased quicker than it will because of only out-of-state tuition being lowered.










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November 13, 2017 at 06:28AM

Point/Counterpoint: Tuition rates

Illinois’ financial problems originate in pension systems

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The claim that the state of Illinois has financial issues and a dysfunctional government has become a truism to the public in the last few years. Many people point fingers at who is to blame for Illinois’ woes, often seeking a sense of affirmation by tying a century of issues to a single name.

Governor Bruce Rauner has insisted that Illinois’ problems derive from a decade long Democratic stronghold in the General Assembly and, until 2014, the Governor’s office. Many people in the state of Illinois believe him or have formulated their own similar conclusions.

This attitude is not only disingenuous, but it is also flat out wrong. The bulk of Illinois’ financial problems come from government mishandling of public employee pension payment issues over the last 100 years. Yes, 100. Underneath the political rhetoric and campaign tactics, there is a much deeper and convoluted reason for the current state that Illinois is in.

In fact, it can be traced to exactly 100 years ago. A 1917 report evaluated the Illinois pension systems. Their findings — that the current pension systems “‘are inharmonious and often in contradictory with reference to each other, but that with perhaps a single minor exception they are financially unsound and moving toward a crisis.’”

Despite this report, dealing with the impending pension crisis was continually pushed back by lawmakers for the next fifty years. In 1970, an Illinois constitutional convention presented opportunity for the state to reform its unstable pension systems. However, instead of delivering reforms to the systems, the delegates doubled down on the pension payments by making it a part of the Illinois constitution to have payments be made to the pension funds as promised.

Though the pension system was insolvent from the beginning, this decision made in 1970 is the bedrock for the state’s pension problems. They modeled it after New York. But, while it worked for the Empire State, the Land of Lincoln was not as forthright with the payments, and the building pension issue persisted.

 1994 presented another opportunity to contain the growing pension deficit. Republican Governor Jim Edgar proposed a 50-year plan, known as the “Edgar Ramp,” which would be a gradual increase in payments made to the pension fund by the taxpayers with the idea that, by the end of the ramp, the debt would be 90 percent erased. It had bipartisan support, was incredibly politically expedient and was signed into law.

Unfortunately, this plan did not work either, and it is now infamous among Democrats and Republicans alike. The initial payments were made well short of the necessary amount, and an economic recession in the early 2000s made the ramp much more implausible going forward. By the time Rod Blagojevich was sworn into office in 2003, the pension debt had only risen substantially.

Edgar still defends his ramp today, claiming that if the economy was stable, payments wouldn’t have gone under. But that’s hard to believe when they weren’t satisfactory from the start. It’s similar to applying for a credit card and claiming that there’s no need to worry about most of the costs in the future as long as the company’s required minimum payments are made in the now. It’s fiscally irresponsible.

In 2013, the General Assembly and Democratic Governor Pat Quinn made monumental pension reform that greatly reduced benefits and would drive down pension costs. This was then struck down by the Illinois supreme court citing the clause, created by the 1970 convention, that stated contemporary pension funds can not be altered and must be paid as promised.

This was a crucial blow to a genuine attempt to reform pension payments and start filling the cracks of the state’s financial problems. It’s important to emphasize how these issues are not black and white or red and blue but a collective result from the sins of Illinois’ fathers.

Last year, the independent state Commission on Government Forecasting and Accountability said that the pension debt was up to $130 billion — the worst of any state. Though many see the state’s future as bleak as political bickering and in state political conflicts continue, there is light at the end of the tunnel.

In 2011, the General Assembly and Governor Quinn passed reform that greatly reduced pension benefits for those who were hired after the year 2011. This means that, many years down the road, the pension crisis has the potential to work itself out once those employees begin to retire.

This, of course, is not as immediate as some would like, and there should still be measures taken to make up for the pension debt that is going to grow substantially before the 2011 reforms kick in and begin to reduce its size.

But those measures would have to come from cuts to government services and/or more taxes, neither of the which are popular among Illinois voters. And therefore, hard political discussions are ahead for elected officials of each party.

Austin is a sophomore in Media. 

aas3@dailyillini.com

The post Illinois’ financial problems originate in pension systems appeared first on The Daily Illini.

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October 31, 2017 at 07:08AM

Illinois’ financial problems originate in pension systems

Illinois’ financial problems originate in pension systems

http://ift.tt/2gZaDpu

The claim that the state of Illinois has financial issues and a dysfunctional government has become a truism to the public in the last few years. Many people point fingers at who is to blame for Illinois’ woes, often seeking a sense of affirmation by tying a century of issues to a single name.

Governor Bruce Rauner has insisted that Illinois’ problems derive from a decade long Democratic stronghold in the General Assembly and, until 2014, the Governor’s office. Many people in the state of Illinois believe him or have formulated their own similar conclusions.

This attitude is not only disingenuous, but it is also flat out wrong. The bulk of Illinois’ financial problems come from government mishandling of public employee pension payment issues over the last 100 years. Yes, 100. Underneath the political rhetoric and campaign tactics, there is a much deeper and convoluted reason for the current state that Illinois is in.

In fact, it can be traced to exactly 100 years ago. A 1917 report evaluated the Illinois pension systems. Their findings — that the current pension systems “‘are inharmonious and often in contradictory with reference to each other, but that with perhaps a single minor exception they are financially unsound and moving toward a crisis.’”

Despite this report, dealing with the impending pension crisis was continually pushed back by lawmakers for the next fifty years. In 1970, an Illinois constitutional convention presented opportunity for the state to reform its unstable pension systems. However, instead of delivering reforms to the systems, the delegates doubled down on the pension payments by making it a part of the Illinois constitution to have payments be made to the pension funds as promised.

Though the pension system was insolvent from the beginning, this decision made in 1970 is the bedrock for the state’s pension problems. They modeled it after New York. But, while it worked for the Empire State, the Land of Lincoln was not as forthright with the payments, and the building pension issue persisted.

 1994 presented another opportunity to contain the growing pension deficit. Republican Governor Jim Edgar proposed a 50-year plan, known as the “Edgar Ramp,” which would be a gradual increase in payments made to the pension fund by the taxpayers with the idea that, by the end of the ramp, the debt would be 90 percent erased. It had bipartisan support, was incredibly politically expedient and was signed into law.

Unfortunately, this plan did not work either, and it is now infamous among Democrats and Republicans alike. The initial payments were made well short of the necessary amount, and an economic recession in the early 2000s made the ramp much more implausible going forward. By the time Rod Blagojevich was sworn into office in 2003, the pension debt had only risen substantially.

Edgar still defends his ramp today, claiming that if the economy was stable, payments wouldn’t have gone under. But that’s hard to believe when they weren’t satisfactory from the start. It’s similar to applying for a credit card and claiming that there’s no need to worry about most of the costs in the future as long as the company’s required minimum payments are made in the now. It’s fiscally irresponsible.

In 2013, the General Assembly and Democratic Governor Pat Quinn made monumental pension reform that greatly reduced benefits and would drive down pension costs. This was then struck down by the Illinois supreme court citing the clause, created by the 1970 convention, that stated contemporary pension funds can not be altered and must be paid as promised.

This was a crucial blow to a genuine attempt to reform pension payments and start filling the cracks of the state’s financial problems. It’s important to emphasize how these issues are not black and white or red and blue but a collective result from the sins of Illinois’ fathers.

Last year, the independent state Commission on Government Forecasting and Accountability said that the pension debt was up to $130 billion — the worst of any state. Though many see the state’s future as bleak as political bickering and in state political conflicts continue, there is light at the end of the tunnel.

In 2011, the General Assembly and Governor Quinn passed reform that greatly reduced pension benefits for those who were hired after the year 2011. This means that, many years down the road, the pension crisis has the potential to work itself out once those employees begin to retire.

This, of course, is not as immediate as some would like, and there should still be measures taken to make up for the pension debt that is going to grow substantially before the 2011 reforms kick in and begin to reduce its size.

But those measures would have to come from cuts to government services and/or more taxes, neither of the which are popular among Illinois voters. And therefore, hard political discussions are ahead for elected officials of each party.

Austin is a sophomore in Media. 

aas3@dailyillini.com

The post Illinois’ financial problems originate in pension systems appeared first on The Daily Illini.

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October 31, 2017 at 07:08AM

Illinois’ financial problems originate in pension systems

LETTER: Charleston, EIU are exceptional

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My pleasure at learning Charleston, Illinois, was designated a 2017 Governor’s Home Town Award was exceeded only by reading that again this year, Eastern Illinois University was recognized by the U.S. News and World Report as the #1 public institution in Illinois, and also that EIU is the second most affordable university in the nation, as well as the second safest institution in the nation. As Nikki Davidson said in her Letter to the Editor (Oct. 3, 2017), “We all have something to gain from fostering a relationship with the campus community and bridging the gap between Charleston and EIU.”

Given such a combination of superlatives, I find it almost unbelievable that there is not a single mention of any of the awards on display within the city in multiple prominent locations. Surely, street light banners should be hung throughout the University area on Lincoln Street, and around the Courthouse Square, telling visitors to the city and the university what an exceptional educational and living environment is found here.

Such a welcoming approach is not just found in Carbondale, Illinois, and SIU-C. Bowling Green State University in Bowling Green, Ohio, also enthusiastically welcomes students and their families with street light banners displaying very similar statements that BGSU is one of the top colleges in the nation in an inviting community environment.

Now I understand from President David Glassman’s October 3, 2017, comments to the Charleston Rotary Club that the university is investing in a major effort with outside consultants to work with the Charleston community to enhance new student recruitment to the University. I sincerely hope a part of that effort will be to place light pole banners touting the excellent reputation of both the University and the Community to both prospective students and their families. And we, as local citizens, also need to be reminded that we live in an exceptional city with a wonderful institution of higher education. EIU did not acquire the nickname, “Harvard on the Embarras,” during the Presidency of Livingston Lord by accident, and we need not abandon that name a century later.

Charles G. Eberly, Charleston

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October 17, 2017 at 01:20AM

LETTER: Charleston, EIU are exceptional